What practical actions could countries take now to ensure that the energy transition both accelerates and proceeds in an orderly fashion?
As 2022 comes to a close, the energy transition seems more disorderly than ever. A world economy shaken by a global pandemic and the surging inflation that has accompanied the subsequent recovery has had to contend with a tragic conflict in Ukraine and its aftermath of human suffering, rising energy costs, and declining energy security. The immediate response has meant more short-term reliance on fossil fuels and less available resources for the transition, not to mention additional challenges to regional and global coordination.
As we look forward to 2023 and COP28, the dual imperatives of ensuring energy resilience and affordability and of reducing emissions appear equally inescapable. Instead of delaying action, we believe these imperatives emphasize the importance of accelerating coordinated long-term action, at the same time as taking short-term measures.
This article, a summary of our full report (which can be downloaded as a PDF here) highlights a range of near-term actions that countries and regions around the world could take to ensure they transition their energy system while maintaining focus on the immediate needs of energy reliance and affordability–and thereby achieving a less disorderly, or “more orderly” transition.
The report looks at these actions through three different lenses: actions that apply on a global scale; actions that apply more specifically to regions that take into account their local needs and nuances; and finally, actions that various stakeholders including governments, financial institutions, companies, and individuals could take to find a path to a more orderly transition.
Our focus is on near-term, critical action, and we use 2030 as the time horizon. We are aiming to describe neither a longer-term path with its implications nor the implications of the current momentum. Three factors motivate this choice: the need to move from commitments to clear plans and actions; the recognition that transitioning our energy system is a slow-moving process and that actions taken now could take years to have the desired consequences; and the sense that time is running out.
Momentum toward renewables is growing but without a corresponding decrease in global emissions
The world’s progress toward cleaner energy has been accelerating. Over the past decade, production of renewable energy has more than doubled globally, and its share of total primary energy consumption has grown from 9 percent in 2011 to 13 percent in 2021. While renewables broadly defined encompass a range of energies, including hydropower and geothermal energy, we focus here mainly on solar and wind energy.
Despite growth in renewable energy, the use of fossil fuels is also expanding to meet growing demand for energy. Global energy demand grew by 14 percent from 2011 to 2021, fueled mainly by emissions-intensive sources. As a result, global energy-related emissions have increased in the past decade by about 5 percent, or 1.7 gigatons (Gt) of CO2, and the share of primary energy from fossil fuels has remained largely unchanged, at 82 percent (Exhibit 1).
Source: McKinsey & Company