Recent Energy Crisis and Economic Shocks Underscore Need for a More Inclusive Approach to Energy Transition, New Report Says

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S&P Global Commodity Insights and the International Energy Forum report the need for deeper collaboration between developed and developing countries to ensure energy security, affordability, and sustainability in a 'multidimensional energy transition'. The report highlights the challenges and complexities of achieving net-zero emissions by 2050, emphasizing the need for an inclusive approach that reflects different situations and policy approaches.

Deeper collaboration between developed and developing nations required to ensure energy security, affordability and sustainability in a 'multidimensional energy transition'

NEW YORK, Aug. 1, 2023 /PRNewswire/ -- Advanced countries need to deepen their engagement with developing countries to overcome a new "North/South divide" on the pace and priorities of energy transition if the world is to make progress on reducing GHG emissions from the energy sector, according to a new report by the International Energy Forum prepared in collaboration with S&P Global Commodity Insights.

The IEF report entitled Shaping a Living Roadmap for Energy Transition, for which S&P Global Commodity Insights served as chief knowledge partner, is an outcome of a global series of roundtables held over the last ten months in Cape Town, Bali, Riyadh, Washington DC, Panama City, and Davos, as well as additional roundtables held in conjunction with CERAWeek by S&P Global in Houston. The report presents the diverse viewpoints expressed by the 350 participants from industry, government and civil society designed to unearth lessons from the recent energy crisis, which has had a profound impact on energy policies and energy transition priorities around the world.

Hosted by Joseph McMonigle, IEF Secretary General, and Daniel Yergin, Vice Chairman of S&P Global, the dialogues revealed a growing consensus that expectations of a linear transition of the energy system that adheres to a single net-zero path globally are not sufficient. Instead, a "multidimensional" approach is required, one that is inclusive of different situations in different parts of the world; reflects varied starting points and diversity of policy approaches; and is equitable, according to the report.

"A series of shocks, crises and tensions in the global energy system have rendered the energy transition more complex as climate goals coexist with energy security, energy access and affordability and other priorities," said Daniel Yergin, Vice Chairman, S&P Global and author of The New Map. "Transitioning a $100 trillion global economy in a quarter century is a big challenge. This project seeks to respond to the challenge by capturing a wide spectrum of perspectives on the energy transition and what will be required to achieve it."

Reflecting concerns expressed by the roundtable participants, the report said that "focusing on a singular pathway to achieving net zero emissions by 2050 could undermine achievement of other sustainable development objectives, constrain financing for critical energy projects and put at risk the necessary public support for climate policies."

The recent crisis in global energy markets and high energy prices have contributed to inflation. At the same time, global GHG emissions have reached new highs as economics and shortages forced many countries to pivot back to coal-fired power generation. Growth in renewable power has accelerated but has so far failed to keep pace with growing power demand.

"Developments over the last two years demonstrate that the energy transition is more complicated than has been previously thought. While the transition proceeds, expectations of a linear global transition have been shaken as climate goals compete with priorities around energy security, energy access and affordability," the report said.

The report noted significant policy moves in developed markets, with hundreds of billions of dollars of new funding and incentives expected to cut emissions in the United States, Europe, Japan and China and drive research into new decarbonization technologies, as well as expanding market share for electric cars. At the same time, participants in the roundtables noted that progress was uneven around the world.

"The path to net-zero will have to travel via the Global South and therefore it is in everyone's interest to collaborate and cooperate for the shared goals to achieve net-zero," it said.

Developing countries, which assert that they have little responsibility for the historical accumulation of CO2 in the atmosphere, are expected to drive growth in energy demand for the next 30 years, the report said.

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."

There was much discussion in the roundtables about investment needs. Some roundtable participants observed that funding bans on areas of energy production raise the cost of energy, impede economic growth and threaten to undermine public support for the transition when competitive alternative energy sources are not yet available. 

"Although there is broad consensus on the need to reduce emissions, the dialogues that informed this report revealed that many in the Global South feel their voices have not been heard in the global climate discussions," said Atul Arya, Chief Energy Strategist, S&P Global Commodity Insights. "No primary energy source has ever been largely or completely phased out, as proposed by some for the current transition initiatives and regulation. It was clear from the discussions that for many in developing countries, access to affordable and reliable energy to improve their livelihoods will also be priority and will be part of the overall equation."

About the IEF
The International Energy Forum is the world's largest energy organization, with 71 member countries accounting for 90 percent of the world's energy market. The IEF is the global home of energy dialogue promoting energy security, market stability and transparency. For more information visit www.ief.org.

Media Contacts:

S&P Global: Jeff Marn +1-202-463-8213, Jeff.marn@spglobal.com
S&P Global Commodity Insights, Global/EMEA: Paul Sandell + 44 (0)7816 180039, paul.sandell@spglobal.com 
Americas: Kathleen Tanzy + 1 917-331-4607, kathleen.tanzy@spglobal.com
Asia: Melissa Tan + 65-6597-6241, melissa.tan@spglobal.com

About S&P Global Commodity Insights

At S&P Global Commodity Insights, our complete view of global energy and commodity markets enables our customers to make decisions with conviction and create long-term, sustainable value. 

We're a trusted connector that brings together thought leaders, market participants, governments, and regulators and we create solutions that lead to progress. Vital to navigating commodity markets, our coverage includes oil and gas, power, chemicals, metals, agriculture, shipping and energy transition. Platts^® products and services, including leading benchmark price assessments in the physical commodity markets, are offered through S&P Global Commodity Insights. S&P Global Commodity Insights maintains clear structural and operational separation between its price assessment activities and the other activities carried out by S&P Global Commodity Insights and the other business divisions of S&P Global.

S&P Global Commodity Insights is a division of S&P Global (NYSE: SPGI). S&P Global is the world's foremost provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help many of the world's leading organizations navigate the economic landscape so they can plan for tomorrow, today. For more information visit https://www.spglobal.com/commodityinsights.

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FAQ

What is the main focus of the IEF report prepared in collaboration with S&P Global Commodity Insights?

The main focus is on the need for deeper collaboration between developed and developing countries to ensure energy security, affordability, and sustainability in a 'multidimensional energy transition'.

What are the key challenges highlighted in the report?

The report highlights the challenges of achieving net-zero emissions by 2050 and emphasizes the need for an inclusive approach that reflects different situations and policy approaches.

What are the concerns expressed by the roundtable participants?

The concerns include the risk of focusing on a singular pathway to achieving net zero emissions by 2050, which could undermine other sustainable development objectives and constrain financing for critical energy projects.

What is the expected impact of the energy transition on developing countries?

Developing countries are expected to drive growth in energy demand for the next 30 years, and many of these countries need access to hydrocarbons to raise their standard of living before their emission trajectories change.