Global energy transition momentum faces headwinds

After a decade of progress, the global energy transition reached a plateau amid the ongoing global energy crisis and geopolitical uncertainties. The World Economic Forum's latest report on Fostering Effective Energy Transition 2023 highlights the need for a renewed focus on energy transition to achieve the Sustainable Development Goals. Harsh-Vijay Singh, Manager of Energy & Industry Transition Intelligence at the World Economic Forum, emphasized the difficulty in balancing energy security with the transition process. The Russia-Ukraine war has added complexities to this balance, causing disruptions and challenges for countries worldwide. Singh pointed out that the energy transition is a long-term endeavor, requiring sustained momentum despite facing near-term obstacles such as the pandemic, supply chain issues, and geopolitical tensions. These short-term challenges have contributed to the plateauing effects in the global energy transition, necessitating resilience to withstand shocks and progress towards long-term goals. The Russia-Ukraine conflict led to unprecedented price volatilities, affecting not only Europe but also global energy markets across different fuel types and regions. While markets have somewhat stabilized in the US and EU, developing economies continue to face lasting inflationary impacts. Geopolitical shifts following the suspension of gas supplies from Russia to Europe have resulted in increased LNG trade and altered oil flows worldwide. Despite pockets of progress in securing sustainable energy sources, concerns loom over the affordability and accessibility of energy for all to sustain economic growth. While several countries have made strides in energy transition, Scandinavian and Western European nations lead the pack due to robust policy frameworks, R&D investments, energy efficiency measures, diversified energy mixes, and enhanced public-private collaborations. However, challenges persist in balancing energy transition with socioeconomic and developmental priorities. While most countries have made advancements in specific areas, achieving a well-rounded and balanced energy transition remains a hurdle. Sub-Saharan Africa, although making promising progress in regulatory strengthening and electricity access, lags behind other regions. The region faces challenges in attracting affordable financing amidst an inflationary environment, necessitating initiatives to lower capital costs and incentivize private investments. Innovative mechanisms like the Just Energy Transition Partnerships are crucial for countries dependent on coal, aiding in the shift away from legacy energy sources while supporting affected local economies and workers. Infrastructure investments play a vital role in accelerating the energy transition in Africa, particularly in modernizing grids and expanding access to clean energy sources. Despite the hurdles, the energy transition journey continues, requiring global collaboration, innovative solutions, and sustained momentum to navigate challenges and achieve long-term sustainability goals.