Hastening the journey to cleaner energy

Hastening the journey to cleaner energy

Two recent reports from the International Energy Agency (IEA) have highlighted both the scale of the opportunities for corporates from the energy transition, but also the challenges that need to be overcome to seize them.

Our own data* – published recently in our two 'Powering Change: Technologies fuelling the future’ reports – supports these findings, examining in detail the barriers that are preventing faster adoption as well as the role governments can play in speeding things up.

The latest edition of the IEA’s annual World Energy Investment report painted a relatively positive picture, finding that investment into clean energy this year was set to reach almost double the sum going in to fossil fuels. Indeed, the Agency said that global spending on clean energy technologies and infrastructure was on track to hit $2 trillion in 2024 - although it warned that higher financing costs were in danger of hindering some new projects.

However, another report, entitled ‘COP28 Tripling Renewable Capacity Pledge,’ found that countries’ ambitions as well as their implementation plans were not yet in line with some of the goals set at the recent COP28 summit in Dubai. It found that while renewable power was at the heart of reaching the world’s energy and climate goals, few countries had explicitly laid out their 2030 targets for installed capacity in their Nationally Determined Contributions. It noted countries therefore had a significant opportunity to set more robust plans for achieving the global goal of tripling renewable power capacity by 2030.

At Ashurst , our two Powering Change reports echo those findings. We found huge levels of optimism about the opportunities from decarbonisation – indeed, most energy sector organisations see investment in renewables as essential to their strategic growth. But also heard about a series of barriers that need to be overcome if the transition is to progress quickly.

Three barriers stand out.

First, executives told us that existing regulations are often not fit for purpose, and need to be updated. Much of the current framework was designed for the traditional, fossil fuel-based energy market, and is therefore not appropriate for the more intermittent generation which characterises much renewable energy.

Second, they believe there is an insufficient regulatory drive to promote greater market liberalisation. Too often, governments are reluctant to open up their country’s power infrastructure to the private sector, which would help spur competition and create better outcomes.

And third, they think the regulatory environment needs to better reflect the new market dynamics, as well as the need for the different infrastructure which the decentralisation of energy will require. Indeed, in our survey, 84% of respondents felt a lack of investment in such infrastructure was likely to stall the development of renewable projects.

A fundamental requirement to overcoming these barriers, corporates believe, will be a change in government mindsets. Our survey found more than a third felt that a lack of government support was a barrier to their organisation investing in renewable energy, the energy transition or decarbonisation technologies, or to them making net-zero commitments. This in turn led many to believe that their country was ill-prepared to reap the benefits of the transition.

But while governments are viewed, at least to some degree, as part of the problem, they are also seen as part of the solution. What corporates are looking for is greater certainty, more robust legislation that supports emerging technologies, and smarter use of government balance sheets, notably in areas such as deciding when to offer subsidy regimes and the processes that are put in place to deliver that support.

Overcoming these obstacles and creating a greater sense of partnership between stakeholders will be critical if the world is to meet its climate goals. There are, however, plenty of examples of ways in which these can be surmounted, provided the right policies and regulatory frameworks are put in place.

Our two reports outline some of those best-practice examples, and look at how the lessons from them can be applied to other markets around the world.

If those lessons can be learned, there is every opportunity for greater capital to flow into clean energy, helping speed up the pace of the energy transition. In the meantime, if you have any questions, or want to find out more about how we can help your own organisations navigate the energy transition, please get in touch with your local Ashurst partner.?


*We surveyed a total of 2,140 senior executives and managers who are involved in energy decision-making in businesses across the G20 nations between 29 October and 3 November 2023. The average annual global turnover of the companies whose executives we surveyed was US$15.1 billion.

Ashurst | Michael Burns | Natalie Duncan | Luisa Deas |


Katherine Kulakowski

Content Manager and Editor at Ashurst

5 个月

Thanks for sharing

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