The energy transition dilemma
A common goal of limiting global warming to well-below 2°C – and ideally 1.5°C by the end of the century as set out in the Paris Agreement – does not mean there is a common or accepted path for how to get there. There are as many ‘pathways to Paris’ as there are climate scenario models. Yet there are some points on which all models seem to agree.
- Radical change to the world’s energy and landuse systems is required.
- The battle will be won or lost in populous emerging markets, where energy supply must grow to meet increasing demand while these markets simultaneously transition to low-carbon sources.
- Action must be taken as soon as possible, as it will be significantly less costly in monetary and socioenvironmental terms than delayed action.
- Policy must address all fundamental elements of the transition to allow the demand and supply sides of the energy system to adjust as required. Carbon pricing calibrated to the end-goal is a core ingredient of any effective policy framework. The lessons of history and the cold logic of market dynamics show that addressing demand is one of the most important ways to exert leverage on the supply side of the energy and land-use system.