Davos Agenda

Investing in sustainable energy can enable resilient societies in race to net-zero

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Investment and innovation in sustainable energy systems is needed to win the race to net-zero. Image: Freepik.

Henrik Andersen
Chief Executive Officer of Vestas Wind Systems A/S and Chair, Electricity Industry Action Group
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Davos Agenda

  • The clock is ticking to meet ambitious global climate goals as we prepare for the COP26 conference in November.
  • We need public-private collaboration and investment in sustainable energy systems to strengthen existing infrastructure and scale-up innovation.
  • In a post-pandemic world this could enable an economic, social and environmental return on investment as we journey to net-zero.

Climate volatility has been reported in news headlines around the world over the past year, further highlighting the unpredictable challenges we face in tackling the climate crisis.

As we gear up for the COP26 conference later this year, there will be a renewed focus on important milestones for global climate goals. But questions around progress, urgency and levels of ambition will no doubt dominate the political and media narrative. How will we win the “race to zero?”.

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While the COP framework is a necessary tool to solidify long-term goals and global coordination, the race to zero won’t be won by establishing goals that delegate action into the future, it will be won with action today. And with several nations affected by the socioeconomic impact of the pandemic, this action must focus on ensuring that our societies can withstand the global challenges that we face now, as well as the ones lurking beyond the horizon. Governments must focus on building resilience.

Opportunity for transformational change

Nurturing sustainable energy systems is a key step along this journey. The rapid expansion of renewable capacity is not only a step towards net-zero, it’s a pathway towards yielding a higher social return on investment than sticking to business as usual, and should therefore be central to every government’s recovery strategy.

Wind energy alone must triple its worldwide growth over the next decade if we are to reach global net-zero, but beyond its impact on carbon emissions, installed capacity will drive job creation. In the US for example, demand for wind turbine service technicians is set to grow faster than any other occupation, while waning industries like coal mining continue to hemorrhage jobs. Globally, estimates predict wind energy to create more than three million new full-time jobs over the next five years, a figure that will only grow as installed capacity accelerates.

Installing renewable energy is only one piece of the resilience puzzle. Strengthening grid infrastructure, energy efficiency and system flexibility must all take place in parallel to build truly sustainable energy systems, and each one of these factors will drive an economic, social, and environmental return on investment in its own right.

The World Economic Forum’s System Value Framework recently concluded that increased investment in both renewable technologies and accompanying infrastructure will yield a social return far higher than initial investments. Betting on change will create more jobs and a higher annual gain on GDP. These new pathways will also lead to a reduction in air pollution, water wastage, and of course, greenhouse gas emissions. Overall, granting societies access to sustainable energy inevitably means access to a more secure socioeconomic future. Renewables are the building blocks of resilience.

The World Economic Forum's Systems Value Framework.
The World Economic Forum's Systems Value Framework.

Accelerated action is needed

Strengthening resilience calls for a broad spectrum of solutions, all of which must be triggered concurrently to transform the energy systems of today into something truly sustainable. For this approach to work, we need to see significant change across two key parameters. Firstly, governments must mobilize investment in sustainable energy systems, with policy makers focusing not just on core climate policies, but on broader investment conditions and wide-ranging policies that address investment competition in all sectors, and power market reform. At present, progress here is slow. COVID-19 stimulus packages are spending a cumulative $30 billion more on fossil fuel energy compared to renewables, a clear sign that global climate goals are still being delayed into the future.

Secondly, collaboration between the public and private spheres must be stronger. Companies have the scale, structure and agility to accelerate renewable electrification. We’re seeing examples of this with some global giants; Amazon are aggressively electrifying operations with a commitment to use 100,000 electric service vehicles by 2030. Schneider Electric recently committed to fully electrifying its car fleet, and Enel X are rapidly expanding their charging network across Europe. This trailblazing can bolster the vision of government action by shaping a new mindset long before it’s formalized by recovery packages. But to move the needle, this thinking must be more widely adopted across the private sector.

Future proofing energy systems

Outlining roadmaps and announcing ambitions is an important step in the journey to net-zero, but its only once these commitments are translated into tangible value for societies that we will start to see change. Sustainable energy systems are an apt catalyst for driving this value; by accelerating the transformation of the global energy system from the technology that powers it, to the infrastructure that sustains it, we can lay the foundation for more resilient societies. As we rebuild economies in the aftermath of the pandemic, it’s imperative that we consider how to safeguard ourselves from the challenges we can’t see, not just the ones that we can. Nurturing a more sustainable global energy system is a tangible pathway towards this, because it can protect us from both.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Davos AgendaEnergy TransitionClimate Change
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