This time last year I wrote in this very newspaper that 2021 could prove to be a year that defines our long-term future. The argument was that with COP26 taking place the end of the year, failure to account for the role of the energy transition in achieving climate ambitions now would irreparably compromise our ability to meet climate and development goals this decade. 2021 was our last best hope. Leaders had to make a choice.
Well they chose, and many strengthened their commitment to a decarbonised future. Nations committed to phasing down coal and phasing out inefficient fossil fuel subsides. More than 100 countries signed a global methane pledge to cut emissions by 30 per cent by 2030, and rich nations reinforced a commitment to mobilise $100 billion through 2025 to support efforts in the developing world.
Moreover, the ambition for net zero is extraordinary. Before Cop26, around 30 per cent of the global economy had stated carbon neutrality goals. Today, 90 per cent of the global economy and three quarters of global emissions are covered by net zero ambitions which if fully implemented, would adjust our trajectory from more than 3ºC of warming to below 2ºC. A notable achievement given much of this was pledged amid profound social and economic uncertainty.
And still the most important meetings lie ahead of us. The Mena swing including Cop27 in Egypt and Cop28 in the UAE will present a unique package of climate discussions whose goal it will be to shift the emphasis from commitments to implementation. From this point the world’s energy response to the crisis before us will be defined not by the gravity of our words, but by the magnitude of our actions. Both countries have an opportunity to show leadership in this respect.
By Cop27, we should be reflecting on a second straight year of record renewable energy deployment globally. Indeed, record levels of deployment and investment will need to be set each year this decade if we are to get anywhere near a path to net zero by 2030. To be more specific, around 800 gigawatts of renewable energy deployment is needed on average each year this decade to meet growing power demand in a way that is consistent with climate and development objectives, up from 260 gigawatts in 2020.
Notably, the transition is not just a climate agenda but an economic one too. Sixty per cent of the new capacity added in 2020 is delivering power at lower costs than the cheapest new fossil fuel option. And since 2010, more than 500 gigawatts of renewables added in emerging countries are producing power at lower costs than the cheapest coal option, reducing electricity costs by around $32bn every year. This unstoppable trend puts money back in the pockets of households and governments across the developing world.
If the next two years can inspire a paradigm shift in investment flows away from high-risk fossil fuels and into the energy infrastructure of the future, we will have a chance. Trillions of dollars of planned investments in traditional energy will have to be redirected away from traditional energy to transition technologies between now and 2050, with investments in renewables more than doubling to around $800bn annually. It is no easy task, but this ambitious agenda delivers much more than it demands.
This is particularly true in the developing world. At Egypt’s “African Cop”, it will need to be abundantly clear that the continent’s various industrialisation strategies and long-term economic and social development agendas are weakened by a reliance on fossil fuels. There is either sustainable, inclusive, long-term renewables-based growth in Africa or there is a risk that hundreds of millions of citizens will continue to experience no growth at all. What the energy system of pipelines and centralised grids could not deliver over the last 80 years will not change in the next eight.
The transition offers an approach that brings greater access to wealth with reduced exposure to risk. The International Renewable Energy Agency’s analysis shows Africa’s economies collectively thriving under an ambitious energy transition scenario, creating millions of jobs and growing the continent’s economy by 7 per cent over business as usual by 2030. Naturally, to many African countries highly dependent on fossil fuel exports and with nascent manufacturing capabilities, a low carbon future appears threatening. The real threat, however, is inaction. This is not a call to immediately unplug the current energy system, but it is an argument to move swiftly and without uncertainty towards a new one.
As we push beyond Egypt and towards the Gulf, the UAE is a step closer to the apex of energy change. It was the first country in the Gulf region to announce a net zero ambition and is a long-time regional pioneer in renewable energy investment and deployment both at home and abroad. Using this as a platform, UAE can leverage Cop to show the world what it takes to be a 21st century energy leader. Not by telling us, but by continuing to show us. The recent UAE-Irena pledge to mobilise $1bn for energy transition projects, underpinned by $400m from the Abu Dhabi Fund for Development, is another example of how to do that.
Challenges undoubtedly lie ahead. Last year’s energy crisis serves as a reminder that we live in a world defined by energy scarcity, inequality, and geopolitical influence, and as we make the transition these factors may grow in intensity. But they cannot adjust our course. Success is no longer a moon shot, but a choice. Glasgow kept 1.5 alive. Now Egypt and the UAE have a unique opportunity to show the world that in pursuit of climate and development goals, we can thrive.