- The energy transition must be backed by a strong and holistic approach to policy-making by governments.
- The key to this lies in more specific nationally determined contributions - and the year of COP26 is the year to do it.
The very first automobiles, introduced in the 1880s, were expensive, niche, and used only by the rich. Within 30 years, Ford’s Model T entered mass production. This pushed the number of car-owning households in the US from 8% in 1918 to 60% by 1928, and triggered the spread of electrification, suburbs, cinemas, shopping centres, sophisticated advertising and much more.
That’s not linear growth – it’s exponential. We’ve seen it happen time and again throughout history, whether from horses to cars or valves to transistors, and each time it has fundamentally changed the way we live and operate. Our race to a zero-carbon energy system will be no different.
But in the same way that pro-business policies spurred the American economic boom and innovation like the Model T in the 1920s (which, incidentally, followed the Spanish flu pandemic), the clean energy transition must be backed by holistic government policy.
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Key to this is achieving greater specificity in countries’ nationally determined contributions (NDCs) under the Paris Agreement – setting out how and when each sector will reach zero emissions, and involving all economic actors and government ministries. The benefits of decarbonizing energy extend well beyond individual sectors to health, jobs, education, equality and nature conservation. But the work behind it does too.
This is the year to do it, ahead of November’s COP26 climate summit in Glasgow, where all countries must raise their NDCs. As a first step, governments must rally their ministers of energy, climate, transport, health and other portfolios around the same goal: zero-carbon energy. Ministers can then align their policies with the NDC targets and begin to implement them.
The energy sector is already leading the charge to zero emissions, with breakthroughs and rapid price declines across the auto, power and lighting sectors. Globally, the number of electric vehicles on the road has jumped from 17,000 in 2010 to more than 7.2 million today. The installation of solar power grew from 290 MW in 2001 to nearly 127,000 MW in 2020. The share of LED bulbs in the lighting market has grown from 1% in 2010 to an expected 69% in 2020 and will be nearly 100% by 2025.
The growth is happening even where governments lag behind. But it’s faster if led by policy. China has 420,000 electric buses on the road, driven by Beijing’s war on air pollution. Norway last year became the first country to sell more electric vehicles than petrol, diesel and hybrid, backed by Oslo’s target to end internal combustion engine sales in 2025.
All of society transformation
These advancements drive all-of-society transformation. They create well-paying jobs, prevent premature deaths through reduced air pollution and introduce affordable energy to rural areas, allowing people to refrigerate produce or medication and enabling children to study by light after sunset.
But reaching the necessary pace and scale requires what UN Secretary-General António Guterres has called “inclusive, networked multilateralism”. The more ambition political leaders demand, the more businesses, investors, cities and regions are challenged to advance. The farther they go, the higher governments can push their targets, and so forth. It’s an ambition loop. Platforms like the Marrakech Partnership’s Climate Action Pathways, the Mission Possible Partnership and the Race to Zero Breakthroughs are enabling this kind of pre-competitive collaboration, reducing the risk of the transition.
Change is gaining momentum even in the midst of the COVID-19 health and economic crisis, with high-emitting countries setting net-zero emissions goals: China by 2060, the EU, US, Canada, South Korea, Japan and South Africa by 2050.
The UK’s new NDC is rooted in the plan for a green industrial revolution that will create 250,000 British jobs this decade. In 2030, London intends to have ended the sale of petrol and diesel cars, reached 5 GW of green hydrogen production capacity and quadrupled offshore wind capacity, among other plans.
South Africa’s new goal for net zero by 2050 is backed by a strategy to cut coal-fired power supply from around 90% now to 46% by 2030 and 30% by 2050, while boosting wind, solar and hydro. This falls short of the Paris goals, but the ambition – set against a serious economic battering from high COVID-19 rates – is laudable.
Yet the bigger signs of transformation are coming from the private sector. International Airlines Group and Oneworld Alliance are ahead of the International Civil Aviation Organization in setting net-zero targets. General Motors is aiming for net zero by 2040 and calling on the US government to forge a national zero-emissions vehicle programme. Nestlé intends to halve its emissions by 2030 by supporting the shift to regenerative agriculture and planting hundreds of millions of trees.
Government policy will help to both realise these ambitions and continuously ramp them up at the scale demanded by the Paris agreement. NDCs could drive decarbonization by ending fossil fuel subsidies and pricing carbon, shifting investments from fossil fuels to renewables, ending the sale of petrol and diesel vehicles, and ending deforestation – as the NDC Partnership recommends. And as the Coalition for Urban Transitions states, investing in cities – including low-carbon buildings and mobility, renewable power and green spaces – would also enhance both national COVID-19 recoveries and Paris contributions.
Of course, all these policies must uphold two pillars in the race to a healthy, resilient zero-emissions world: the just transition and nature regeneration.
We know the transition will create jobs, but those jobs must be made available in places where workers and communities rely on fossil fuels. The just transition is a local challenge, and political and business leaders should treat it as such.
What's the World Economic Forum doing about the transition to clean energy?
Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated.
Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010.
Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.
Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.
To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.
Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission.
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And we know that slashing emissions will only get us part of the way to greater health and resilience; we must simultaneously regenerate nature. By reforming their measure of economic success, and placing a premium on working and living sustainably rather than destroying nature, governments can restore humanity’s relationship with its most “precious asset”, as the Economics of Biodiversity: Dasgupta Review makes clear.
The world we live in today has been shaped by the breakthroughs of our past – from the Model T assembly line to the spread of mobile phones across previously unconnected rural areas. Such breakthroughs continue to propel us towards a safer future, as long as governments make sure the whole of society comes along for the ride.