The world needs an energy transition

There is plenty of talk about energy “transition” in the current discourse around climate mitigation, but what is actually happening in the energy sector is going beyond that – our present trajectory is more akin to a “revolution”. A transition implies a clear and neat path from A to B, with defined milestones and a predetermined outcome; whereas with a revolution the journey is treacherous, the destination uncertain, and there is high risk of collateral damage along the way.

The current polycrisis of high inflation and interest rates, energy security issues, and the climate crisis, have made it clear that we cannot afford to focus on one or two prongs of the energy trilemma – security, affordability and sustainability – at the expense of the others.

Second, it’s critical to ensure that all voices are heard, including those from emerging economies. It is after all the developing countries – which emit less carbon than the developed countries – that are suffering disproportionately from the effects of both climate change and inflation, further putting economies, communities and political stability at risk.

And, because of this, forums that are inclusive, rational and action-oriented are essential. The G20 is of course a leading forum, as is Cop; and the upcoming Cop28 being held in the UAE is important, as it is a regional hub for innovation and collaboration. At Cop28, we should see a focus on implementation of measures that balance the energy trilemma, while also moving us towards a greener future.

But while convening and agreeing on targets is one thing, one also needs to focus on measurability. That is why frameworks – such as those for transitioning companies by the Sustainable Markets Initiative Energy Transition Task Force – are so important. Developed to provide stakeholders with the information they need on performance and progress, this framework recognises the activities and impact of companies reducing and removing emissions, as well as those accelerating the development of low-carbon solutions at scale. Ultimately this will help to mobilise capital into transitioning companies.

This framework brings many perspectives together, as it was developed by the Sustainable Markets Initiative Energy Transition Task Force working group. This group includes parties from across the energy and utilities, sustainability, metals and mining, banking, insurance, and management consulting sectors. Rating agency Sustainable Fitch will utilise it to develop an independent transition assessment, illuminating the spectrum of companies in the undefined space between carbon intensive and net zero today.

While the desired destination is unequivocally a greener future, the journey ahead – if we are to sidestep a messy revolution – needs to be far more considered. A path towards as clean and green a transition as possible must involve building rational frameworks as well as a frank appraisal of the financial realities, while also leveraging expertise and innovation – including from the Middle East and Africa, and from the hydrocarbon sector itself, which has important depth and breadth of knowledge and skills.

The National