The 2023 World Economic Forum (WEF) Annual Meeting discussed the different challenges and solutions of electrification as well as why the 2020s must be the electric decade. One of the most significant challenges to completing this goal is electrifying the global economy with clean energy sources. However, to achieve the Paris Climate agenda (preventing more than 1.5-celsius temperature increase), Harvard professor Meghan O'Sullivan, the lead panelist, stated that by 2030, clean power capacity must increase threefold. On top of that, by 2050, 50% of energy consumption must be based on electricity. What can governments and businesses do to accomplish this?
CHALLENGES AND SOLUTIONS
According to WEF experts, significant challenges include the limited capacity of clean energy sources to provide 24/7 power. This results from a lack of effective policy structures, such as carbon pricing or green premiums, to drive the transition to clean energy. Knowing this, the WEF launched two accelerators, the "Clean Power and Deliver Accelerator" and the "Electrification Accelerator," at the 2023 annual meeting. These are aimed to help mobilize the transition and facilitate dialogue between stakeholders from the business and government sectors to share solutions for the energy systems of the future. Additionally, as the cost of renewable energy continues to decrease, it has become more competitive with fossil fuels, and more countries are setting ambitious targets and policies to accelerate the transition to clean energy. One such plan is the pledge from the US to achieve a carbon pollution-free power sector by 2035.
WHAT THIS MEANS FOR BUSINESS
As businesses enter a new era where cheap and reliable fossil fuel generation is becoming less of a guarantee, they must choose their energy future or risk the consequences of volatile markets and an unpredictable climate. The gas price crisis in early 2022 refutes the assumption that fossil fuels are more reliable than weather-dependent clean energy sources. As the economy is directly impacted by gas price volatility, long-term power purchase agreements from low-cost and reliable renewables, such as wind and solar, are becoming more appealing for price certainty. In the foreseeable future, with new technology, we are now seeing more options for clean energy alternatives, such as geothermal and fusion, and services that help companies get closer to 24/7 carbon-free energy.
The WEF comments that the era of continuing with traditional energy practices is over. Organizations that wish to be successful in the future must be proactive in selecting their energy strategy and use the available options and incentives to increase business resilience.
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