"The energy transition has to advance in orderly manner."

Mika Anttonen

Statement of the Chairman of the Board

Global signals suggest reasons for optimism

The United Nations Climate Change Conference (COP28) closed in December with an agreement signalling a transition away from fossil fuels in energy systems in a just, orderly and equitable manner. The ambition is high to accelerate this critical action during this decade. This includes a call on governments to speed up the transition away from fossil fuels, while accelerating global efforts towards achieving net-zero energy systems. Tripling renewable energy capacity and doubling the rate of energy efficiency improvements globally by 2030 is one of the key elements in this agreement. These are in line with the IEA’s Net Zero 2050 scenario, which shows a pathway for the global energy sector to achieve Net Zero CO2 emissions by 2050.

With efforts to limit global warming to 1.5°C, greenhouse gas emissions should peak already this year, and decline 43% by 2030. Unfortunately, progress so far has been too slow, and we are currently off-track when it comes to meeting the Paris Agreement’s goals. As a result, we ’re now headed towards a temperature rise of 2,5–2,9°C.

To make the change, the next 1,5 years will be critical to agreeing on how to phase out fossil fuels, how developed countries can support developing ones, and how to ensure concrete solutions. Expectations are high for COP30 next year (2025), where countries must come prepared with updated climate action plans that are fully-aligned with the 1.5°C target. This gives a positive signal for the future.

"The technologies needed to make the required emission reductions by the year 2030 are already available on the market."

There is no single solution

There is no single solution to accelerate the energy transition and reach our shared set targets. Instead, we need a number of energy solutions, some of which already exist, and some that are still waiting to be discovered.

The technologies needed to make the required emission reductions by the year 2030 are already available on the market. We do, however, need significant investments to be made and at the same time ensure ability to pay on the demand side in order to make these as widely used as possible.

In 2050, almost 50% of CO2 emissions reductions should come from technologies that are currently still at the demonstration or prototype phase. To facilitate and accelerate the desired outcome, we need to make vast investments and renewed efforts in R&D. That is a prerequisite for the discovery and commercialisation of scalable breakthrough innovations in the energy sector.

Today's low-emission energy solutions do not necessarily guarantee scalability. While the availability of sustainable feedstock is limiting the supply of biofuels today, cost is the limiting factor for hydrogen-based e-fuels. Low-emission e-fuels are currently expensive to produce, but on the other hand, it is anticipated that this current cost gap with fossil fuels could be significantly reduced by 2030. The most important innovation to enable the energy transition would be electricity storage on an industrial scale.

Energy companies have to take on the challenging task of finding new solutions and must show leadership through their own ambitious energy transition roadmaps.

Regulation to support cross-border cooperation and solidarity

The EU has world’s strongest climate legislation, already in line with 1.5 OC target. However, the EU’s GHG emissions are less than 10% of global emissions. The EU’s climate goal is to reduce its own emissions by 55% in next 6 years (2030 compared to 1990 levels). EU countries are working on new legislation to achieve this goal and make the EU climate-neutral by 2050.

Climate change doesn’t stop at the EU border. Unfortunately, new investments in fossil energy production are still constantly being made to meet increasing energy demand in emerging and developing markets. These economies currently account for over 95% of the increase in global greenhouse gas emissions and two-thirds of the world’s population, but only one-fifth of global investment in clean energy, and a mere tenth of global financial wealth.

To reverse that trend, we need global climate regulation that enables cross-border and cross-sectoral investment in the most cost-efficient CO2 reductions. This would enable EU member countries to support developing countries in phasing out fossil energy while energy demand there is increasing. Thus, real global solidarity through finance is necessary.

"In 2050, almost 50% of CO2 emissions reductions should come from technologies that are currently still at the demonstration or prototype phase."

Accelerate the reshaping of the global energy market

The energy sector employs over 65 million people in total, equal to ~2% of global employment in 2019. An additional 85 million energy-transition-related jobs could be created by 2030. Meeting the demand to fill new jobs requires scaling up education and training programs, alongside measures to build a diverse and inclusive energy transition workforce.

The energy transition also holds enormous potential for job creation in emerging and developing markets. According to a review by the International Renewable Energy Agency (IRENA) in 2022, transition-related sectors could double the number of jobs in the energy sector, for example, from 10 million to 20 million in Africa by 2030, and additionally create a significant shift from current fossil energy sector jobs to renewable energy ones.

Science to steer systemic change

Current climate policy goals are built on plans, which still need to be translated into a more concrete roadmap and actions in order to be realised.

The energy transition is a transformation that encompasses the entire energy system - innovations, capacity development, cooperation, global solidarity, and sound regulation are driving it forward. Each move eventually has an effect on the entire energy system, and therefore must be carefully planned to avoid trial-and-error slowdown. To steer all measures towards a common goal, we would need a realistic schedule of actions in the right order from the energy science community. The transition plan has to take into account the carrying capacity of all parties involved, even the most vulnerable ones. We all have to understand that the transition doesn’t materialise overnight by switching off a button.

To realise that plan, we need deep collaboration between all systemic stakeholders for a timely and cost-efficient, system-level transition to form a mutual understanding and roadmap to commit to. The energy transition has to proceed in an orderly manner.

We can only solve this if we all are willing to pull together. The commitment demonstrated to COP30 gives us hope for this.

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