From strategy to steps forward
At a glance
If COP29 is to enable funding and decisive action, the conversation needs to shift to one that starts with asking frank questions, such as ‘how do we actually do this, and what is the full cost of our plans to make it happen?’ While there is no one-sized-fits-all-approach to the energy transition, positively, governments are moving from strategy and target-setting to building credible energy transition roadmaps through real-world projects that are making implementation and execution possible.
Leveraging detailed techno-economic modelling, dynamic simulation and data analysis is carving out improved clarity on the way forward from a finance and technology perspective. The underlying challenge remains how to establish economic growth and a stable energy base while balancing an ongoing, long-term switch to renewables.
Tackling the trilemma
Sustainability, security and affordability, commonly known as the global energy transition trilemma, are the three conflicting objectives that demand tough trade-offs. There are regional nuances specific on this, such as land-use availability, new energy improvements that impact health and gender equity, reliable energy, water and food security simultaneously, and price inequalities, with fossil fuels currently cheaper and more secure.
Balancing the energy transition acceleration with the needs of the trilemma requires multiple parties coming to the table with the same vision and goals, including central and regional governments, development funders, private sector banks and investors, and industry. The breadth and depth of stakeholder involvement are so important to work through and overcome the competing demands.
Efforts are being made to use alternative low carbon fuels, with demand set to grow by almost 30 percent between 2021 and 2026. This includes low carbon hydrogen produced via electrolysis and hydrogen derivates such as ammonia, synthetic methane and sustainable aviation fuel. Hydrogen, an abundant global resource, holds the potential to decarbonise hard to abate industries serving as a viable replacement for natural gas. Often referred to as the "missing link" in global decarbonisation, hydrogen is particularly crucial for energy-intensive sectors where direct electrification is challenging and not a viable option, such as steel production, high-temperature industrial heat, shipping and aviation.
Reimagining the status quo
Many forward-thinking organisations are realising that they must find entirely new ways of doing business in a low carbon world. Companies are feeling pressure from stakeholder groups, with consumers in the food and beverage and transport industry influencing the energy transition. Arriving at this point requires moving beyond quick-win initiatives to deeper thinking to redesign entire production and operational processes, new partnerships, physical space and supply chains. For example, a recent pre-feasibility study with a historically fossil-fuel dependent country aimed to assess the potential of producing green hydrogen from up to 10 GW of offshore wind. The groundbreaking project focused on green hydrogen, deriving from renewable energy sources like wind and solar, and considered multiple options for the supply and distribution of the hydrogen to end –user markets .
A deep analysis of the dynamics, approaches and risks that considers a multitude connection points of options is critical. Overlooking one aspect often means hindering the entire project. Becoming low carbon future-state ready means having your plans validated by scientific, economic and financial principles, viability and feasibility.
A clear regulatory landscape with structured funding frameworks is needed to enable industry and developers to build on and test new concepts and ideas so they become actual full-scale projects that can contribute to the future of energy for generations to come.