Sustainable energy requires at least $ 2.2 trillion in annual investment
According to the report “Grand Transition. Energy in the new technological cycle” presented by the Global Energy Association during the 24th World Energy Congress, already at this stage, sustainable energy development requires about $ 2.2 trillion in annual investments. It is this amount of funding that is critical to ensuring universal access to affordable, reliable, sustainable and modern energy sources. However, currently manufacturers keep their investment decisions in traditional fossil fuel assets and are often not ready for the structural changes required to move to a new technological cycle designed to provide a better quality of life for all people on our planet.
The report indicates that the energy transition requires a review of the global energy system management strategy, which implies an increase in investments in modernization of current capacities, a significant growth in energy efficiency of resources, as well as stimulation of a low-carbon economy and the development of new technologies. The implementation of such changes is impossible without long-term planning and overcoming a number of obstacles. The main problem that the world community faces in the transition period is the low speed of innovation, the lack of a holistic view of integration and a plan of change. In addition, the capital-intensive nature of the industry, maintaining a balance between energy security and accessibility, and the vulnerability of digital systems to cyberthreats are those difficulties that require immediate solutions.
When assessing the costs of ensuring universal access to sustainable energy sources, the Global Energy Association`s experts cite data from a forecast by the International Energy Agency (IEA), according to which a scenario of such development will require from $ 60 to $ 80 trillion from 2018 to 2040. In 2017, investments amounted to only $ 1.8 trillion, which already indicates a lack of funds in the future. In addition, as indicated in the report, the situation is complicated by the inertia of governments in creating incentives for clean energy, as well as their reluctance to introduce taxes on CO2 emissions and tax incentives for the efficient use of energy.
At the same time, there is no doubt that the demand for electricity will continue to grow in the future. This means that in its production using fossil fuels, the development of carbon capture and storage technologies is necessary. Now, such solutions increase the cost of electricity by about 60%. In addition, new energy systems will be available no earlier than mid-2020. The Global Energy Association`s experts see the promotion of environmentally friendly technologies for converting fossil fuels based on combined-cycle plants and methods for the deep processing of coal as an important step towards decarbonization of energy. Of course, fossil fuels will remain a priority type of energy for resource-rich countries, they estimate, but the general structure of world energy will undergo radical changes due to the development of renewable energy, which, according to various evaluations, will begin to dominate in the energy balance no earlier than 2040-2050.
It is noteworthy that the efficiency and sustainability of the production and distribution of electricity will depend on the desire of states to find a delicate balance between economic development and solving environmental problems. The introduction of new technologies (including big data analytics, robotics, automation), as well as the creation of common energy systems by strengthening integration processes, are those necessary steps that will positively affect the development of interstate energy associations and in the future will solve the problems of energy hunger in remote regions of the world, the report notes.
It also assesses the impact of renewable energy technologies on improving the overall well-being of mankind. In particular, the data is provided by the International Renewable Energy Agency (IRENA), according to which an increase in investments in renewable energy by 30% by 2050 will create an additional 11 million jobs, increase global GDP by 1%, and global welfare of citizens by 15 %.
A special chapter of the report is devoted to the theme of the impact of the “fourth industrial revolution” on the energy sector, the benefits and risks of technological innovations that Industry 4.0 entails. In addition to considering changes in infrastructure and production processes, experts give an analysis of the change in the social paradigm, as well as the readiness of society for large-scale changes.
It should be noted that the association`s report “Grand Transition. Energy in the new technological cycle” was formed following the results of the VIII Global Energy Prize Summit, held in 2019 in Germany. It was presented as part of the Global Energy Association`s business program at the 24th World Energy Congress. A number of its authors made their keynote presentations on various topics of the report: Rodney John Allam, the 2012 Global Energy Prize laureate, member of the Global Energy Prize International Award Committee, Member of the Intergovernmental Panel on Climate Change (IPCC), awarded with the Nobel Peace in 2007; Sergey Alekseenko, the 2018 Global Energy Prize laureate, Head of the heat and mass transfer laboratory of the Institute for Thermophysics of the RAS Siberian Branch; Marta Bonifert, the Global Energy Prize International Award Committee member; Hungarian Business Leaders Forum (HBLF), Board Member, Sustainability Work Stream Leader; Steven Griffiths, the Global Energy Prize International Award Committee member; Senior Vice President for Research and Development, Khalifa University of Science and Technology (KUST), Rae Kwon Chung, the Chairman of the Global Energy Prize International Award Committee, Adviser to the Chair, UN Secretary-General’s High-level Expert and Leaders Panel (HELP) on water and disasters, and Member of the Intergovernmental Panel on Climate Change (IPCC), awarded with the Nobel Peace Prize in 2007.
The report “Grand Transition. Energy in the new technological cycle” is available at the Global Energy Association’s website, on the press-center page.