As nations proceed their progress in transitioning to scrub power, it’s important to root the transition in financial, political and social practices to make sure progress is irreversible, in response to the newest version of World Financial Discussion board’s Fostering Efficient Power Transition 2021 report printed at this time.
In its 10th version, the report, printed in collaboration with Accenture, attracts on insights from the Power Transition Index (ETI) 2021. The index benchmarks 115 nations on the present efficiency of their power techniques throughout the three dimensions of the power triangle: financial growth and progress, environmental sustainability, and power safety and entry indicators – and their readiness to transition to safe, sustainable, inexpensive, and inclusive power techniques. This 12 months’s report makes use of a revised ETI methodology, which takes under consideration current modifications within the world power panorama and the growing urgency of local weather change motion.
“As we enter into the last decade of motion and supply on local weather change, the main target should additionally embody velocity and resilience of the transition. With the power transition shifting past the low hanging fruit, sustained incremental progress will likely be tougher as a result of evolving panorama of dangers to the power transition,” mentioned Roberto Bocca, Head of Power and Supplies on the World Financial Discussion board.
The outcomes for 2021 present that 92 out of 115 nations tracked on the ETI elevated their mixture rating over the previous 10 years, which affirms the optimistic route and regular momentum of the worldwide power transition.
Robust enhancements had been made on the Environmental Sustainability and Power Entry and Safety dimensions. Eight out of the 10 largest economies have pledged net-zero targets by mid-century. The annual world funding within the power transition surpassed $500 billion for the primary time in 2020, regardless of the pandemic. The variety of individuals with out entry to electrical energy has declined to lower than 800 million, in comparison with 1.2 billion individuals 10 years in the past (2010). Growing renewable power capability has particularly helped power importing nations obtain simultaneous positive factors on environmental sustainability and power safety.
Nonetheless, the outcomes additionally present that solely 10% of the nations had been capable of make regular and constant positive factors of their mixture ETI rating over the previous decade. This highlights the inherent complexity of the power transition problem, as evidenced by thelack of measurable progress within the financial growth and progress dimension – primarily by way of fiscal implications, labour market dislocations, and affordability challenges ensuing from the power transition. Furthermore, the carbon depth of the power combine has been rising in lots of rising economies in Asia and sub-Saharan Africa.
“A resilient and simply power transition that delivers sustainable, well timed outcomes would require systemwide transformation, together with reimagining how we reside and work, energy our economies and produce and devour supplies,” mentioned Muqsit Ashraf, a senior managing director who leads Accenture’s power apply. “This in flip would require robust collaboration between coverage makers, enterprise leaders, power shoppers, and innovators. The journey to attaining such a balanced transition has been gradual and daunting, however it’s choosing up momentum and providing nations and corporations many alternatives for long-term progress and prosperity.”
The social, financial, and geopolitical interlinkages of the power transition have uncovered vulnerability to systemic dangers and disruptions, which can threaten progress on the power transition. This report makes Three suggestions to boost the resilience of the power transition course of: (1) pursue a simply transition by prioritizing measures to help the financial system, workforces and society; (2) amplify electrification whereas exploring different choices for decarbonizing industries; (3) entice diversified, resilient sources of capital from the private and non-private sectors to fund multi-year and multi-decade investments.
Stephanie Jamison, a senior managing director who leads Accenture’s utilities apply, mentioned resilience is an important idea for the journey to scrub power. “The function of electrical energy within the power system will enhance considerably by 2050, which is an enormous transformation,” she mentioned. “Whereas it’s nice to see renewable power sources stronger popping out of COVID, there may be nonetheless much more work to do to additional progress the shift to net-zero -carbon power and guarantee buy-in from a broad set of stakeholders.”
Nation highlights from ETI 2021
This 12 months’s report tracks progress during the last decade. The checklist of prime performers within the ETI has stayed broadly constant over this era, sharing widespread attributes resembling low ranges of fossil gas subsidies, enhanced power safety and a robust regulatory atmosphere to drive the power transition. The highest 10 nations on the ETI 2021 are Western and Northern European nations. Sweden
(1) leads the ETI for the fourth consecutive 12 months, adopted by Norway (2) and Denmark (3). All prime 10 economies have made robust enhancements in environmental sustainability, particularly in reducing the carbon depth of their power combine, supported by robust political dedication and investments within the power transition.
The United Kingdom (7), France (9) and Germany (18) are the one G20 nations within the prime 20. Their progress is supported by robust efficiency on the environmental sustainability dimension, although their scores on financial progress and growth have regressed over the previous decade as a consequence of affordability challenges.
The United States (24) and Italy (27) have improved on all three dimensions of the power triangle, whereas additionally strengthening their enabling atmosphere. Japan (37) registered average enhancements in its general mixture ETI rating, primarily as a consequence of robust declines in per capita power consumption because of energy-efficiency enhancements, although it continues to face power safety challenges as a consequence of rising power imports.
China (68) and India (87), which collectively account for a 3rd of world power demand, have each made robust enhancements over the previous decade, regardless of coal persevering with to play a major function of their power combine. China’s enhancements primarily outcome from lowering the power depth of the financial system, positive factors in decarbonizing the power combine by way of the growth of renewables and strengthening the enabling atmosphere by way of investments and infrastructure. India has focused enhancements by way of subsidy reforms and quickly scaling power entry, with a robust political dedication and regulatory atmosphere for the power transition.
Amongst commodity exporting nations, Canada (22), Australia (35), Russia (73) and Saudi Arabia (81) lead globally on power entry and safety dimensions, as a consequence of considerable home reserves. Nonetheless, they’ve displayed divergent trajectories over the previous decade. Australia has improved its scores by way of sustained will increase in funding and renewable power capability, and the gradual phasing out of coal. Russia improved its scores as a result of strengthening of the enabling atmosphere for the power transition, although the uptake of renewable power stays low and fossil gas exports stay excessive. Scores for Canada and Saudi Arabia declined marginally.