Balancing the Green Surge: Renewables, Energy Security, and the 2030 Challenge

2024 was a record year for renewables, which accounted for over 90% of new global power capacity. This growth came after global renewable power capacity had already increased by over 50% in 2023 compared to 2022.

The surge was fueled above all by the rapid expansion of key clean energy technologies in the most industrialized countries: according to estimates from the European Union’s POLES (Prospective Outlook on Long-term Energy Systems) model, by 2050 and in the 1.5°C scenario, at least 80% of G20 countries’ electricity production will come from non-fossil sources.

However, much progress remains to be made to align with the global goal of tripling installed renewables capacity by 2030

According to IRENA – the International Renewable Energy Agency – to reach this target, renewables sources capacity will need to grow by 16.6% per year until 2030.

An ambitious challenge that all countries are called to face and which is at the centre of a new study by ISPI and Deloitte on how to reconcile sustainability objectives and energy security needs, made even more unavoidable by geopolitical and commercial tensions.

Data collected in the study Reconciling Sustainability Transition Priorities with Energy Security ones: a focus on Industrialized Countries highlights that the transition to a green economy is essential to mitigate the effects of climate change. Energy-related CO₂ emissions have reached a record high of 37.7 gigatonnes (Gt).

The electricity sector is responsible for 36% of emissions, followed by industry (26.5%), transport (21.2%) and buildings (7.9%). Failure to reduce emissions has profound consequences for ecosystems around the world, with impacts on human health, biodiversity and water security. Estimates indicate that by 2050, climate change could cause approximately 14.5 million deaths, economic losses of 12.5 trillion dollars and up to 1.1 trillion in extra healthcare costs.

Faced with this urgency, however, countries must deal with geopolitical tensions that have undermined the stability of global energy markets. The COVID-19 pandemic, Russia’s invasion of Ukraine and conflicts in the Middle East have led to a redefinition of supply chains and a rise in commodity prices, particularly in Europe. In August 2022, a few months after the start of the war in Ukraine, gas prices in the EU reached on average more than 3 times those of Japan and almost 8 times those of the United States, resulting in a reduction in competitiveness on global markets for European companies.

Another destabilizing factor towards the energy transition is the high geographic concentration of critical minerals, essential for the production of clean technologies. Some examples from the study: the Democratic Republic of Congo supplies 70% of cobalt, China 60% of rare earths and Indonesia 40% of nickel, Australia accounts for 55% of lithium extraction and Chile 25%. The processing of these minerals is also highly concentrated: China is responsible for refining 90% of rare earths and 60-70% of lithium and cobalt.

“Balancing the drive towards decarbonisation with the need to ensure stable energy supplies, sustainable prices and resilient industrial supply chains”, commented Andrea Poggi , Head of DCM Public Policy & Stakeholder Relations Centre and DCM Innovation Leader, “is one of the main strategic challenges for advanced economies today, called upon to lead a sustainable transition also from an economic and geopolitical perspective. To address it, it is essential to promote a synergic and collaborative approach between institutions and businesses involved in the renewables sector, valorising innovation and emerging technologies as a lever for growth.”

“The energy transition does not necessarily have a negative impact on energy security, and vice versa,” pointed out Antonio Villafranca , ISPI Vice President for Research, “it is in the interest of industrialized countries to lead the green transition and ensure more strategic and sustainable growth. However, new policies on renewables and financial resources are needed to address the short-term impact on businesses and families.”

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(Featured image by Thomas Richter via Unsplash)

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First published in ESG NEWS. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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