With 2024 projected to be the hottest year on record, what could influence the global energy transition from phasing out the use of fossil fuels to adopting renewables and low-carbon solutions? Forum for the Future’s Global Strategic Lead – Energy, Kunal Sharma highlights four key trends to watch as the energy transition gathers pace. 

Delegates at next week’s COP28 in the United Arab Emirates will face some familiar and troubling truths. 2023 is set to be the hottest on record, with 2024 projected to be even hotter. Record heatwaves, floods and droughts wreaked havoc across the planet in 2023 resulting in significant planetary and economic losses.  

The Global Stocktake and similar assessments confirm  that existing pledges and enacted policies put us well short of the pathway for  achieving the goals of the Paris Agreement. The reality might be even worse; recent research suggests that the global carbon budget might be smaller than previously estimated and net-zero emissions need to be achieved by 2034 if we are to remain within 1.5C of warming. 

Recognising the climate urgency a growing list of countries and other stakeholders have called for a COP pledge on tripling renewable energy capacity and doubling energy efficiency by 2030. Near term action is vital. Here are four trends to watch in 2024 to track the pace of the global energy transition towards the safe and just adoption of renewables and other low-carbon solutions. 

1. Continuing to create the enabling environment for renewables to flourish

Global deployment of renewables in 2023 will set a record for new capacity addition and this must continue in 2024. However, the offshore wind industry faced significant challenges this year, which governments and industry must redress to avoid a slow-down in deployment, adverse knock-on effects on the offshore value chain, and reduced confidence in the viability of the broader renewables sector.

A combination of supply chain problems and rising costs, a persistently high cost of capital, and challenges with permitting and power-purchase agreements, led major offshore wind developers like Ørsted and Vattenfall halting projects in the US and UK. Although the UK is a global leader in offshore wind, its offshore wind auction did not attract any bids this year

Forum’s Responsible Energy Initiative is working with renewable energy actors to mainstream practices, norms and policies that are enabling the safe and just deployment of renewable energy in India and The Philippines.

2. Improving inclusion of local communities 

The role of citizens, communities, and local authorities as enablers of the energy transition is well-recognised, however, mechanisms to involve these stakeholders appropriately and adequately have fallen short across the globe. The Global Stocktake calls for “taking a whole-of-society approach informed by local context” so that those most affected by climate impacts are involved in crafting solutions. 

This gap needs to be urgently addressed as local communities and stakeholders have a vital role to play in the clean energy transition through  decision making in critical areas like permitting and siting of renewables, new mines for minerals required for the energy transition, electricity grid infrastructure, and new processing and manufacturing facilities; as also investing in decarbonisation solutions like EVs, heat pumps, and energy efficiency measures like residential retrofits.

Over the course of 2021 and 2022, working closely with charity Involve, Forum worked on the Local Just Transition Challenge to better understand how the net zero transition relates to communities and their everyday needs, and what a vision of a just or fair transition looks like.

3. Unlocking the electricity grid 

Expansion and modernisation of the electricity grid is a critical bottleneck in need of attention. The phase out of fossil fuels relies on increased electrification of our energy system. The IEA projects that electricity’s share of final energy consumption needs to increase from around 20% today to over 50% by 2050. This will necessitate more than doubling the size of today’s electricity grid.

But the grid is already a bottleneck in markets like the US and UK. Globally, about 1,500 GW of renewables in advanced stages of development, a figure that exceeds the US’ current generation capacity inclusive of fossil fuels, are in queues for connection to the grid. New renewable energy installations in the UK may have to wait over a decade to connect to the grid. Governments and regulators need to address permitting, financing, and other challenges to ensure grid development is in step with the deployment of renewables

4. Bolstering political support for ambitious climate action

Climate action in countries typically seen as climate leaders came under threat in 2023. The UK government rolled-back its targets for phasing out petrol and diesel cars and gas boilers, and energy efficiency improvements. Germany passed weakened rules that pushed back a proposed 2024 deadline for sale and installation of new gas boilers. While the Inflation Reduction Act (IRA), with its plethora of subsidies and tax-credits, has led to a spurt in new clean energy investment and jobs in the US, a change in the White House next year could lead to a dilution of such measures, particularly under a continuing debt-ceiling crisis. 

The energy transition requires countries to demonstrate increased climate ambition in the coming year as countries gear up to submit their enhanced Nationally Determined Contributions (NDCs) in 2025. Climate commitments must be backed by concrete and stable policies to spur business confidence and investment, particularly at a time of increasing geo-political risk and potentially rising energy transition costs as the US, EU and other countries seek to onshore a greater share of the clean energy value chain. 

Beyond these four trends, efforts to enhance energy efficiency, circularity in the clean energy value chain, and decarbonising hard-to-abate sectors like cement, steel, global aviation, and shipping must continue to be advanced. Additionally, demonstrating the use-case for the safe and just deployment of low-carbon technologies like green hydrogen, nuclear, biofuels, carbon capture, among others, needs to continue. A mix of these solutions is likely to be needed for the planet to remain within the Paris Agreement targets, even if the sought for tripling of renewables capacity by 2030 is committed to and achieved. 

Forum’s BECCS report highlight that the objective was to assess under what conditions from a safe and just lens is the use of BECCs justified.

At Forum for the Future, we’re working to enable a systemic, urgent transition in our energy system. Find out more and get in touch with Kunal to collaborate.