Just energy transition

Honestly, technology is not the issue. The issue is how we will be able to organize and prepare for a plural of interconnecting energy transitions without leaving millions of people behind. Because the transition to low-carbon technologies is bringing significant opportunities for some and substantial concerns for others. Can we ensure that the costs and benefits are equitably shared? Siemens Energy’s Managing Director for Africa Nadja Haakansson and the World Economic Forum’s Head of Energy, Material and Infastructure Kristen Panerali discuss changing values and competing needs in our energy systems and how a trillion-dollar upheaval in global dynamics and labor could ever be just and fair.

Kristen Panerali: Nadja, today countries, businesses and households are facing a triple crisis of climate, energy security and affordability, especially with geopolitics and war putting added pressure on supply, demand and delivery. Yet, there are so many solutions out there that can address climate and energy security – and be deployed in a way that creates a fair, just and inclusive system. What that means is that people need to be at the center.

Nadja Haakansson: I agree, Kristen. The essence and core of a just transition is ensuring no one is left behind. And it means that when we collaboratively take collective action around outlining and implementing new energy and climate strategies, we really consider this social impact.

For example, you have communities that depend heavily on the coal business, so it is important to quickly provide the certainty that repurposing and reskilling is part of the plan – and that the green economy will provide millions new jobs along with the repurposing of existing jobs.

Kristen Panerali: And do it in a way to lift people out of energy poverty.

Nadja Haakansson: Absolutely. Considering that almost 800 million people globally still do not have access to energy, ending energy poverty in the developing part of the world is a key step to ensuring their socio-economic development. But developing countries depend on support from industrialized, developed parts of the world through various elements: financing, governments, policy frameworks, and different ways of stimulating the massive investment required.

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.

Nadja Haakansson: The UN climate summits are also an important platform. COP27 was hosted in Africa. And it is important to have this voice of how the developing world and the developed world can ensure close collaboration to achieve shared prosperity, to achieve the end of energy poverty, to achieve net-zero and climate targets, and essentially stimulate socio-economic growth.

We are still in the long game, but there are many good examples of developing countries already moving forward with their commitments. Nigeria is making a roadmap to achieve net zero by 2060. And South Africa has launched the most successful public-private partnership in Africa in the last 20 years, attracting over $200 billion rands in private-sector investment. So, there are huge opportunities out there for companies and societies to transition into more competitive, future-oriented solutions.

Kristen Panerali: The economics of clean power make sense. Plus, as clean power and electrification are expanded, it can be done so in a way to create a more just and inclusive system.