Over the next two decades to 2035, investments to the value of US$48-53 trillion will be required in energy supply and efficiency to meet future energy supply needs, the International Energy Agency (IEA) estimated in its 2014 World Energy Investment Outlook. But for this investment to be delivered, the development of a clear climate framework and a global emissions target is essential, according to the World Energy Council (WEC).
Energy sector must contribute to climate debate
In the latest edition of its World Energy Trilemma report, the WEC says the energy sector has a key part to play in driving the climate debate and delivering the investment and technologies that will help achieve better access to cleaner energy. Proactive engagement between climate negotiators and industry implementers will be essential to ensuring that measures are deliverable and targeted.
“The energy industry believes the time is ripe for stronger action on climate change, and it is more than ready to play its full part, building on the examples of leadership which some businesses are already showing,” says Joan MacNaughton, World Energy Trilemma executive chair. “Our findings show that there is a real thirst for vigorous implementation of strong commitments – the focus now needs to move from negotiation to action.”
The ‘energy trilemma’ is the WEC’s framework to achieve sustainable energy systems, based on the three dimensions of energy security, energy equity and environmental sustainability. The 2015 report draws on the insights of more than 2,500 industry leaders and policymakers from across the globe.
Urgency for climate change framework
According to the report, the urgency with which a framework is required is evidenced by predictions around major changes in global energy demand which is set to change dramatically in the period to 2050. As the economies of emerging countries such as Brazil, India, China and Southeast Asia grow, they will use more energy and their role in the negotiations as well as their commitments will be critical.
Asia is set to produce almost 50% of global economic growth by 2050, with its share of global total primary energy consumption rising between 45 and 48%. The Middle East and North Africa will continue to be heavy users of energy, with their economies set to triple by 2050 and stimulating a doubling in energy demand. Despite European GDP doubling over that period, with improved energy efficiency across the continent, energy demand will remain largely unchanged.
Regional differences and priorities
The report highlights regional differences and priorities, stating that solutions to accommodate the energy transition need to be devised according to regional and country level differences. Thus, international agreements must be sufficiently flexible to allow countries to develop their own paths, while contributing to the overall objective.
As energy usage patterns evolve and countries develop, any agreement should provide scope for dynamic target adjustment at the country level. This will also ensure the longevity of such a consensus.
Priority action areas
For energy and climate goals to succeed, the right enablers must be in place to deliver the associated policies. The report identifies five policy enablers:
• Removal of barriers to trade and enabling technology transfer, including tariffs on environmental goods and services, and protecting intellectual property rights
• Setting a carbon price to level the playing field and redirect investment towards low carbon solutions.
• Providing the right policy signals to scale up investment, accompanied by a portfolio of bankable projects to attract more private capital.
• Placing greater emphasis on demand management including increasing energy efficiency across all sectors covering residential, commercial, industrial and transport.
• Prioritizing and building platforms for innovation and RD&D, principally in the investment case for new technologies, as well as encouraging collaboration between the public and private sectors.