President, dmg events
The scale of investment needed to achieve a clean energy transition requires a global effort.
A successful transition requires cross-sector partnerships bringing together knowledge, skills and resources.
Opportunities need to be created to facilitate lasting impact and shape the global energy agenda.
To date, more than 70 governments have pledged to achieve net-zero carbon emissions by 2050, illustrating the real investment and commitment to the energy transition. But Rome was not built in a day and to reach these targets, the international energy community will need to take several steps to get there.
National and international oil companies have already started to embrace sustainable goals. But the scale of the effort and the investment needed to achieve a clean energy transition is not something any one nation, let alone one entity, can take on its own. In 2020, the Energy Transitions Commission (ETC) estimated that achieving net-zero emissions by mid-century would cost $1-2 trillion a year of additional investments, or 1-1.5% of global gross domestic product.
In Europe alone, $3.8 trillion of investment in new-build power generation projects such as wind and solar, as well as an additional $1.5 trillion in green hydrogen developments would need to be spent between 2021 and 2050 in order for the continent to walk away from fossil fuels.
Global annual investment.
Energy companies at the forefront of sustainable partnerships
This shift amid global oil companies also comes with the acknowledgement that achieving emission pledges and broader climate goals is not an individual game plan and multi-sectoral partnerships are essential. National, regional, and international energy companies are already exploring partnerships in areas with lasting impact on the energy transition.
1. Hydrogen: fuel of the future
Hydrogen has become the main focus of many clean energy partnerships. ADNOC, BP and Masdar have signed a partnership to explore the possibility of jet fuel using green solar hydrogen and municipal waste gasification which could support the energy transition of one of the most polluting industries: aviation. Such projects typically require large amounts of capital and have low returns in the short term, making potential investors reluctant to engage. By collaborating through shared commercial projects, large industries can bridge capital gaps.
2. The transport industry: a decarbonization priority
Other transport industries such as maritime shipping are also taking a step forward by collaborating with energy bodies. The International Chamber of Shipping (ICS), representing over 80% of the world’s merchant fleet, has signed a partnership agreement with the International Renewable Energy Agency (IRENA) based in Abu Dhabi to support the decarbonization of the shipping sector and its role in the transition towards a global energy sector based on renewables.
3. Methane emissions: a vital opportunity for climate change
But these partnerships are not, and must not be, limited to energy entities. One of the first steps toward decarbonization will be methane reduction, which targets all areas of industry from oil and gas to agriculture and waste management. According to McKinsey, methane accounts for about one-third of global warming and would require an annual 2% decline to meet the Paris Agreement objectives. Tools, like remote satellites and analytics, are increasingly allowing the energy industry to address the challenges attributed to methane emissions. As such, the involvement of digital industries is necessary to find and develop solutions to decarbonize heavy industries.
4. Smart technologies: necessary component to innovation
The adoption of smart technologies based on electrification, low-emission hydrogen, or carbon capture, utilization and storage, all require extensive infrastructure. Collaboration with industry and cross-industry peers through shared infrastructure planning and development can ensure that companies deploying new technologies will not be constrained by the lack of enabling infrastructure.
Opportunities for global cross-sector collaborations
But for these partnerships to happen, opportunities need to be created to facilitate strategic dialogues and expedite synergies between sectors. Global forums and international conventions such as ADIPEC and the COPs are the media of choice.
These influential platforms for decision-makers, business leaders and innovators have a real convening power around innovative solutions and technologies making a lasting impact and shaping the global energy agenda.
Throughout the years we have seen collaborations take shape through these opportunities. By bringing together diverse energy voices and creating key knowledge sharing opportunities, the energy sector is able to tackle numerous topics across the energy value chain with cross-sector partners.
To achieve a clean energy transition, actors from all sectors, from industry leaders to policymakers, from leading innovators to the young generation, must collaborate to assess the industry’s landscape, and exchange ideas, experiences and expertise across the entire value chain to advance the energy transition in a responsible and sustainable way. The energy transition is everybody’s problem, and it’s everybody’s responsibility to find solutions to solve it.
License and Republishing
The views expressed in this article are those of the author alone and not the World Economic Forum.