New Study Details A Complex, Contentious, Non-Linear Energy Transition

The energy transition is far more complex than has previously been thought and is proceeding on a non-linear progression involving multiple transitions in different parts of the world. That’s the principal finding in a new study titled, “Shaping a Living Roadmap for Energy Transition.”

The study, a collaboration between S&P Global and the International Energy Forum, included the conduct of a series of discussion forums held in places like Cape Town, Bali, Riyadh, Washington DC, Panama City, and Davos from October 2022 through February 2023. The goal was to capture views and information from those with firsthand knowledge regarding the direction of the varied energy transitions in widely disparate regions of the world. Participants included representatives from industry, financial institutions, governments, NGOs, academia, research institutions and think tanks.

“Expectations of a linear global transition have been shaken as climate goals coexist with priorities around energy security, energy access, and affordability,” said Joseph McMonigle, Secretary General of the IEF, in a press release. “Instead, a ‘multidimensional’ approach is required that is inclusive of different situations in different parts of the world, reflecting varied starting points, a diversity of policy approaches; and is equitable.”

Lack of Unity on Transition Timelines

Daniel Yergin, the Vice Chairman of S&P Global and author of the best-seller, The New Map, served as a co-moderator of the study along with Dr. Atul Arya, Chief Energy Strategist for S&P Global. In an interview last week, Yergin said he was struck by the widely varying perspectives expressed by participants, who described transitions bearing little relation to the prevailing narrative emanating from the western world. “That is a fundamental theme,” he says, “It isn’t just Brussels that determines what an energy transition will look like.”

With the goal of getting to net-zero emissions by the year 2050 being the target as defined in places like Brussels, Washington, DC, London, and Ottowa, Yergin says he is struck by the low percentage of current emissions targeting that timeline in the national commitments set by various countries. “The thing about the 2050 goal that I puzzle over is China’s goal is 2060. Indonesia’s goal is 2060,” he says. “Nigeria is the most populous country in Africa – its goal is 2060. India’s goal is 2070. You’re talking about over half the world’s emissions that are not aimed at a 2050 goal.”

With its goal of achieving carbon reductions by 2060, China remains a key driver of rising energy demand, including for coal, oil, and natural gas. “China is responsible for maybe half the growth in global demand in 2023,” Yergin points out, adding, “Half the wind and solar in the world is in China. But, you know, they’ve also said that energy security takes primacy over climate goals.”

“So, I just I just kind of scratch my head and say, well, how does that work?” It’s a great question, one that at least currently does not seem to have an easily defined answer.

Tensions Between the Global North and the Global South

Another question that arises is whether it is reasonable or even feasible for developed nations of the west who have grown their economies over well more than a century via reliance on abundant and affordable coal, oil, and natural gas to now attempt to leverage international organizations to implement mandates and other policies that would effectively deny developing nations the ability to do the same. This tension between the Global North and Global South has been a point of contention for some time and is something Yergin wrote about in The New Map.

“In The New Map, I quoted the Indian Energy Minister saying there’s not a single energy transition there. It’s energy transitions, plural,” Yergin notes. “In India, part of the energy transition is people who burn waste or wood using LPG or natural gas to replace them.”

Yergin was struck by the diversity of discussions that took place during the recent Energy Asia conference held in Kuala Lumpur, Malaysia. “People from all over Asia have a very different perspective because they said, you know, we need energy to grow, we need natural gas to grow,” he says. “We’d like to use natural gas to replace coal in electric generation. It’s a very different agenda. And the Japanese have done a paper showing the economic growth that will be lost if you have what we call a linear energy transition in Asia, that will result in lower standards of living for people. So, it’s all of these things that are forcing this kind of rethinking to go on.”

With barely a quarter century remaining before the at least nominal goal of 2050 arrives, this rethinking will have to happen over a compressed time frame. The challenge there becomes especially daunting given that, as Yergin notes, previous energy transitions have happened over centuries, not mere decades. This one has the additional complicating factor that countries in the Global South are driving rising energy demand currently and feel little obligation to sacrifice their own economic development to accommodate western desires.

As the report itself notes, participants from the developing countries of the Global South argued that “depending on their access to energy resources both indigenous and imported, financing needs and geography, many of these countries need access to hydrocarbons to raise their standard of living before their emission trajectories change”.

The Bottom Line

It seems hard to overstate the value of this study given its clear delineation of the competing goals at play in what is in reality a highly complex, intensely competitive, and widely disparate set of energy transitions, few of which really conform to prevailing narratives in the western world. Its findings should serve as a guide for the conduct of discussions at future global conferences like the upcoming COP 28 meeting that starts November 30 in Dubai.