Summary of "Fostering Effective Energy Transition - 2024" Report by World Economic Forum

INSIGHT REPORT - 2024

ENERGY TRANSITION

Rahul Prasad

9/22/20244 min read

Executive Summary

In a dynamic global landscape, most countries are progressing in the energy transition, with the centre of gravity moving towards developing nations.

Few key points worth mentioning are:

Growing uncertainties are impeding energy transition momentum despite record Energy Transition Index scores.
Energy security continues to be tested, energy equity has gone into reverse and sustainability shows a gradual improvement over the past three years.
Advanced economies, along with China and Brazil continue to be top performers, together with several developing nations that are forging pathways for progress.
International support that is tailored to country-specific requirements, must be reinforced to direct sufficient financing to emerging and developing economies.

Introduction

Growing uncertainties complicate the energy transition trajectory, underscoring the need for adaptive and decisive action.

In a landscape marked by complexities and uncertainties, the path forward remains clear: now is the time for all stakeholders across the value chain, spanning supply, demand and distribution, and including both public and private sectors, to take decisive action. This means ramping up efforts to transform their energy systems by implementing innovative solutions, mobilizing investment and driving bold policy reforms. By harnessing the momentum of the energy transition, stakeholders can chart the course towards an equitable, secure and sustainable energy future.

Energy Transition Index framework

The assessment of a country’s energy system performance revolves around three imperatives:

Equity: Ensuring fair distribution, accessibility and affordability of energy for all, along with shared efforts and benefits from sustainability to foster equitable economic growth and an improved standard of living.
Security: Ensuring supply security through diversification across three levers – in the energy mix, energy trade partners and sources of electricity generation. Resilience, both in gas supplies and the power system, is also instrumental for energy security, in addition to the reliability of the grid, especially as the number and range of power generation and management assets increase as a result of decentralization.
Sustainability: Incorporating demand- and supply-side metrics to reduce carbon dioxide (CO2) and methane intensity in energy supply, enhancing energy efficiency, promoting responsible consumption through lower energy and emissions footprint per capita, and increasing the share of clean energy in final demand.

Key Highlights of Global Progress in the Energy Transition

Most countries are making progress in the energy transition, with Northern European nations leading, and China and Brazil showing strong improvement.
Meanwhile, improvements in ETI scores have slowed in Germany, Japan and the US over the past year.
Although ETI scores reached their highest in 2024, transition momentum has slowed in the last three years.
Several countries have made notable progress in their energy transition journeys, each with tailored pathways to address their unique challenges and opportunities.
Regional breakdown of ETI momentum reveals a wide divergence in performance, with Sub-Saharan Africa showing the strongest improvement, while the Commonwealth of Independent States experiences the most significant decline.

Trends in the Energy Transition

Despite energy security challenges, overall improvement is driven by recovery in equity and continued progress in sustainability, alongside strong transition readiness.
Geopolitical conflicts and disruptions in key energy-producing regions, like the Middle East and Ukraine, rattled global energy supply chains, leading to shortages and subsequent price hikes.
Equity issues remain largely unsolved and are often less prioritized and understood as compared to energy sustainability and security.
Advancing an equitable energy transition is a key topic in global discourse, prompting policymakers to implement targeted programs to address these issues.
The transition to an equitable energy system involves the collective efforts of multiple stakeholders and requires strengthening and expanding current measurement mechanisms.
Several countries are faced with a dual challenge in ensuring energy security: reducing net energy imports while diversifying energy import counterparts.
Countries need to prioritize six key factors to enhance energy security: supply security, demand management, market and regulatory measures, building global and regional trust, ensuring system stability, and strengthening system security.
Emissions grew slower than global GDP in 2023, signalling decoupling of emissions from economic growth.
In 2023, renewable energy witnessed unprecedented growth, marking a record year with nearly 510 gigawatts (GW) of added capacity globally.
Tangible progress is evident in enhancing transition readiness, particularly in regulation and political commitment, education and human capital, and infrastructure.
Financing the transition, particularly in emerging and developing economies, is a significant focus, with a growing emphasis on exploring innovative methods.

Looking ahead: top 10 actions

Actions should be taken to regain momentum across security, equity and sustainability while advancing transition readiness. Despite the notable progress in the energy transition, concerted efforts are needed to ensure momentum picks up. Actions should be taken to regain momentum across security, equity and sustainability while advancing transition readiness. The top 10 actions that emerge from the ETI 2024 are:

Implement regulations to advance decarbonization.
Deliver energy equity for vulnerable households.
Increase investments in clean energy infrastructure.
Invest in energy efficiency solutions.
Upgrade grid capabilities for more efficient distribution of energy.
Enhance collaboration between sectors and nations.
Lower emission intensity of fossil fuels.
Drive R&D and adoption of new technologies.
Accelerate the decarbonization of hard-to abate sectors.
Prioritize the development of a skilled workforce for the energy sector.

The message from this year’s ETI is clear: there is no time to waste. Decision-makers across the globe must act decisively and collaboratively to accelerate the transition towards an equitable, secure and sustainable energy future.