Global Energy Transition Will Continue But Expert Yuri Shafranik Says It Will Take Longer Than Expected
Global investment in the ongoing transition to renewable energy surged by over a quarter in 2021 compared with 2020, but according to energy expert Yuri Shafranik, it will take decades for a complete conversion to occur. Indeed, even with billions of dollars being poured into the lower carbon energy industry, the mid-century which has been targeted by some governments for a transition milestone is unrealistic.
According to BloombergNEF’s latest Energy Transition report, global investment in the overall energy transition hit a new record of US$755bn in 2021. That’s a 27% increase from 2020 and was driven by renewable energy which received some US$366bn of investment into new projects and systems. However, even if global investment into the industry continues to rise at such a pace, it will take more than just money to successfully adopt an entirely new energy regime.
Numerous Factors Required To Drive Lasting Change
While investment is a key detail behind any change, and particularly in the energy industry towards more sustainable extraction and usage, there are other important details that must be cultivated and in place. According to global expert on mineral resources Yuri Shafranik, three of the more important ones are:
- Socio-economic, where the population across the globe, not just areas of it, are committed to developing sustainable energy usage.
- Technical and technological details are also important. Right now, due to the still-developing nature of the industry there are no tried and tested and reliable options, this will come over time but many new options haven’t even been piloted yet.
- Geo-politics is a third element that must improve before such a major shift within the energy industry can take place and be sustained. That’s because even though billions of dollars continue to be invested in the transition, without international cooperation, much of that investment will end with disappointing results.
“Achieving an energy transition will require not only large additional investments but also significant transformations in the habits of our entire society,” Yuri Shafranik said in a recent speech.
Good Progress Being Made
Although it’s clear that many elements must emerge and align for a complete transition from the current energy status-quo to a sustainable, carbon-neutral energy environment, good progress towards that is being made.
The Energy Transition report by BNEF shows that second to the renewable energy sector, which includes wind, solar and other renewable options, the second most popular investment option was electrified transport. Some US$273bn was invested in electric vehicle development and the related infrastructure, with that appetite supported by a 77% surge in electric vehicle sales in 2021 from 2020. Indeed, such is the appetite from investors and consumers for this area of energy transition that it could become larger than the renewable energy segment as soon as 2022.
The regional breakdown is equally promising:
- Asia Pacific was the largest area for investment which totalled US$368bn, a 38% increase from 2020.
- Energy transition investment in the EMEA grew 16% to reach US$236bn.
- In the US, US$150bn was invested in the industry in 2021, representing a 21% gain from the previous year.
“The energy transition is well underway and moving faster than ever, but governments will need to mobilize more finance if we are to get on track for net-zero by 2050,” said Head of Energy Economics at BloombergNEF, Matthias Kimmel.
It seems the expectation for achieving a mid-century energy transition goal is considered ambitious by a number of experts. However, that shouldn’t stop investment plans, if anything it should support an acceleration of them and more commitment to the target.