The current state of global energy transition

Numerous indicators show promising pathways towards avoiding the worst effects of climate change as acceleration into the shift to non-emitting sources of energy, such as wind and solar, have transformed the energy landscape. Increasing energy efficiency, electrifying transport, industries and buildings propelled the global transition towards green energy. In recent years, marked by energy prices shocks and rising inflation, increased deployment of clean energy technologies such as renewables and electric vehicles helped limit the global growth in emissions to lower than what was initially feared. For example, sales of electric vehicles doubled in 2021, the same year in which public spending on subsidies and incentives for EVs nearly doubled as well. In the production end of the market spectrum, higher fossil fuels improved the competitiveness of solar PV and wind generation, as the world is set to add as much renewable power in the next 5 years as it did in the previous 20 years. Challenges still lie ahead, as although governments have continued to pour in investments for clean energy post-pandemic, it is focused heavily on advanced economies.

Following the COVID-19 pandemic, the strains in the global market was sharply exacerbated by the war in Ukraine, although amid this turmoil, the growth in renewables was held up well due to many European countries to accelerate their respective energy transitions. Particularly to Europe, the total amount of government spending committed to clean energy transition since the start of the pandemic reached USD 1.1 trillion, as clean technologies further cements its place as the most cost-efficient option for new power generation in many counties.

But are we really in an energy crisis, and how does it affect our daily lives? Since the recent turmoil in the market, gas-intensive manufacturing plants in Europe and China have curtailed output due to limited procurement, while in some developing countries, higher energy bills have increased poverty and set back progress towards affordable energy access. Even in the developed regions of the world, rising prices impacted vulnerable households and caused significant economic, social, and political strains. Because gas usually sets the price in which electricity is sold, power prices have soared as well, prolonging the cascade of negative impact on all levels of society, from disruptions in international trade to higher expenditure per household during the winter months due to higher electricity bills.