100 days to COP28: how we move from rhetoric to action

We are eight months into 2023, and almost every month this year has been in the top five hottest on record. As we continue to witness the effects of intensified climate change, we are now at the stage of “now or never”. Every fall in CO2 emissions counts because the reality is that the world is not making the desired progress. In 2022, global emissions reached a record high of 36.8 billion tons of CO2. And while global energy demand is expected to surge by approximately 25% by 2030, we are still faced with the sobering fact that around 775 million people still lack access to the most basic means of electricity.

To reach net zero, the world must radically rethink how it lives and must recognize that energy is not merely a commodity; it is the foundation for social development, economic growth, and prosperity. The absence of a resilient electricity supply hinders economic growth and slows down social development. Avoiding dependencies on one or a small number of fuels, technologies, or countries and, in turn, strengthening the resilience of infrastructure and ecosystems to withstand climate change will be key to breaking this cycle. Moreover, the energy transition also provides a huge opportunity to become the most significant transformation since the industrial revolution.

Tackling energy transition means tackling multiple sectors causing global greenhouse gas emissions in parallel. As the chart below shows, emissions come from many different sectors to which there is no single or simple solution.

With the implementation of the Paris Climate Agreement in 2015 and its long-term goal to keep the rise in mean global temperature well below 2 °C, there is no question about what we have to work towards. Build out renewables as fast as possible, strengthen the electrical grids, develop green hydrogen for hard-to-abate sectors, and most importantly, drive energy efficiency wherever possible.

The energy industry has the knowledge and ability to develop innovative technologies to build an energy system for a net zero future. What is required is that global conferences, like that of COP28, do not merely turn into an exercise of sharing information, leading to vague recommendations. Only through concrete and actionable measures will we drive the desired change. In the words of secretary-general of the United Nations, António Guterres “leaders must lead, no more waiting for others to move first”.

Let me highlight four points that a successful energy transition will require:

1. A lot of Investment

There is no getting around it. Driving meaningful climate action forward will cost a lot of money. These investments will need a business case meaning energy cannot continue to get cheaper. Funding all the necessary energy projects across industries will therefore require a shift in mindset.

At the same time, a system must be put in place to help the poorest countries in the world to finance this transition. COP27’s takeaway to provide loss and damage funding for vulnerable countries hit hard by climate disasters was an important step in the right direction. Now it is down to COP28 to build on that and create a framework that will transform climate finance.

2. Effective Implementation

The need to carry out new grid infrastructure and renewable projects is greater than ever. Making this possible will require a ramp-up of resources, factories, and infrastructure. Since the volumes we are talking about are so huge, it will be necessary to set boundary conditions for energy projects as effectively as possible. It is not just about easier, faster, and more predictable permitting procedures but also more standardized equipment and concepts.

3. Innovation

45% of all emissions savings in 2050 will come from technologies that have yet to reach the market. The question, therefore, is how do we make innovative technologies commercially viable in the energy market? Because energy projects have such a long life span, it is tough to implement technologies that, despite being innovative, haven’t been proven in the long term.

An example of what can happen if innovation is pushed too fast and without a balanced risk and reward profile can currently be observed in the wind industry. It has made great technical progress in recent years, but the market remains flawed. This needs to be addressed so turbine suppliers can earn what they require in order to fund innovation. If we want innovation to thrive, we must define how a risk and reward profile can be distributed fairly.

4. Global Trade

There is no doubt that pushing for diversification of supply chains and technologies is the right approach. However, we should not fool ourselves. Diversification comes at a cost and requires time. While diversifying, we also need to ensure that we keep global trade open and viable. Everything that slows the implementation of energy technologies will also slow the fight against climate change.

To conclude, while the challenges facing COP28 cannot be underestimated, neither can the vast opportunity of solving its problems if done right. COP28 will bring together a diverse set of stakeholders – we should not miss the opportunity for all of them to leave as climate change leaders.

I would be interested to hear your take on the matter – let me know in the comments below. Furthermore, in the coming weeks, my colleagues responsible for heading Siemens Energy’s business in our active regions across the globe will add their perspectives to the mix and dive deeper into what is required to make the energy transition happen on a regional level. Make sure to follow Nadja H?kansson (Africa), Thorbj?rn Fors (Asia-Pacific), Ariel Porat (EU), André Clark Juliano (LATAM), Dietmar Siersdorfer (UAE), Rich Voorberg (USA).

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