Full report
Published: 20 April 2021

Fostering Effective Energy Transition 2021 edition

6. Conclusion

Analysis of the Energy Transition Index has shown encouraging progress on the energy transition over the past decade. But more progress is needed. Evolution in areas such as environmental sustainability remains uneven and insufficient, while progress on other dimensions such as economic growth has been mixed. Recent disruptions, whether caused by COVID-19 or the climate, have challenged the resilience of the energy transition. As energy systems become more variable, distributed, and digitalized, new risks are emerging that threaten the reliability, resilience, and affordability of future energy. Understanding how to boost the resilience of the energy transition and identifying the levers required to do so will become increasingly critical during this decade of action and delivery.

Policy-makers, business leaders, and consumers all have a part to play in delivering a balanced, resilient transition which continues to speed progress regardless of disruptions and opposition. While there is no single approach, some common key themes are emerging across different geographies:

  • Energy transition must be a just transition. This challenge is about more than simply energy system performance. The energy transition is a systemic transformation of entire economies and societies. It follows that transition measures must address the issues of equity, jobs, public health, access and affordability. Policy-makers and investors must consider all these issues when evaluating and communicating their decisions, to gain cooperation from a broad coalition of stakeholders.
  • Electrification is necessary but not sufficient. Accelerating electrification and shifting to renewables will be critical to achieve the emission reduction goals of the next decade. But that alone will not be enough. Jump-starting the transition in other areas of the energy system, from heavy-duty transport to hard-to-abate industries such as cement and steel, is now a necessity. We need to commercialize and scale up a wide range of emerging clean energy technologies to fully decarbonize all energy systems. We will also need to foster and fund innovation and collaboration across industry sectors.
  • Collaboration between public and private sectors is vital to share risks, scale up funding and de-risk investments made with multi-year and even multi-decade time horizons. This is crucial for emerging markets and new, clean technologies, where the economics is not yet competitive with more established energy investments.

Looking ahead, there are two major opportunities which will have profound impacts for the coming decades. First, the unprecedented level of government stimulus to combat the social and economic impacts of COVID-19 could be targeted to build resilience in the energy transition and provide a near-term focus on energy transition. Second, the upcoming COP26 summit in November holds the potential to set the tone and the trajectory for coordinated international action on climate change.

Developments in this decade will be crucial in resetting our economies and in our fight against climate change. Policy-makers and private sector actors must work together and seize the opportunities to build the foundation for a resilient energy transition – one that not only ensures long-term sustainability but also delivers inclusive growth and long-term prosperity.

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