Today is energy day at the COP26 meeting in Glasgow, so I wanted to reflect on how we can accelerate the green energy transition that is already underway.
The International Energy Agency predicts that renewables, which account for 21% of the global electricity market today, will soar to account for 47% in 2040, and 90% in 2050. Looking at the share of renewable energy in the world’s total energy supply, this is expected to jump from 12% in 2020 to 26% in 2050 - with the share of unabated coal declining from 26% in 2020 to 18% by 2050. But in short, despite the immense challenge that this increased share of renewables puts in front of us, it still leaves another massive unaddressed energy transition challenge on the table.
And, for only the first scenario to materialize, a great deal of planning and work needs to take place and at high pace. Despite the substantial investment made to date, oil, coal, and natural gas still account for 80% of the total energy used to produce electricity and provide refined products across the three core application areas: industry, transport, and buildings.
How can industry and government accelerate the green energy transition? That is the question we explored in our recent strategy+business article, “State of flux.” The answer, as you might expect of an issue so integral to all our futures, is both complicated and multi-faceted. But one overarching theme - collaboration between public and private sectors – will be crucial.
The different players in these industries, many of which are regulated or have a high level of state involvement, have always been intertwined. Going forward, the public and private sectors must learn how to evolve and move together in a complicated dance as they progress into an uncertain future. Participants will need to fundamentally rethink the efficacy of a purely market-based approach and accept the presence of a more visible hand, guiding and orchestrating markets over the next decades.