The energy transition in the post-war world
- Today’s energy policy is both domestic, foreign, climate and security policy. And this will be even more evident in a post-war world.
- There is a historic opportunity for the global energy transition if we can reconcile security of supply with decarbonisation, more renewables and sector coupling technologies.
- I believe four aspects are important in driving our energy transition in a post-war world – and all of them have to do with innovation.
The Russian war in Ukraine will have serious repercussions on the shape and pace of the energy transition, not only in Europe but worldwide. We are already seeing shifts in the energy policy triangle, which generally aims to balance security of supply, affordability and sustainability. For now, it seems, security of supply has become priority number one. However, we must not make the mistake of losing sight of the other two objectives. Instead, we must ensure that energy does not become a divisive issue within societies. This applies to industrial nations – and it applies to our global community in which 800 million people still do not have access to electricity. We must also be very careful that our climate goals do not fall victim to war. The latest IPCC report shows that the climate crisis is not stopping. There is no planet B – this is true for nuclear threats, and it is also true for climate change.
How will the energy transition take shape in a post-war world?
Although it may seem paradoxical in the midst of huge uncertainties, this new era may also offer a historic opportunity for the global energy transition. How? If we manage to reconcile security of supply and decarbonization, develop renewable energies and sector coupling technologies.
For starters, our economies need to be much better prepared for scenarios where the energy supply is disrupted. We need to make our energy systems more resilient. This requires a thorough analysis of the energy system paying attention to strengths and weaknesses, interdependencies and potential threats. It should also answer the question of what priorities an economy should set in the face of energy shortages. Resilience means that energy reservoirs must be sufficient to compensate for sudden interruptions in supply. Politics and business must work together to protect the energy system from cyberattacks and to increase its cybersecurity in general. It is, moreover, an international task.
Resilience also means that our economies must diversify supply routes. In the case of the gas pipeline, for example, we have to open up other supply routes that allow us to obtain gas from several sources and from different suppliers. In addition, liquefied natural gas (LNG) capacities should be developed in parallel with the diversification of gas pipeline routes through the rapid construction of new LNG terminals and the commissioning of floating LNG terminals which could be commissioned more quickly.
Another angle we should consider is that green energy partnerships are becoming increasingly important. Some countries can contribute their energy transition know-how by developing zero-carbon technologies; others have the natural conditions to provide green energy. This is the way to create win-win partnerships. It is precisely the strength of these partnerships that will matter as we build a global green hydrogen economy.
When it comes to resilient energy systems, diversity matters: multiple energy providers, multiple energy supply routes, multiple fuel sources, and a focus on energy efficiency and security. Globalization is not over. But there is a tectonic shift from countries with abundant fossil resources to countries blessed with wind and sun as a source of renewable energy.
We all welcome the fact that our energy systems are becoming increasingly green and hybrid – think large onshore and offshore (centralised) wind farms and photovoltaics (centralised/decentralised). But we need much more speed in implementing new solutions. I think of my home country, Germany, and the many years it takes to get administrative approval for new projects. The construction of LNG terminals in Germany as well as the expansion of wind farms will be a litmus test of whether we are able to accelerate.
While transforming our energy systems, we also need to be honest with ourselves: until renewables are available in sufficient quantities, we will need transition fuels like natural gas for at least one investment cycle. additional. That’s why we have to use proven technologies such as high-efficiency gas-fired power plants. They can replace coal and reduce emissions by around 50% to two-thirds. These gas turbines should be hydrogen compatible for a future where they can run on 100% green hydrogen. In other words, investments in gas technology are sustainable and do not lead to stranded assets.
I believe four aspects are important in driving our energy transition in a post-war world – and all of them have to do with innovation.
1. Implement proven solutions that help us get to net zero, as well as end unsustainable solutions like coal
2. The move upmarket of innovative solutions. Without a well-developed hydrogen economy, the second stage of the energy transition, namely decarbonisation, will not take off! Scaling up to industrial scale as quickly as possible is crucial to drastically reduce the manufacturing costs of hydrogen-based products. Green hydrogen and its derivatives must be transformed from luxury goods into commodities. What is also clear is that we need to adapt to rising energy prices and adjust taxation. For a successful market ramp-up and efficient sector coupling, the color of hydrogen should not be decisive in the start-up phase – even green hydrogen has its nuances. What should decide is the intensity of CO2 and its contribution to decarbonisation.
3. We need to think about the holistic energy system. In a few decades, once the share of renewable energy reaches 100% of the energy supply, utilities, transport companies and industry will be able to create a zero-carbon economy. Power plants are becoming hybrid power plants. These include 100% “green” gas turbines that provide a reliable flow of energy, heat storage, heat pumps for district heating and electrolyzers that produce hydrogen. And since it will be possible to transfer energy to all economic sectors with integrated energy storage systems – be it buildings, mobility, industry or agriculture – the whole economy would be decarbonized. . The biggest challenge is then to ensure the integration capacity and the resilience of the system.
4. Develop a global energy vision for the 21st century. A few thoughts on this subject: energy policy must ensure the future of our planet. In doing so, two aspects are important. First, an overall idea of a “circular economy”. For me, net-zero also means that the wind and solar business – which uses steel, plastic components, rare earths and other raw materials – is based on recyclable components. Second, the search for an inexhaustible source of energy. Research decides whether nuclear fusion can be such a source. In any case, the dream of creating an energy source like the sun is alive. And we would do well to continue to pursue such visionary projects – even at the risk of failure.
The clean energy shift is key to tackling climate change, but over the past five years the energy transition has stalled.
Energy consumption and production contribute two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Additionally, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018, energy intensity improved by 1.2%, the slowest rate since 2010.
Effective policies, private sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.
Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing the energy transition is the lack of preparedness of the world’s largest emitters, including the United States, China, India and Russia. The 10 countries with the highest score in terms of preparedness account for only 2.6% of annual global emissions.
To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials platform works on initiatives such as systemic efficiency, innovation and clean energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.
Additionally, the Mission Possible Platform (MPP) works to bring together public and private partners to drive industry transition to put the heavy industry and mobility sectors on an emissions path. net zero. MPP is an initiative created by the World Economic Forum and the Commission for Energy Transitions.
Is your organization interested in working with the World Economic Forum? Learn more here.
In many ways, we are currently seeing the importance of a sustainable, affordable and reliable energy transition: in debates over an energy embargo; to attempt to diversify energy supplies; becoming net zero. Today’s energy policy is all at once: domestic, foreign, climate and security policy. This will be even more evident in a post-war world.