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The nine elements of the Energy Transition

Author: Mark Kissack

Published: 08 Apr 2024

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Finance has a key role to play in combatting global warming.

2023 was the warmest year on record. We are currently on track for a 3.0 degree warming compared to the 1.5 degree warming target of the Paris Agreement . Urgent action is required to get the world back on track to an acceptable level of global warming.

This urgent action is called the Energy Transition. The technologies in many cases exist. We need to drive the other elements of the Energy Transition that support the adoption of these technologies. There are nine elements of the Energy Transition.

The Energy Transition involves the following nine elements:

  • Technology  – from fossil fuels to renewable sources of energy
  • Scale – from large scale energy production to smaller scale local production
  • Ownership – from large energy companies to smaller local producers
  • Local adaptation – optimally using the local resources already in place
  • Efficiency – reducing the demand for energy through eliminating waste
  • Inclusion – areas deprived of energy should have access to clean energy
  • Regulation – adapted to encourage renewable energy implementation
  • Digital – required to manage complexity
  • Finance – making the Energy Transition financially profitable

Because of its complexity, the Energy Transition requires the collaboration of many different players. The good news is that there are many working on this collaboration. Specifically, finance is developing to support the Energy Transition by addressing the different elements.

*The views expressed are the author’s and not ICAEW’s