You’d think the renewable energy transition would be chugging along nicely, right? That our fossil fuel use looks set to continue its decline, slowly marching to its death and ready to become a scar in our history as Earth’s custodians? A huge and grotesque scar at that but a scar nonetheless. After all, the argument from a climate change side continues to beat loudly. There have been record floods recently in Spain and analysis has shown that 2024 looks almost certainly set to be the warmest year ever beating… you guessed it, 2023! The list of climate change’s impacts continues to unfortunately grow and the decarbonisation of the energy industry is a key piece in stopping that growth.
Yet, I can’t help but feel that recently that chugging has started to become more of a slow-walking place. Increasing financial concerns, recent political decisions and an increase in climate scepticism, which will be broken down in this article, have come to hurt the renewable energy transition. And as a result, I wanted to take a step back and reassess the renewable energy picture and ask, truly, what kind of a state is it currently in?
Thankfully, in the UK the situation looks good; the list of positives in my notebook from researching this article is considerably longer than the negatives. To kick off Labour's period in government a record-breaking renewable energy auction was held, in which the highest number of renewable energy projects in the UK secured funding through the Contracts for Difference (CFD) scheme. This was largely off the back of the Labour government's decision to raise the auction budget. The auction oversaw a 9.6 gigawatt (GW) increase in the UK’s future renewable energy production capacity, which included 4.9 GW of offshore wind, a considerable step up from the 0 GW confirmed last year, from the Ørsted’s Hornsea 4 and ScottishPower’s East Anglia 2 projects. 3.3 GW of Solar capacity was also secured as well as 1.0 GW of onshore wind power, which most notably included a project in England, marking a revival of it under the Labour government after an effective period of exile under the previous conservative government. Ultimately, the auction can be seen as a positive contribution to the energy transition to the UK and whilst the actual capacity realised from the auction is at the mercy of the economic pressures that come with setting up renewable projects, with previous years projects having seen considerable scale backs in their capacity, it marked a positive intent from the new government and highlighted an increasing appetite for renewable production in the UK.
Following the CFD auction, the Labour budget was announced and whilst missing the mark on many issues within the UK, in terms of renewables the budget largely continued in the same trend as the auction. Analysis from experts such as Carbon Brief and E3G has generally found the budget to be supportive towards the energy transition in the UK. Clearly recognising the UK's unique position within the global transition towards renewables and the merit in early investment into it, Rachel Reeves pledged to make the UK a “clean energy superpower”. The budget helped outline the framework in which both public and private investment will be ploughed into renewable energy projects in the UK. Greater private investment will come through the national wealth fund, which will look to support innovation within the renewable energy field such as the development of “Green hydrogen” and its integration into current energy infrastructure. The vehicle to drive public investment will be the newly established GB Energy, a publicly owned company that will look to invest in and own renewable energy projects. It will be largely funded through windfall tax on oil and gas companies, which rose to 38% in the new budget. With the importance of Public Investment for the energy transition stressed by the IMF, the establishment of GB energy is crucial and may help to shift the reliance from privately funded projects within the UK whose subjection to shareholder interests can have damaging effects.
So, increased investment into the energy transition, both publicly and privately, the resurrection of onshore wind in England, a potential 9.4 GW increase in our renewable capacity and state-owned renewable energy projects – it all sounds a bit too good to be true really. And, well, that’s the drawback here because if anything the previous government has taught us it’s that these promises can largely just be words rather than actions. I fear as well that as fires elsewhere in this budget start to need to be put out, how quickly will renewables be sacrificed and the money pledged towards them reduced? Ultimately, the state of the energy transition in the UK is in a healthy place but for the true impact of these decisions discussed to be realised, it will take a patient and committed government that remains steadfast on its climate and renewable energy goals. It will take continued investment (and a little balls) for the UK to be fully dependent on renewable sources but we have taken a big step towards it seemingly.
Globally, the picture looks slightly more bleak however…
It would be remiss of me not to mention the recent election results in the USA and, in truth, much of this article was put off until the results of the 5th of November. As one of the world's most powerful countries, America’s policies on the renewable energy transition will dictate or influence the attitude towards it in other countries and the re-election of Donald Trump only spells bad news for the energy transition in the States. As the Agence France-Presse puts its, putting Trump back in the White House will “slam the brakes on the transition to Green Energy”; the chugging of energy transition now instead coming to a screeching stop. For one, Trump will almost surely pull out of the Paris Agreement again, as he did in his previous presidency, and without that commitment towards reducing global emissions, the need and enthusiasm for renewable energy projects will wane in America. Trump has also described Oil as “liquid gold” which can only infer he isn’t looking to transition away from fossil fuels. If anything, he is looking for more investment towards the extraction of the US’s oil resources. This sets a dangerous precedent. If the USA, inarguably the largest player on the global stage, won’t hold itself accountable for reducing CO2 emissions, analysis predicts that with Trump back an additional 4 billion tonnes of CO2 equivalent emissions could be released by 2030, and won’t transition away from fossil fuels, why should others? India has already looked at exploiting its remaining oil resources before fully transitioning to renewables and could be more incentivised to do so now. China has seen somewhat of a solar and wind energy boom as of late, and, as the largest exporters of solar panels, their role in the energy transition is crucial. Yet, seeing their greatest economic competitors increase their oil outputs may mean they choose to tap into the oil resources as well. Let’s hope these brakes are too old and knackered to work.
Elsewhere, the state of the global energy transition remains a mixed bag. The ongoing COP 29 may be a make or break for the ongoing energy transition in developing countries. The chronic clean energy finance gap faced by developing countries remains a significant barrier still to the energy transition and efforts at COP 29 will look to remedy this. The main topics of focus will include the agreement of the New Collective Quantified Goal for climate finance which will determine the target amount of funds that will look to be channelled towards developing nations. We will have to wait if the end amount decided on is ambitious and large enough to have a meaningful impact on the energy transition in developed countries. British Petroleum, BP, also recently abandoned its supposedly “ambitious target” of reducing oil and gas production by 40% by 2030. This came from investor pressure, with questions around their short-term profit-making ability due to their renewable energy investment. This again, much like the USA’s stance on renewables, sets a dangerous precedent. Most investors will always be focused on profits and renewable energy has never promised to be a get-rich-quick scheme, yet if BP is willing to give up its renewable stance just to appease shareholders how long is it before other energy companies face similar pressure? It is a dire situation for the energy transition if oil giants further scale back their transitions away from fossil fuels.
So what is the current state of the energy transition? Perhaps it would have been naïve to think that it would be going swimmingly, after all, a full energy transition will take a considerable global collaboration, something history tells us doesn’t occur regularly. And it’s slightly disheartening to see the transition take the hits it has a recent weeks. Yet, I see no reason not to be optimistic and I hope that trends seen in the UK and China ultimately become the trends elsewhere in the world as well. As long as public support and climate change remains the energy transition will continue.