Energy Transition

How and why the world must join forces and act fast to scale renewable energy

Renewable energy facilities must rapidly spread across the world

Renewable energy facilities must rapidly spread across the world Image: Photo by Andreas Gücklhorn on Unsplash

Mike Hayes
Global Climate Change and Decarbonization Leader, KPMG
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Energy Transition

This article is part of: World Economic Forum Annual Meeting
  • At COP28, 130 governments pledged to triple the world’s renewable energy capacity by 2030.
  • Achieving this requires a massive global coordination of policy, planning, finance and resources.
  • The world must install over 1,200 gigawatts of renewable energy capacity annually by 2030 to meet these goals, the consequences of failure are too awful to consider, the time for global cooperation is now.

At the COP28 climate summit in late 2023, finding new sources of more sustainable power was rightly high on the agenda, with 118 governments pledging to triple the world’s renewable energy capacity by 2030.

The initiative, led by the European Union, the United States of America and the United Arab Emirates, clearly links the tripling of renewable energy with the removal of CO2-emitting fossil fuels from the world’s energy network by 2050. The cross-section of nations supporting such an endeavour is reassuring. From Nigeria and Brazil to Chile and Barbados, political leaders from all sides, including heavy polluters and those countries most at risk from the climate crisis, put aside their differences and agreed something must be done. While some nations haven’t fully come on board, they are, at least, showing a signal of support, which is a step in the right direction.

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Turning plans into action

It was one of the headline-grabbing achievements of COP28 and something that should be celebrated, but it’s not simply about signing up for the ambition. The crux is how to achieve that goal. Without this, the world is going to be reliant on fossil fuels for much longer than envisaged.

The reality is that the world is not moving with anything like the determination, pace and scale needed to meet the target, with a series of obstacles hamstringing our ability to ramp up renewable energy capacity. It will require a massive global coordination of policy, planning, finance and resources if we are to get there.

A recent KPMG study identified ten financial, policy and legislative hurdles that need to be overcome if renewables are to be scaled and the ambitions of the 2015 Paris Agreement – to cap global warming at around +1.5 degrees Celcius above pre-industrialized levels – are met.

Some of these barriers are well-known. The grid infrastructure, designed for the fossil-fuel-intensive electricity generation of the 20th century, is woefully outdated. A truly net-zero grid must be decentralized and requires enormous flexibility and intelligence to balance variable supply and demand consistently. Regulation will play its part in this. Even as sales of electric vehicles (EV) soar, grid operators in the United States are struggling to get approvals to upgrade the infrastructure to support EV charging. The demand will be there – the issue is one of supply.

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Renewable energy obstacles must be surmounted

Across the world, lengthy planning and permitting processes, coupled with a lack of knowledge about renewables, are obstructing renewable development projects. In the United Kingdom, it takes an average of 12 years to plan, permit and develop an offshore wind plant. Renewables planning can be reformed and has led to landmark policies, such as the European Union’s RePowerEU framework, which recommends short and straightforward permitting processes for renewable development projects.

Other challenges need to be better understood. The transition to renewable energy requires an enormous amount of capital, particularly in emerging markets, where significant barriers and risks – such as reliance on coal, foreign currency risks and the upfront costs of renewables – deter investors.

It is well known that the raw materials needed to meet the demand for renewables are concentrated in a few countries. China produces most of the silicon used for solar panels, 60% of the world’s wind blades and a large proportion of the minerals needed for batteries, including nickel, lithium and graphite. The world, therefore, needs a solution that takes account of this.

Meanwhile, the world should be cautious when trying to mitigate the impact of ‘green-on-green conflicts’ and seek to deploy renewables thoughtfully so that scaling them does not, at the same time, damage nature and biodiversity. Further, the social and economic impacts and benefits of the transition to renewable energy should be fairly distributed – so it is a just transition.

The world is on the right track

The good news is that the world is on a decent path.

In the past two decades, significant progress has been made in advancing renewables. Around 17% of the world’s energy now comes from renewable sources. In the UK, renewable energy now supplies 42% of generated electricity, up from 3% in 2000. The International Energy Agency forecasts that global renewable capacity additions could reach 440 gigawatts in 2023 – the equivalent of the combined power capacity of Germany and Spain - and could increase by a further 550 gigawatts in 2024.

This is impressive. But the sobering truth is that the run rate will still fall short in delivering the promise of a sustainable future. In practical terms, the world will need to install more than 1,200 gigawatts of renewable energy capacity annually by 2030 to meet our goals.

This should spark a sense of urgency. The pathway to accelerating progress remains viable, but the window of opportunity is narrowing. The world must be hard-headed and clear-eyed about what’s required to meet the 2030 renewables target and then double the ambition if the planet is to be net zero by 2050. The consequences of failure are too awful to think about. The time for global cooperation is now.

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Energy TransitionClimate and NatureDavos Agenda
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