The Future of Energy: Policy Recommendations from the World Economic Forum
- March 22, 2018
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The clean energy sector earned more than $333 billion in investments in 2017, second only to the record $360.3 billion in 2015, a remarkable figure that shows a growing interest in smart technologies and renewable energy. Since 2010, a total of $2.5 trillion has been invested in clean energy.
The biggest investments last year were made mostly in China ($132 billion), followed by the U.S. ($67 billion), Australia and Mexico, while Japan Germany invested less than in previous years.
As the economic and environmental benefits of clean energy are becoming clear to businesses, governments and households, the general trend is to transition towards new technologies. Experts estimate that if investments continue at the same pace, they will reach $1 trillion/year. This figure may sound impressive, but change is not happening fast enough. Climate change is more worrying than ever and a solid legal framework is required to implement clean energy initiatives faster and at a lower cost.
The World Economic Forum’s Global Future Council on Energy that was held recently suggests several policies for a smooth transition to clean energy, agreed upon after strategic discussions with industry groups, researchers, and economic analysists.
Governments should support local innovation
Countries do not need a large economy to drive innovation in the clean energy field. This was proven time and time again by small governments and local communities that achieved great results by leveraging their hydro and solar power and reducing reliance on fossil fuels. Both homeowners and business owners are becoming increasingly aware of the importance of renewable energy and Governments should allow bigger budgets to innovations in this field, like in the case of Mexico, which is close to becoming a clean energy innovation hub.
Long-term vision and integrated policies
When implementing clean energy policies, governments shouldn’t only look at the short-term effects, but also at the way in which these policies impact the economy in the following ten or twenty years. Will the policy help the country achieve its 2020 renewable energy goal? How will it impact the economy? Are there any infrastructure challenges that could hinder progress?
These are questions that policymakers should answer in advance. For example, American Power and Gas, (a US based energy provider) is also innovating in numerous ways to bring renewable energy alternatives to the American people. In a recent Forbes article, CEO Tom Cummins stated that in order to make renewable energy affordable for the public at large, there needs to be more consumer-centric options to provide it, hence the prices remain high.
Subsidies for clean energy
At present, the amount of fossil fuel subsidies outweighs clean energy subsidies. Governments of 11 European nations offer a combined £80 billion annually in fossil fuel subsidies, encouraging the population to purchase diesel powered vehicles. In order for renewable energy innovations to take effect, governments should focus less on fossil fuels and transition towards clean energy incentives for electric vehicles, solar system installation and green home improvements.
Contrary to popular belief, even countries dependent on coal can innovate in the field of green energy. Norway is perhaps the best example in this regard – a country whose economy used to rely almost entirely on petrochemicals is now embracing clean energy and could even become one of the world’s fully electric powered country.
Apart from these policy recommendations, the World Economic Forum’s Global Future Council on Energy emphasizes the importance of launching new initiatives while at the same time contributing to the existing initiatives of institutions such as System Initiative on Shaping the Future of Energy.
Photo Credit: Jennifer Boyer via Flickr