Wide-ranging barriers are preventing renewable energy from contributing effectively to a green energy transition. Barriers include a lack of attention to all energy carriers, a failure to diversify renewable energy technologies beyond wind and solar power, deficiencies in policies, bottlenecks in permitting and grid connections, unequal investment levels in different regions, and continued large investments in fossil fuels.
The global energy supply is split mostly among heat (49 per cent) and fuel (29 per cent), with electricity having the lowest share (22 per cent). In 2022, the share of renewables in the power sector reached a record high of 30 per cent, mainly because the sector has received long-term policy attention that enabled market and technology development and drove down costs. Across all sectors, renewables cover only 12.7 per cent of the total energy system.
“The record thirty per cent growth of renewables in the electricity sector is positive news,” Rana Adib, executive director of renewable energy network REN21. “However, we need to more than double this growth and to achieve deep electrification of the heat and transport sectors. We also need to invest heavily in grid infrastructure to address climate change and to provide greater access to electricity in developing countries.”
Building a transition consensus
Ren 21 is a network and global community of players from governments, intergovernmental organisations, industry, NGOs and science and academia, working together to accelerate the systemic shift to renewable energy with a collective intelligence and multi cycle approach. REN21 research, policies and activities are based on information from a community of more than 600 contributors.
“Building a consensus and driving change among traditional energy companies can be like wrestling an octopus,” Adib admits, “but it’s important to engage with these key players because fossil fuel producing and exporting countries that depend on this income stream need to be part of the transition, otherwise they will always do everything they can to hinder progress, which they are often doing. But it’s not only an empty system transition, it’s a transition of the economy and society and renewable energy needs to become the backbone of the economy in the society.”
Analysts such as Bloomberg, the IEA and New Energy Finance forecast that electricity will be play a central role in the energy transition. Today electricity represents 22 per cent of total final energy consumption but it will soon rise to 50 per cent, driven mainly by electrification of transport, heating and industrial processes. Generation by geothermal, hydro, wind and solar sources will play a key role in the transition but all will need to be scaled up. Electricity generation from solar and wind will need to increase almost tenfold each year compared to today’s installed capacities.
Carbon reduction and net zero targets can only be achieved by scaling up renewable energy infrastructure, Adib says. “A blended infrastructure is key to an integrated transition that includes power grids, storage capacities, sector coupling with electric mobility and thermal power. Biomass has a big role to play in the heat and fuel sectors, along with hydrogen and ammonia and, in the long term, synthetic fuels for aviation and industrial uses.”
The hurdles to overcome
There are four major challenges to address, Adib believes. “There is a structural challenge in that the energy system, the economy and society has been built on fossil fuels for a very long time and it is hard to change this long-established economic framework. Another challenge is the fact that energy demand is growing and the third challenge to overcome is the huge subsidies paid to fossil fuel companies.
“Even though many governments are engaging in the development of energy efficiency and renewable energy, they still send mixed messages by continuing to subsidize and invest in fossil fuel infrastructure and exploration at the rate of $11 million every minute, according to the International Monetary Fund. The direct subsidies to fossil fuels were in the region of one trillion US dollars in 2022, an increase of 85 per cent compared to 2021; a situation that continues to favour fossil fuels and does not allow renewable energy to operate on a level playing field.”
The core challenge is governments’ central approach to the transistion, Adib believes. “Up to now political attention has been focused on the renewable power sector but this is only one part of the equation and it does not take into account energy as heat or fuel. So what we have is a power transition, but we don’t have an energy transition. When you look at the renewable energy targets, for example, in the power sector 174 countries have a target on renewable power. Only 46 countries have a target on renewable heat and only 49 countries a target on renewable fuels. So this shows that there is really a spectral and attention problem too.”
Balancing renewable energy investment
China led the world in renewable energy investments in 2022, with 55 per cent of the global total energy, followed by Europe with 11 per cent and the United States with 10 per cent. Africa and the Middle East together received the lowest share of renewable investments, at only 1.6 per cent. Most of the worldwide deployment in renewables was in China, which accounted for 44 per cent of all solar capacity additions and 38 per cent of all wind capacity additions, pointing to the high geographic concentration of renewable energy additions. “Africa and Southeast Asia still have 700 million people without access to electricity which points to a structural problem in the lack of attention to developing and emerging economies,” Adib suggests.
Recent soaring prices have seen some investors and finance houses who had previously subscribed to net zero alliances and were committed to ESG turn their back on sustainability driven by short term profit interests of shareholders. But today the majority of global investment funds are putting their money into net zero and renewables.
Major players now investing in renewable energy because it’s the least cost option and it allows for the creation of an economically resilient and climate resilient energy infrastructure, says Bruce Douglas, CEO of the Global Renewables Alliance. “Renewable energy is now recognised as the necessary backbone for all energy systems. However, it also needs to be developed as an economic sector, with clear and strategic focus on building a profitable industry. Investment in manufacturing and skilled labour is now crucial to deliver a secure, sustainable and thriving sector.”
Money will drive the transition but money only comes if you have the right political leadership, policy and regulatory frameworks. Right now, there is one terawatt of solar and wind capacity that is not being constructed or connected to the grid because governments have not invested in grid infrastructure. “You need the raw materials, you need technology, you need a profitable economic sector and industry and you need skilled people,” says Adib. “You also need a political and regulatory environment that allows markets to develop and investment to flow.”
Positive steps to the future
Momentum has been building for the creation of a worldwide target for renewable energy in the power sector, to be announced at the United Nations Climate Conference (COP 28) in Dubai in November. Recently, leaders of the G7 countries made a historic pledge to collectively increase the world’s offshore wind power capacity by 150 gigawatts and its solar capacity to more than one terawatt by 2030.
The announcements are welcome signals for both countries and renewable energy markets, Adib believes. “However, science and experience tell us that to be effective, these targets need to be urgently translated into concrete actions that will speed the energy transition in all countries – including through national policies, technology development and sharing, equitable investments in all regions, fossil fuel phase-outs, and the removal of barriers and bottlenecks.”
The energy transition will, ultimately, replace most use of fossil fuels and while there are a range of future hurdles to overcome it would be easy to overlook the tools we already have. “Innovation will go a long way to powering the energy transition,” Adib says. “But according to the International Energy Agency 50 per cent of the CO2 emissions that need to be abated can be abated with existing technologies. Sometimes the answer is right in front of our face.”