The recent energy crisis and resulting economic shocks have underscored the critical importance of a more inclusive and comprehensive approach to the global energy transition, according to a groundbreaking report released recently. The report, titled Shaping a Living Roadmap for Energy Transition, jointly prepared by the International Energy Forum (IEF) in partnership with S&P Global Commodity Insights, emphasizes the necessity of deeper collaboration between developed and developing nations to ensure energy security, affordability, and sustainability as the world navigates complex and multidimensional energy transition.
The IEF report, a culmination of a series of global roundtable discussions held over the past ten months in crucial locations including Cape Town, Bali, Riyadh, Washington DC, Panama City, and Davos, along with supplementary discussions in conjunction with CERAWeek by S&P Global in Houston, presents insights from over 350 participants representing industry, government, and civil society. These discussions have illuminated crucial lessons drawn from the recent energy crisis, which has significantly impacted energy policies and priorities across the globe.
Joseph McMonigle, IEF Secretary General, and Daniel Yergin, Vice Chairman of S&P Global, hosted the dialogues, revealing a growing consensus that a linear approach to energy transition is insufficient. The report advocates for a “multidimensional” strategy that considers varying circumstances in different regions, acknowledges diverse starting points and policy approaches, and prioritizes equity. The report echoes concerns voiced by participants in the roundtables, cautioning against overemphasis on a singular path to achieving net zero emissions by 2050. Such a narrow focus could jeopardize other essential sustainable development objectives, impede financing for critical energy projects, and undermine public support for climate policies.
“A series of shocks, crises, and tensions in the global energy system have rendered the energy transition more complex as climate goals coexist with energy security, energy access and affordability, and other priorities,” remarked Daniel Yergin, Vice Chairman of S&P Global and renowned author of The New Map. “Transitioning a $100 trillion global economy in a quarter century is a big challenge. This project seeks to respond to the challenge by capturing a wide spectrum of perspectives on the energy transition and what will be required to achieve it.”
The recent crisis in global energy markets and high energy prices have contributed to inflation. At the same time, global greenhouse gas (GHG) emissions have reached new highs as economics and shortages forced many countries to pivot back to coal-fired power generation. Growth in renewable power has accelerated but has so far failed to keep pace with growing power demand. “Developments over the last two years demonstrate that the energy transition is more complicated than has been previously thought. While the transition proceeds, expectations of a linear global transition have been shaken as climate goals compete with priorities around energy security, energy access, and affordability,” the report highlighted.
The report spotlighted substantial policy actions in developed markets, foreseeing significant funding and incentives to reduce emissions in nations such as the United States, Europe, Japan, and China, and promote research into innovative decarbonization technologies and electric vehicle proliferation. Nonetheless, the discussions underscored uneven progress worldwide. “The path to net zero will have to travel via the Global South and therefore it is in everyone’s interest to collaborate and cooperate for the shared goals to achieve net zero,” the report asserted.
Developing countries, arguing limited historical responsibility for atmospheric CO2 accumulation, are projected to drive energy demand growth over the next three decades. These nations contend that considering their access to energy resources, financing needs, and geographical factors, access to hydrocarbons remains vital for raising living standards before altering emission trajectories.
Amid the discussions, investment requirements emerged as a focal point. Some participants cautioned against funding restrictions on energy production areas, as such policies could elevate energy costs, impede economic expansion, and jeopardize public backing for the transition, especially when competitive alternative energy sources are not yet universally accessible.
“Although there is broad consensus on the need to reduce emissions, the dialogues that informed this report revealed that many in the Global South feel their voices have not been heard in the global climate discussions,” stated Atul Arya, Chief Energy Strategist at S&P Global Commodity Insights. “No primary energy source has ever been largely or completely phased out, as proposed by some for the current transition initiatives and regulation. It was clear from the discussions that for many in developing countries, access to affordable and reliable energy to improve their livelihoods will also be priority and will be part of the overall equation.”
