Energy Transition

5 actions needed to regain the energy transition momentum

Solar panels with wind turbines and electricity pylon at sunset. Clean energy transition concept.

The clean energy transition needs to turbocharge Image: Getty Images/iStockphoto

Muqsit Ashraf
Global Lead, Accenture Strategy
Roberto Bocca
Head, Centre for Energy and Materials; Member of the Executive Committee, World Economic Forum
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This article is part of: Annual Meeting of the New Champions
  • The energy transition is progressing, but the rate of improvement is slowing in the face of increasing global uncertainty.
  • Achieving balanced progress – improvements on the three primary dimensions of sustainability, equity and security – seems more complex than ever; 21 out of 120 countries managed to do this in the last year.
  • A new report by the World Economic Forum, Fostering Effective Energy Transition 2024, suggests that regaining transition momentum requires a combination of regulatory reforms, adoption of AI, efforts to deliver energy equity, better-connected energy supply and demand and enhanced collaboration between countries.

"Where the marathon starts is after 30 kilometres," says Eliud Kipchoge, perhaps the greatest marathon runner in history, as he stresses the importance of preparation and planning over all else in how he approaches the race.

"That's where you feel pain everywhere in your body. The muscles are really aching, and only the most prepared and well-organized athlete is going to do well after that."

Similarly, the energy transition is a marathon, not a sprint.

It left the starting line many years ago. And as it approaches mid-distance, the finish line remains far ahead. Momentum has slowed, and the improvement in the global Energy Transition Index score from 2021-2024 was almost four times less than the improvement from 2018-2021.

The Energy Transition Index highlights the difficulty of achieving a balanced transition across sustainability, equity, and security. Only 21 out of 120 countries managed to progress across all three dimensions in the last year.

Sustainability performance has improved; aside from increased adoption of wind and solar, however, it has not kept up with the trajectory needed to reach net zero by 2050. Energy security is being tested amid rising geopolitical tensions. Energy equity challenges persist within and across countries – especially in affordability and access.

Clean energy investments reached a record high of $1.8 trillion in 2023 but remain around one-third of the level required through 2030 to be on the pathway to net-zero emissions. Post-COVID-19, the energy transition landscape experienced wild swings in geopolitical and economic realities, challenging the underlying momentum of the energy transition.

The World Economic Forum, together with Accenture, has identified five actions that, in combination, can regain critical momentum and ensure we have a strong pace well into the second half of the race.

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What's the World Economic Forum doing about the transition to clean energy?

1. Prioritize regulations that advance decarbonization and efficiency

Energy has transformed from a set of distinct linear value chains to a connected system. Regulations need to act on and balance more than a single objective while addressing momentum across the entire system. 'Push-pull' initiatives can lower the energy and carbon intensity of economic growth by accelerating clean energy innovation and lowering the share of demand for carbon-intensive sources.

For example, the US's Inflation Reduction Act (IRA) offers a 26% tax credit for solar investments amid an overall $369 billion fund for transition incentives. Similarly, the UK provides Contracts for Differences (CfDs), offering long-term price stability to attract renewable energy investment.

The International Business Council identified a possible 31% reduction in energy intensity if measures were to be taken by 2030, including effective short-term regulation. For example, Minimum Energy Performance Standards (MEPS), adopted by the EU, US and Canada, led to a 20% reduction in energy consumption in the Japanese manufacturing sector between 2000 and 2012.

Regulation metrics captured in the Energy Transition Index reveal a substantial gap between advanced economies and the rest of the world. Countries need to prioritize and adopt next-generation policies that create incentives to invest in low carbon while lowering emissions.

2. Adopt digital and AI to unlock productivity and accelerate innovation

Digital technologies unlock substantial value by boosting productivity and enhancing efficiencies. These, in turn, improve equity and security by enabling additional capital investments and reducing energy supply costs.

Generative AI represents a transformative opportunity and many companies and governments are positioning to reimagine how the technology will reinvent their entire value chains. By 2030, Accenture estimates the industry’s investment in generative AI will more than triple, increasing from approximately $40 billion annually to over $140 billion.

Ensuring the benefits of the AI revolution map to the energy sector is a key priority. The energy requirements for AI are now a major topic, with several countries re-evaluating their future electricity demand growth, which is sharply upward on account of the rise of data centres. Ensuring AI has a positive net impact on the transition means delivering gains far exceeding the new energy demand the technology creates.

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3. Provide energy equity for vulnerable people and households

Society at large ultimately sets the pace of the energy transition. Social safety nets and compensatory measures, including income-based targeted support, cash transfers, and temporary basic income initiatives, can lower or reverse energy poverty and ultimately increase momentum for adopting clean energy solutions.

Examples of social initiatives have accelerated, albeit from a low base. For example, the Philippines implemented the Lifeline Rate programme to provide subsidized electricity rates to low-income households consuming less than 100 KWh per month.

France has targeted most of its support for energy efficiency retrofits in buildings to those with the lowest incomes. India is targeting support for electric mobility towards two and three-wheelers, mostly owned by lower-income populations.

4. Connect energy supply and demand to bring forward future investment

Offtake and commercial agreements are critical for investment approval, especially for large capital projects and infrastructure programmes, as they provide revenue certainty. Currently, markets for green products remain sub-scale, with some, such as hydrogen, at just 1% of the scale of the existing industry.

The First Movers Coalition aims to advance the critical emerging climate technologies required to decarbonize the world’s heavy-emitting sectors, with commitments to represent an annual demand of $16 billion for emerging technologies by 2030.

There is an emerging need for both public and private sector action to stimulate investment by de-risking future demand. Japan and the United Arab Emirates have recently collaborated on shipments of blue ammonia totalling thousands of tonnes, marking the first initiative of this scale.

Certification and comprehensive sustainability reporting ensure transparency. Only 55% of companies are enhancing their sustainability data capabilities. Closing the gap presented by implementing green certification standards, such as the EU's CertifHy policy, can standardize hydrogen emissions thresholds and differentiate clean (low carbon) hydrogen products from existing production.

5. Tailor efforts to country-specific needs

Achieving a successful energy transition requires both global cooperation, such as shared commitments like those at COP28, and individual actions tailored to initial conditions, readiness and sector priorities.

The most significant divergence in system performance between advanced economies and emerging and developing nations lies in disparities in equity, particularly in emerging Asia and Sub-Saharan Africa. The Middle East notably lags in sustainability efforts – despite many advantages - and can likely drive faster decarbonization by rebalancing its use of fossil fuels and enhancing energy efficiency. Global momentum depends on bringing along all countries, not just the advanced nations.

The message from this year’s Energy Transition Index is clear: we are deep into the race. Momentum matters more now than ever. Decision-makers worldwide must act collaboratively to pick up the pace and accelerate the transition towards an equitable, secure and sustainable energy future.

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