Over 7,000 international energy stakeholders are descending on Rotterdam this week for the World Energy Congress, marking one hundred years since the first World Energy event.
However, in contrast to these centenary celebrations, the 26th edition opened with words of warning from IPCC Chair Jim Skea, who said that the world has a “long, long way to go” on its decarbonisation journey.
Indeed, fossil fuel expansion continues to ramp up, and despite record renewable energy growth last year, it’s still far off the mark and unevenly distributed.
Alongside this, we’ve witnessed government backsliding on climate policies and far less consensus now than was seemingly displayed at COP28.
This week, discussions take place in the shadow of a more polarised landscape and rising geopolitical tension, with the challenges and disparities in climate finance emerging as a key theme.
Monday’s panels were also dominated by conversations on how timelines and the implementation of the energy transition will vary across different geographies.
Clear direction, multiple pathways
WEC chief Angela Wilkinson began with words on the multidimensional energy transition in a session on Monday morning, outlining that, considering there is no world energy system, there will not be a single global energy transition.
Wilkinson noted that there are a variety of regional visions, and while the direction is clear, getting there will require multiple pathways. “The hard truth is: what got us to here won’t get us to there,” said Wilkinson, calling for a “revolution in agency.”
Indeed, speaking about how she sees the situation evolving across Africa, Monique Motty, Founder of Eco Solutions Consulting, said there needs to be an understanding that the transition will be “incremental.”
“We will not go from not having electricity to hydrogen energy. We will not go from using coal to electric vehicles; that expectation from the rest of the world is just not realistic for us.”
Elsewhere, in a session on the new era of geopolitics, Douglas Silliman, President – Arab Gulf States Institute, outlined how this variability is playing out in the Middle East context, noting that it’s not a level playing field.
Speaking to ESG Mena on the sidelines of the event, Silliman said that there is a reasonably positive energy transition outlook among the countries with sufficient capital to invest in their own transition.
“I know that the Saudis, the Emiratis, the Qataris, and, to a lesser extent, the Kuwaitis and the Bahrainis, are actively working to prepare their economies a couple of generations ahead.”
Silliman said that this is leading to a lot of capital investment in research, development and production techniques.
However, for the broader region, especially in countries troubled by internal conflicts, such as Iraq, Yemen, and Libya, the outlook is less promising.
“Unless they are able to get a grip on their own internal politics and find some way to more fairly developed or distributed political power and income, none of which seem to be moving in that direction at the moment,” said Silliman.
Adding: “Those who produce hydrocarbons now will be competing 20 to 40 years from now on cost of production, degree of carbon intensity, especially as consumer markets will begin to tax or increase costs for carbon, but also political stability.”
Meanwhile, for those who have hydrocarbon resources but have not been able to manage them “as effectively,” Silliman explained that creating the wealth required for the energy transition will be more difficult.
Making the transition affordable
Indeed, to triple renewable energy and reach climate goals, the energy transition needs to be affordable, and in developing countries, there’s an annual $1.2 trillion investment gap to fill. The ways in which to fill this gap were in the spotlight on Monday, with effective collaboration cited as a key factor in success.
Indeed, the role of the Multilateral Development Banks (MDBs) was highlighted, as was public private partnerships, mobilising private sector finance, and increasing appetite for risk.
“I think it’s very important for institutions such as multilateral development banks to show increased risk appetite because they are institutions that can bridge between the public sector and the private sector,” Sabrine Emran, Economist (Energy and Commodities) at the Policy Center for the New South, told ESG Mena.
“When I think about increasing risk appetite, it’s looking beyond the ratings, it is looking at the potential of African countries or countries in the MENA region. It’s looking at what sources of energy they have internally, and how they can be deployed in the future; it’s looking at the five-year/ ten-year investment spectrum of it and looking at it with a long-term objective, rather than just looking at it from a short-term point of view,” added Emran.
Meanwhile, speaking about Breakthrough Energy’s approach to overcoming the financing challenge, Ann Mettler, Vice President, Europe – Breakthrough Energy, said: “We believe that what is needed first and foremost is lots of patient, risk-tolerant capital.”
Mettler added that the Bill Gates-founded company also believes philanthropic capital has a role to play in de-risking key emerging technologies and highlighted the need to make the business case for clean technologies. Here, she praised the Inflation Reduction Act (IRA) for incentivising the development and deployment of emerging clean technologies. Mettler also shared that public guarantees can “unleash investment and give confidence”.
However, the clock is ticking, and Mettler noted that while it took wind and solar forty years to become cost-competitive, time is running out.
“How do we share these technologies in record time? How do we really bring them to the world? I’m not sure that just letting markets play it out, as we did with wind and solar, will be the way to go,” said Mettler, adding that they need to be scaled, commercialised and deployed.
Centring community in climate conversations and action
At the same time, as the world strives to move the dial on the energy transition, ensuring that inclusivity is prioritised and community and people are centred in these conversations is vital.
Indeed, the mining of the critical resources central to the energy transition poses a huge risk to the communities that live in those areas.
“Canada’s very high in critical minerals. One province, Manitoba, has 29 of the 31 critical minerals in the world,” explained Melina Laboucan-Massim, Founder of Sacred Earth Solar & Co-founder of Indigenous Climate Action.
“We need to really talk about these things as we move forward because if we replicate the same systems of harm that we see in a fossil fuel era on communities, and then we bring that into a new energy era, I don’t think we’re any better off.”
However, Laboucan-Massim noted that new models of participation and ownership are beginning to emerge.
“Outside of utilities, indigenous communities across the country are the largest asset holders of renewable energy. So you’re seeing a large uptake. We’re seeing indigenous-owned projects, 3000 indigenous-led, small to medium scale and then over 300 revenue generating, very large scale, solar and wind in indigenous communities.”
Looking ahead, in a message to future energy leaders on the first day, the IPCC’s Skea said: “At the IPCC, we constantly debate how to message the science, and our particular worry is that we make the risk seem so overwhelming that it induces paralysis.”
Adding: “Realism is incredibly important, but beware of a slide from realism to fatalism. We must maintain all optimism and agency.”
By Madaline Dunn, Lead Journalist, ESG Mena