High fuel costs, commodity shortages, insufficient progress toward reaching climate objectives, and slow progress on energy equity and access, according to the study Fostering Effective Energy Transition 2022, exacerbate the urgency for countries to expedite a comprehensive energy transition.
In order to adapt to energy market volatility, it is critical to prioritize a robust energy transition and diversity of the energy mix.
“Countries are at risk of future events compounding the disruption of their energy supply chain at a time when the window to prevent the worst consequences of climate change is closing fast,” said Roberto Bocca, Head of Energy, Materials and Infrastructure, World Economic Forum. “While there are difficult decisions to be taken to align the imperatives of energy security, sustainability and affordability in the short term, now is the time to double down on action.
To negotiate this difficult situation, countries must diversify on two fronts: not just in terms of domestic energy mix in the long run, but also in terms of fuels and energy providers in the near run. Most countries rely on a small number of trading partners to meet their energy needs, and their energy sources are insufficiently diverse, leaving them with little flexibility to deal with interruptions.
“The current energy crisis reveals just how important energy is to people and the economy,” said EspenMehlum, Head of Energy, Materials and Infrastructure Programmer for Benchmarking, World Economic Forum. “It is now critical to tackle the structural risks that have become evident while also increasing momentum on climate action. Success will largely hinge on policy and investments. Prioritizing energy efficiency and ramping up investment in clean energy infrastructure, renewables, clean hydrogen and new nuclear capacity can strengthen energy system resilience and will be a win-win for reducing emissions.”