Paris Agreement and Global Energy Transition

Paris Agreement

Paris agreement is the first universal and legally binding agreement on climate change which was adopted in 2015 at the end of the United Nations conference on climate change. The aim of the Paris agreement is to strengthen the global response to the threat of climate change by keeping a global temperature rise below 2 degree Celsius at the end of 21st century and pursue efforts to further limit the rise to 1.5 degree Celsius.
Additionally, the agreement aims to increase the ability of countries to deal with the impact of climate change, and at making finance flows consistent with a low green house gas (GHG) emissions and climate. Under this agreement all parties are required to put forward their best efforts through nationally determined contributions (NDCs). This also include requirements that all parties should report regularly on their emissions and implementations efforts after every five years.

Global Energy Transition

The global energy transition is a pathway towards transformation of the global energy sector from fossil-based to zero carbon at the end of 21st century. The decarbonisation of the energy sector requires urgent action on a global scale to mitigate the effects of climate change. To achieve goals of the Paris agreement and global energy transition, countries around the world are upping the share of renewables in their energy mixes. The countries are unfortunately not doing it quickly enough to meet the Paris agreement goal. According to the World Economic Forum report [1], the top ten countries contributing in the global energy transition are Sweden, Switzerland, Norway, Finland, Denmark, Austria, United Kingdom, France, Netherlands and Iceland with ranking from top to bottom respectively. These countries are ranked according to the "Energy Transition Index (ETI) 2019" [2]. Among these countries, Finland is on the top regarding the readiness for Energy Transition followed by Denmark and Austria on third. The reason behind countries at the bottom of ETI ranking is political instability and lack of effective regulatory framework. The ongoing geopolitical conflicts and dependency on fossil-fuel based power generation infrastructure also restrict  opportunities to develop the conditions for energy transition. For successful energy transition, the World Energy Council has developed some tools that are; World Energy Issues Monitor, Energy Trilemma Index, World Energy Scenarios, Dynamic Resilience Frame Work and Innovation Insights which we will discuss one by one.

1. World Energy Issues Monitor

The World Energy Issue Monitor is a tool which is based on the data collected from 2300 energy leaders of 86 countries. It provides an idea of key issues that make challenges for the world energy transition. It gives an insight of the risks and uncertainties at country, regional and global levels. This tool can be  used for common understanding of the successful energy transitions. The tool has capability for assessment and comparison of regional variations, understanding polices and areas of concern and follow the evaluation of technology and trends. The tool can be used online available at [3]. While analyzing the tool in Pakistan's perspective, we can see that the US policy, commodity prices, exchange rates and renewable energies are the critical uncertainties which are making hurdles for energy transition and investment. The action priorities are energy efficiency, innovative transport, corruption and economic growth as shown in the figure 1.

Figure 1: World Energy Issue Monitor 2019 for Pakistan, Source: World Energy Council

2. Energy Trilemma Index

The Energy Trilemma is based on the Energy security, Environmental Sustainability and Energy Equity. A healthy energy system depends on the carefully managed balanced trilemma between the three dimensions. According to the World Energy Council Trilemma Index, a country's energy performance is ranked on these three dimensions and also include recommended areas for improvements on policy coherence and integrated policy innovation. According to the World Energy Council report, the top ten countries of the World Energy Trilemma Index are, 1. Switzerland, 2. Sweden, 3. Denmark, 4. United Kingdom, 5. Finland, 6. Frnace, 7. Austria, 8. Luxembourg, 9. Germany, 10. New Zealand. Among these ten countries, Sweden, Luxembourg and Switzerland are at the top with respect to Energy Security, Energy Equity and Environmental Sustainability respectively. The full report is available at [4]

Figure 2: Energy Trilemma, Source: World Energy Council

3. World Energy Scenarios

The three scenarios developed by world energy council are Modern Jazz, Unfinished Symphony, and Hard Rock. Modern Jazz represents a digitally disrupted, innovative and globally market driven world. Unfinished Symphony is a world shaped bu government polices, in which more coordinated and sustainable economic growth models emerge as regions collaborate to address broad environmental concerns and, in particular, climate change. Hard Rock explores the consequences of weaker and unsustainable global economic growth with inward-looking national policies.

4. Dynamic Resilience Framework

The resilience of energy system is its ability to prepare for changing conditions, withstand and recover rapidly from disruptions. These systems need to prepare for complex emerging risks. As the increasing of extreme weather events, weather dependent renewable energy requiring new storage options bring new opportunities, but also increasing cyber security threats and data integration challenges. The main focus of Dynamic Resilience Framework is Extreme weather, Cyber risks and Geo-spatial analysis.

5. Innovation Insights

This tool describes how successfully to utilize the existing energy assets while transiting to a decarbonized system. The use of existing infrastructure is a resource of more affordable transition to decrabonisation. This tool helps businesses to reframe market strategies to explore the opportunities of reusing existing infrastructure to support transition to a low carbon future.