What will the energy transition really cost the world? Siemens Energy’s Nadja Haakanson and the World Economic Forum’s Kristen Panerali discuss how the shift from fossil-based systems to renewable energy can be just and fair for everyone.
Investments in clean energy in emerging markets have to be multiplied by seven annually until 2030 to keep the world on track to reach net zero.
Kristen Panerali: And energy poverty is not only a challenge in emerging markets. Access to modern energy from heating and cooling to affordable electricity and gas is a just transition issue in developed economies too. But certainly far more investment and action are needed in emerging markets. Recently, the World Economic Forum, along with the IEA and World Bank, put out a report showing that investments in clean energy in emerging markets have to be multiplied by seven annually until 2030 to keep the world on track to reach net zero and different SDG goals. Part of the Paris Agreement stated that the developed world must support developing regions in addressing energy supply and sustainability. Where do you see us standing today?
Nadja Haakansson: Right now, plenty of support and financial commitments have been made, such as the Global Gateway Africa-Europe Investment Package of about 150 billion euros announced earlier this year at the European Union-African Union Summit. But what is lacking is the translation of these commitments into tangible projects. At the end of the day, concrete projects must be bankable. And they must generate the benefits they intend, and attract beneficial financing conditions and concessional loans.
Kristen Panerali: There is also a real opportunity to shift the political and commercial focus beyond cost to include value. Which is why the World Economic Forum often uses a framework that focuses on value creation, evaluating how solutions can drive outcomes with enormous economic and societal returns, for example, improved energy access, job creation, economic development, emissions reduction or improved air quality. This type of system value framework can help diverse stakeholders from government and business to more easily create a common narrative and goals and evaluate solutions. There are solutions, technologies and business models being deployed around the world that are accelerating the clean energy transition in ways that deliver significant value. And it is through multistakeholder dialogue, governments and businesses from around the world can learn from each other what works and what can be replicated.
Nadja Haakansson: And here we need to be mindful that the developing part of the world is not being blocked in its development, because the energy transition in the developed part of the world cannot be compared to Africa or other developing continents. The voice of the African leaders and the African companies that I interact with reason that it would be hypocritical of a developed continent such as the EU – that for the past 200 years had massive development based on coal – to now impose their own regulation and limit a continent like Africa.
Because Africa contributes minimally to global greenhouse gas emissions – less than 4 percent. And even if Africa deployed all its natural gas resources, the contribution would still be marginal.
This is where technology does play a role. We have hydrogen-capable gas turbines that, if implemented today, would reduce carbon emissions by half versus a coal-fired power plant. In the long term these gas-fired power plants can be repurposed through simple replacements of combustion burners and combustion chambers in the gas turbines, and essentially emit zero emissions with the deployment of hydrogen.
Kristen Panerali: This is also where far more focus needs to be put on local communities and workforce, putting people at the center of the transition. So going back to our conversation at the beginning.
Already there are great examples of repurposing coal plants into new clean energy facilities – and doing so in a way that engages communities and creates economic opportunity. When repurposing coal plants, you can leverage the existing grid connection, the existing land, and transform the existing infrastructure into a new opportunity for clean power and new training and jobs for the local community. The Forum has recently produced several case studies from around the world on this topic.
About Kristen Panerali
Kristen Panerali, Head of Energy, Material and Infrastructure Clean Power and Electrification at the World Economic Forum, began her career at the White House before moving into the energy sector where she helps shape a more sustainable, just and resilient economy.
December 12, 2022
Netherland-based physicist and author Rolf de Vos has been reporting on global developments in energy and the environment for more than 30 years. Among the first to cover climate change and sustainability, de Vos has also been an acting consultant for organizations such as the Dutch Ministry of Economic Affairs and Climate Policy.