Syllabus

GS 3: Conservation, environmental pollution and degradation, environmental impact assessment

Context: 

Recently, World Economic Forum (WEF) has released report on global energy titled ‘Fostering Effective Energy Transition 2025’. 

Key Highlights of the report

• Global energy systems are facing growing challenges due to climate change, political conflicts, and fast-changing technologies.
• According to the report, record energy demand in 2024 has been driven by factors like artificial intelligence (AI) and electrification.
• Extreme heat has revealed major weaknesses in global energy supply chains and raised concerns about the world’s ability to meet its climate goals.
• Despite the growth of renewable energy and better energy efficiency, carbon dioxide emissions from energy reached a record high of 37.8 billion tones last year. 
• Although clean energy investment crossed $2 trillion, which is twice the amount in 2020, it still falls well short of the $5.6 trillion needed each year until 2030 to meet net-zero targets.
• The Energy Transition Index (ETI) 2025 showed a modest 1.1% increase in global scores compared to the previous year which was more than double the average growth of the past three years.
• However, progress in the energy transition is still uneven and scattered. Only 28% of countries improved in all three key areas: energy security, equity, and sustainability.
• Many others are still struggling to deal with multiple global challenges at the same time.
• The report noted that "momentum is rebuilding," but emphasized that to achieve a sustainable energy transition, plans must lead to real projects and commitments must be backed by actual investment.

Global Energy Transition: Demand Surges, Investment Lags

• The year 2024 witnessed a 2.2% surge in global energy demand, the fastest in recent years. 
• This was driven by extreme weather, growing cooling needs, and the rapid rise of energy-hungry AI data centers are expected to contribute 10% of power demand growth by 2030. 
• Despite a 49% share of clean electricity in the power sector, clean energy accounts for only 14.8% of the total primary energy mix.
• Meanwhile, clean energy investment growth slowed to 11%, down from the previous 24–29% trend.
• The rising cost of capital, due to monetary tightening and inflation, especially in emerging economies, has worsened the investment gap. 
• While 80% of energy demand growth came from developing countries, over 90% of clean energy investments since 2021 have gone to advanced economies and China.

Security, Equity, and Fragmentation

• In 2024, the world faced record heat and multiple geopolitical disruptions, adding stress to energy systems. 
• While equity improved through subsidies and falling prices, energy security remained fragile, hindered by import dependency, inflexible grids, and limited resource diversification. 
• The rise of domestic resource control policies has further fragmented global supply chains.
• Digital infrastructure and the increasing use of unreliable energy sources are putting pressure on electricity systems. 
• At the same time, more governments are focusing on controlling key energy materials like lithium, cobalt, and rare earths within their own countries, leading to more competition and fragmentation.

Transition Challenges and Regional Trends

• Top performers on the Energy Transition Index (ETI) included Sweden, Finland, and Denmark, while China (12th) and India made strong gains. 
• The United States ranked 17th, and Nigeria rose from 109th to 61st since 2016. 
• However, transition readiness slowed to 0.8%, far below the 10-year average, indicating that the barriers are no longer technological but delivery-related.

Way Forward: Five Key Priorities

• The report stresses:

1. Stable policy frameworks

2. Grid and infrastructure upgrades

3. Investment in skills and innovation

4. Commercialization of clean technologies

5. Increased capital flow to emerging economies

Mains Practice Question

The global shift towards clean energy is creating new pressures on electricity systems and increasing geopolitical competition over critical minerals. Discuss the challenges and suggest measures to ensure a stable and secure energy transition. (10M, 150W)