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Global Practices

Why 2017 Will Be Pivotal for the Energy Transition

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As global leaders gather in Davos this week, it is clear that the “energy transition” and its focus on the decarbonization of societies around the world, will be immediately tested by the profound pace of political developments across many countries.

The pace of political developments is occurring at a time of transformative change in the energy industry, where the legal framework of the Paris Agreement has just entered force, the global oil price recovered ground, and renewable energy has made enormous strides in performance, scale and breathtaking technological advancement.

The big question at Davos will be the extent to which the revolution of the energy transition will be impacted by changes to the global political outlook.

Pivotal to this changing outlook will be the future actions of a new U.S. administration whose policies towards energy and climate have yet to be clearly articulated but whose tone and outlook differ significantly from the previous government.

For it is the world’s changing climate that provides a crucial frame of reference for the energy transition that is already underway and that leaders at Davos must tackle head on. 

Progress on the goals of Paris will only be achieved through the decarbonization of existing energy systems which is taking place already around the world.

Technology is moving at such speed that it has enabled Portugal to produce many consecutive days of carbon-free energy.  Costa Rica has performed even better producing 98.1 percent of its electricity in 2016 from renewable sources. In 2017, new records will undoubtedly be made.

Transport and housing are being decarbonized through technology like electric vehicles and battery storage devices that harvest renewable energy. 

Nuclear is changing tooSMRs or “Small Modular Reactors” mean localized small-scale, low-carbon energy at a fraction of the cost and time requirements to construct large-scale facilities.

Among traditionally carbon-intensive producers, there is growing momentum towards integrating new technology like Carbon Capture Storage; introducing a global carbon tax that would create economic incentives to reducing CO² emissions; and portfolios that include renewable assets.

Importantly, leaders at Davos will confront the existential challenge of climate protection with the need to deliver secure, affordable energy for a growing global population. 

Discussion will focus on how to provide energy to the estimated 1.2 billion who live without electricity.  This endeavor will take many decades.

For those communicating in the energy space, there might be the temptation to roll back from engaging political audiences, business and communities in a period of political uncertainty. This would certainly be the wrong approach.

It is only by openly talking about the requirements of the energy transition – its monetary costs and the levels of engagement needed – that meaningful progress will be made.

In a world where we will interact with energy more actively, communities must be educated about the transition in order for society to benefit from their collaboration. 

We are on a journey towards a new energy paradigm. There is every reason to believe that 2017 will be pivotal to the energy transition.

Michael Zdanowski leads Edelman’s UK Energy practice and is based in London.

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