Wesley Johnson, January 2024
Can we power a planet hungry for electricity without succumbing to the dark allure of fossil fuels? Can we build a future where the wind whispers electricity through our homes and sunshine dances on our streets? The answers lie not in denial, but in innovation, collaboration, and a healthy dose of green grit.
Leading up to the Global Energy Transition Congress taking place in Milan in July of this year, I have been sitting down with Europe’s leading energy professionals to dive into what is keeping them up at night concerning the Energy Transition. From the many challenges presented, I have highlighted my top three below with potential solutions.
Who is going to fund the energy transition?
Although renewable energy projects have low operating costs and can produce clean energy for many years, the high upfront cost can often be a barrier to investment, especially in developing countries.
The energy transition is happening at a time when many countries are facing economic challenges. Although inflation rates are decreasing in some parts of the world, financial recovery from COVID-19 and the war in Ukraine have caused energy prices to soar and have put a strain on government budgets. This could make it difficult for governments to invest in clean energy, even though they are committed to climate action.
As we know there are technical challenges that need to be addressed before clean energy can be deployed at scale. We need to develop better ways to store renewable energy and integrate it into the grid. These challenges are being addressed by researchers and engineers, but they will require additional investments.
Regulatory hurdles
Regulatory frameworks need to support the development and deployment of low-carbon technologies in industrial sectors, such as carbon capture and storage (CCS), hydrogen-based fuels, and energy-efficient industrial processes.
Complex and outdated regulations can hinder the adoption of low-carbon technologies. Permitting processes for renewable energy projects may be lengthy and bureaucratic, and regulations may not adequately address the challenges of integrating renewable energy sources into the grid.
NIMBYism (Not in my backyard)
NIMBYism can hinder the energy transition in several ways, it can lead to delays or cancellations of renewable energy projects. Despite local communities seeing the broader benefits of the project, there is a growing concern about noise, visual impact, and property values.
Furthermore, NIMBYism can increase the cost of renewable energy projects, as developers may need to invest more in mitigation measures to address local concerns or face permitting processes. It can also create a negative public perception of renewable energy, making it more challenging to gain widespread support for the energy transition.
Possible solutions
- Collaboration is key, especially across the hard-to-abate and energy sectors. Sharing expertise, knowledge and resources can expedite the development and implementation of innovative low-carbon technologies, such as CCS, advanced energy storage solutions, and low-carbon fuels including the likes of Hydrogen and Ammonia. Furthermore, there are additional benefits including the likes of cost reductions and maximizing efficiency when sharing existing or developing new infrastructure assets.
- Governments can establish supportive policies and regulatory frameworks, such as carbon pricing, tax incentives, and renewable energy mandates, which can encourage investments in clean energy technologies.
- Multilateral development banks can not only provide financial support but also technical support for clean energy projects in developing countries.
- The private sector can invest in more clean energy projects including investment funds, venture capital firms and pension funds.
- New financial products and services can be developed to support the energy transition, including the likes of green bonds, sustainability-linked loans, and carbon capture and storage investment funds.
- Engaging the public in discussions about the energy transition and providing clear information about the benefits and potential impacts of new technologies can help to build trust and acceptance regarding NIMBYism.
It is evident that the role of innovative technologies and funding from both the public and private sectors will be key for us to ensure an efficient and cost-effective transition. However, what surfaced as a key component to our energy transition success was cross-sector collaboration and the fact that we are not seeing enough of it.
I appreciate that there are cons including the likes of lack of trust and limited capacity, especially in developing countries and smaller businesses, but the pros are vast and strongly outweigh the cons. They include a long list such as accelerated innovation, reduced costs when sharing resources and expertise, and increased equity.
By breaking down silos, fostering trust and investing in capacity-building, we can leverage the collective power of diverse stakeholders to build a clean, just, and sustainable energy future.
