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Global visions: International Energy Week debates the key factors impacting the energy transition


10 min read

3 men and 1 woman sitting and talking on stage as part of conference panel Photo: Oliver Dixon Photography/Energy Institute
Left to right: Christof Rühl, Columbia University; Chris Weafer of Macro-Advisory; Spencer Dale of BP; and Mallika Ishwaran of Shell. Obscured: Ian Jones AMEI, Head of Knowledge, Insights and Research, Energy Institute

Photo: Oliver Dixon Photography/Energy Institute

With more than 30 sessions on energy scenarios, energy finance, making a just transition, technological innovation and electrification, International Energy Week 2024 covered lots of ground. One session in particular encompassed the widest possible scope, addressing the global energy situation and outlook. New Energy World Senior Editor Will Dalrymple reports.

Setting the scene, moderator Christof Rühl, Senior Research Scholar at Columbia University’s Global Energy Policy Centre, looked at energy outlooks a few decades ago. The outlooks highlighted that the global energy supply system is huge and growing, though disruptive change and discretionary spending is extremely rare. There was never an expectation that greenhouse gas emissions could be solved easily or mitigated.


Starting in the 1990s, another narrative emerged that would dominate the energy transition. It goes like this: science tells us that there’s a problem with global warming; and the energy sector is the biggest contributor, through burning of fossil fuels; but we can swap them out and replace them with renewables. If we are tenacious enough, we can solve this problem. In reaction to that narrative, politicians and business leapt ahead with a proliferation of net zero targets. Now we have thousands of companies and tens of countries with net zero targets between 2030–2050. In the last few years, there has been a bit of backpedalling. Maybe it’s not so easy to decarbonise, maybe we need to rely on offsets, but there is no market for offsets yet, so a gap is opening between perception and reality.


Taking up that latter point, the Energy Institute’s Head of Knowledge, Insights and Research Ian Jones pointed out that the Statistical Review of World Energy indicates that the world’s energy transition is not on track. Global energy demand is increasing at 2% per year over the past two decades, while 2007 was the first time that demand from non-OECD countries exceeded demand of OECD countries. This trend has persisted ever since.


As it stands, China accounts for about 45% of non-OECD demand. Electricity generation has increased 3% over that period. Last year saw record deployments of renewables at about 300 GW. But the underlying story is that emissions continue to rise; over the past decade CO2 and CO2e have grown by about 1% a year. While that is an improvement over the previous decade of 3% a year, it is still going in the wrong direction. Until we get to a point where they are displacing fossil fuels, it is not clear how renewables can make inroads on that 82% share of fossil fuels in world energy generation.


One doesn’t need the Statistical Review to see that the world is on an unsustainable path, said Spencer Dale, BP Chief Economist. Carbon emissions are continuing to rise, and we need to get to net zero as soon as possible. That doesn’t mean that low-carbon technology isn’t growing; investment was $1.7tn in 2023, up 40% from three years before, and 60% greater than investments in fossil fuels in 2023. Likewise, wind and solar installations were double that of 2019. In 2023 the world purchased nearly five times as many electric vehicles (9.5 million) on the roads than in 2019.


That low-carbon economy is growing unbelievably quickly. It’s just not growing quickly enough to meet the growth in energy demand. The world needs to get to net zero at some point; and every year that we don’t get on that sustainable pathway, the cost and disruption associated with getting to net zero gets harder and harder.


But there is encouragement from a law in economics named for US economist Herbert Stein, the deceptively simple Stein’s Law, which stipulates that if something can’t go on forever, it will stop. When considering the energy outlook, one must make sure to think deeply about what may make us stop and get on to a sustainable pathway, said Dale.


Electrification should be the focus  
Mallika Ishwaran, Shell’s Chief Economist, explained that its scenarios use a hierarchy: electrify everything that we can with low-carbon electrons; what you can’t you put in low-carbon molecules; and for what’s left over, some form of removal, whether man-made carbon capture and storage (CCS) or carbon sinks is needed.


That scenario does get to net zero in 2050. The thing to keep in mind is that in some sectors (such as aviation), the cost of low-carbon technologies is greater than fossil fuels, even in 2050. There will need to be policy efforts after 2050 to bridge that gap. For those difficult-to-abate sectors, CCS will be needed after 2050. Even if the world’s industries reach net zero by 2050, our planet could go on heating because of the CO2 there.


Returning to the here and now, Chris Weafer, CEO of consultancy Macro-Advisory in Russia, reported of the disconnection between the way forward for rich and poor nations. He said he hears a lot of resentment among officials of governments of developing economies about the imposition of renewables policies, regardless of cost and technology, by the developed world.


While it’s easy to think that the world is dominated by the biggest economies, the G7 and European Union only make up 1–1.5 billion people; that leaves another 6.5 billion on Earth. Saving the planet is physically impossible without bringing along the developing world, where efforts to move to renewable energy compete with a number of pressing short-term priorities such as developing economies, infrastructure, improving social conditions and healthcare.


For example, consider the central Asian country of Kazakhstan, which is pushing hard in economic development and has an ambitious programme for renewables. But in the next 18 months it is planning to increase oil production by 15%, 250,000 b/d, because it needs the money to fund the economy. That’s a typical story across the globe.


At Shell, Ishwaran says that it manifests the fragmentation that it sees in world economies in terms of security. This issue first emerged after the financial crisis, when countries were looking at obtaining economic security, and intensified during the pandemic and then Russia’s invasion of Ukraine. Security of supply is balanced with decarbonisation targets and how to make sure energy was affordable during the transition. The response to that in different parts of the world has been very different, depending on whether they are a resource owner or a developing country, China with its huge ambition and huge sphere of influence, or Europe, which has a lot of climate-leading activities. Energy security doesn’t have to slow down the transition, but what it does do is create a diversity of transitions across different regions and countries, based on their economic, social and technological resource base.


‘The US Inflation Reduction Act has restrictions of imports. That is just going to raise costs. What we need is more of the innovation and less of the protectionism.’ – Mallika Ishwaran, Shell’s Chief Economist


On the other hand, Europe has the advantage of having already built its grid, pointed out Spencer Dale at BP. In the developed world where power demand growth has been flat for the past decade, every investment in renewables can displace fossil fuel, so it makes sense to think that no more investment in thermal power is required. However, in a country where power demand is 6–7% per year, it is very hard to grow renewables sufficiently quickly to meet all of that demand.


For example, India has a target to achieve 450–500 GW of renewable capacity by 2030. In terms of wind and solar, it is increasing capacity by 50 GW/y. Last year it hit 30 GW of capacity extension. Supposing that it can increase installation to that high level and put all of that capacity to meet power demand, the total would account for only 75% of power demand to 2030. To meet all of the required demand, it needs to also add 20% more coal or three times as much gas. That’s what is meant about imposing western blueprints on developing economies.


Not all of the elements of the energy trilemma – security, sustainability and affordability – are mutually exclusive, argued Shell’s Ishwaran. For example, the energy security imperative is driving some countries to move away from imported fossil fuel in a lot of growing markets, including India, towards domestic resources that are solar and renewables.


However, she added that such efforts remain insufficient to reach compliance with the Paris Agreement, in Shell’s scenarios. It also factors in technological competition, she explained. ‘The competition that works is a race to the top. A competition around innovation; industrial policies that help countries to compete to produce the best low-carbon fuel, technology or solution. The other scenario you have is more protectionism; raising the drawbridge. All that does is end up increasing the cost of the transition and delays the time it takes to achieve the object. For example, the US Inflation Reduction Act has restrictions of imports. That is just going to raise costs. What we need is more of the innovation and less of the protectionism.’



The state of play of Article 6 for global trade of carbon credits

Despite other achievements, the COP28 summit in the United Arab Emirates did not produce any global agreement on carbon trading. Such schemes can drive real change in reducing emissions, by creating a value for carbon as a tradeable commodity. On another International Energy Week panel, Rachel Armstrong, Director Industrial Decarbonisation and Emissions Trading, Department for Energy Security and Net Zero, credited the European Union Emissions Trading Scheme (EU ETS) with helping to shut down coal-fired power in the UK.


The potential of a global carbon market, in the form of the progress at recent COP summits toward consensus in Article 6 of the Paris Agreement, was surveyed by Maria Eugenia Filmanovic, co-founder of procurement platform Abatable.


There are two parts to Article 6, she explained. Article 6.4 is essentially the successor of the clean development mechanism started in Kyoto. It allows for an international trading market for different countries to allow the transfer of credits from one country to another. Article 6.2 encourages bilateral cooperative approaches where one country may finance activities in another country and receive accounting for that.


close up of woman sat in chair on stage

Maria Eugenia Filmanovic, co-founder of procurement platform Abatable, speaks at International Energy Week 2024 
Photo credit: Oliver Dixon Photography/Energy Institute


At COP26 in Glasgow, the text of Article 6 was approved. From there, the only piece missing is the operationalisation consensus around Article 6.4 and how it will work in practice. Some of the work streams have started already, and at COP28 in Dubai a lot of people were hoping consensus would be reached on Article 6.4. Unfortunately, European parties vetoed further progress and that has delayed its implementation.


Despite that setback, Filmanovic added, some countries are participating in bilateral approaches under Article 6.2, and governments are trying to operationalise it at their legislative national level.


Switzerland is financing activity in different countries and Singapore is ramping up activities. The challenge that Abatable sees is lack of capacity building from the governments’ side, specifically in emerging markets and frontier markets. They don’t know how to go about regulating this what could potentially be the next oil or forest asset, which can be quite a big resource for the country to leverage. There is a lack of understanding about what good policy means, both to preserve the revenue potential that comes from taxing exports of carbon credits that come out of their country, but also how to preserve the interest of communities that might be the primary beneficiaries of these assets.



  • Further reading: ‘Leaders of the transition’. Three high-profile speakers at International Energy Week 2024 highlight the severity of the environmental crisis we face.
  • Find out more about Energy Institute President Juliet Davenport’s view on the compelling need for electrification.