The document discusses energy transitions on a global scale. It defines energy transitions as shifts from one dominant energy source to another that typically take decades to occur across countries. While governments are driving transitions to meet climate goals, there is no single global transition but rather many national transitions due to differing resources and goals. Key challenges of transitions include reducing fossil fuel use, increasing renewable electricity and electrifying other sectors like transport and industry in a cost-effective way while ensuring grid reliability. Opportunities exist for distributed renewable resources and new digital technologies to empower individual citizens and communities in transitions.

1. Energy Transition(s): where are
we?
Lima, 5th Global Energy Forum
22 October 2019
Jean-Michel Glachant
Director Florence School of Regulation
& President FSR Global Hub
European University Institute (Florence, Italy)

2. FSR.EUI.EU
Tell me my
future: at 15
and at 35?
Paris Agreement
is 4 years old…
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Energy Transition(s)… overview
Five key questions… answered after 3 weeks… to frame 1 year of research
• 1- What is an “Energy Transition”?
• 2- What are the costs & benefits of the coming energy transition(s)?
• 3- Why some encourage more than others?
• 4- Main challenges of these energy transition(s)?
• 5- Opportunities of energy transition(s) for the citizens?
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1- What is an “Energy Transition”?
Humans did many energy transitions
Producing fire; domesticating ox, donkey, camel, horse, etc; domesticating wind (sailing, wind
mill); domesticating rivers (river mill); etc.
Last Energy Transitions (Vaclav Smill 2016-17)
Across countries
Coal > 50% energy in: England 1620; France & USA 1870-80; China 1960
Transition Duration: in a given country, Coal up to 1 century
Leapfroging countries
Oil in 20 years: 1950-70 Japan, 6% to 72%
Gas in 10 years: 1965-75 NL, 5% to 46%
Wind in 14 years: 2000-2014, 12% to 41% of electricity
Entire World: much slower
To do world +20% (5% to 25%) it took: Coal 35Y, Oil 40Y, Gas 60Y (need of specific assets)
Today replacing x4 times more (80% world energy = all fossil fuels): How many years? 30 Y? ??
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1- What is an “Energy Transition”?
IEA (World Energy Outlook, November 2018): Government driven
195 countries signed for long-term climate goals under the Paris Agreement in
2015 > implemented by 2030?
“Today over 70% of global energy investments ($2,000bn yearly = < 2.5% GDP) are
government driven – the worlds’s energy destiny lies with decisions and policies
made by governments” (Fatih Birol)
 Will it shorten the length of the transition?
 NO (IEA 2018) World countries globally will reach their cumulated “Paris
Pledge”, but this is not enough to trigger a world emissions peak. World 2°C
still out of reach.
 No guaranteed pathway yet. And actual implementation of ‘Paris’ Pledges by
countries in 2020-2025 to be checked only in 2023
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1- What is an “Energy Transition”?
IEA & Argentina Presidency (“Energy Transitions in G20 countries”, September
2018) Quote:
“Energy transitions are driven by multiple goals, including *modernising and diversifying
the economy; *improving energy security by reducing import dependency and securing
energy access; *improving air quality; and *mitigating climate change.
> Because the *national resources of G20 economies differ, and because *GDP growth,
*per capita energy use and emissions vary from country to country, the energy sources and
technologies on which G20 energy system transitions are based are highly diverse.
> The pathways chosen by individual G20 countries to transform their respective energy
sectors are also reflected in the Paris Agreement’s Nationally Determined Contributions
(NDCs)”
 No single world energy transition, but many countries energy transitions
 Any single world Energy Transition economics?
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2- Costs & benefits of energy transition(s)?
Various goals, technologies and resources of energy transitions = various costs & benefits
No doubt; but do we have a robust world economics core: the “Climate” component of it?
First, potential total costs of world Climate Change are not measured yet, we only have
predictions
(Size of uncertainty) applied (to Size of event)
Some consensus on the type of events (catastrophes as drought and flood, mass extinction
of species, agriculture decline, etc) and shape of their costs
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Nordhaus (Nobel 2018) evaluation: 4% GDP for 4°C (based on past local weather shocks)
To compare: Earthquake Japan 2011 = 3% GDP
*When to start stopping?
3°C (Nordhaus)?
2°C, if not 1°5C (Paris)?
**When too late?
(irreversible)
3°C to 4°C?
2- Costs & benefits of energy transition(s)?
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>> Very strong criticism (like N. Stern & J. Stiglitz) for lack of relevant empirical basis
Recent analysis
Working Paper NBER, August 2019 (Kahn& C°)
Past increase temperature 1960-2014 in 174 countries, reproduced again in 21 century, reduces
GDP by -7% in US; but temperature limited to Paris Agreement limits to -1%
(BAU: -13% in Canada; US, Japan & India -10%)
Nature Climate Change (US EPA report on Climate Change) April 2919
Going from 2.8°C to 4.5°C in US: Health impact ($46bn) Loss of labor ($75bn) as major costs;
Loss of coastal land ($26bn), Road damage ($12bn), Flood ($3.8bn). But loss of crops ignored
Global Commisssion on Adaptation (Ban Ki-Moon, CEO World Bank Georgevia, Gates Fundation,
etc) September 2019 – Detailed Cost & Benefits analysis
Doing $1,800bn investments (<2% world GDP) by 2030 (in *weather warning, *infrastructures,
*dry-land farming, *mangrove protection,* water management) could yield $7,100bn (8% GDP)
Examples: *Knowing storms 1 day earlier can cut damages by 30%; *using drought resistant
seeds increase crops in Zimbabwe; *climate-responsive infrastructures in towns prevent flood
damages; etc.
2- Costs & benefits of energy transition(s)?
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3- Why some encourage more than others?
Fundamental: Heterogeneity of Climate Change dimensions
OECD works for COP21 (in 2015): Annual temperature change scenario
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OECD works for COP21 (in 2015): Precipitations scenario
3- Why some encourage more than others?
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OECD works for COP21 (in 2015): Urban Floods scenario
3- Why some encourage more than others?
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OECD works for COP21 (in 2015): Sea-level coastal threat scenario
3- Why some encourage more than others?
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Heterogeneity of Climate dimensions
IEA & Argentina Presidency (“Energy Transitions in G20 countries”, September 2018): no
single world energy transition, but many countries’ energy transitions
Energy transitions are driven by multiple goals, including modernising and diversifying the
economy; improving energy security by reducing import dependency and securing energy
access; improving air quality; and mitigating climate change.
Because the national resources of G20 economies differ, and because GDP growth, per
capita energy use and emissions vary from country to country, the energy sources and
technologies on which G20 energy system transitions are based are highly diverse.
The pathways chosen by individual G20 countries to transform their respective energy
sectors are also reflected in the Paris Agreement’s Nationally Determined Contributions
(NDCs)
3- Why some encourage more than others?
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More of Basic Politics with Geography: Geopolitics
IRENA January 2019 “A New World: the Geopolitics of the Energy Transformation”
As big shift as “biomass to fossil fuel” 2 centuries ago. Why?
**Relative position of states will reverse (fossil fuels rich to go down)
**New energy leaders will emerge: China for sure; India why not
**More diverse energy actors
Renewables are better distributed all over the world, and within countries
More decentralised energy: small entry size & low costs –down to communities,
individuals, off-grid & mini-grid
**Change of world trade routes and trade flows (fossil fuel rich don’t buy anymore)
**Emergence of new alliances (sharing loads, infrastructures, technologies, financing)
3- Why some encourage more than others?
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More diverse energy actors
IEA Forecasts, yesterday, 21 October 2019
3- Why some encourage more than others?
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More diverse energy actors
IEA Forecasts, yesterday, 21 October 2019
Distributed PV installed capacity
+150% in 6 years (+300 GW)
• BUT Potential of rooftop PV
Within this reduced cost path
is x16 times more (= 9,000 GW)
3- Why some encourage more than others?
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4- Main challenges of these
energy transition(s)?
Several Basic dimensions (Argentin diversity)
*Reducing fossil fuel emissions
- Increasing energy efficiency of fossil fuel usage (investment + asset life duration)
- Substituting gas to coal
- Decarbonizing fossil fuels (CCS – CCU)
**Greening electricity
- Cost is not anymore a barrier to choice RES (IEA; Lazard investment bank; Irena)
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4- Main challenges of these
energy transition(s)?
- Cost is not anymore a barrier to RES
choice (Lazard investment bank, Nov.
2018)
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4- Main challenges of these
energy transition(s)?
- Cost is not anymore a barrier to RES choice (Irena, May 2019)
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4- Main challenges of these
energy transition(s)?
**Greening electricity
Levelized Cost Of Energy is not anymore a barrier to RES choice
But
- System Value (Texas 125% average wholesale; California 75%)
- Balancing the variability of RES <> increasing system flexibility (with gas CCGT? Or Gas
peaking? Or storage and demand response?)
- Adapting grids (‘Fit & Forget,’ or ‘Flexibility’), markets (Equilibrium shifting to realtime)
***Electrifying energy usage (to green them)
- Heating & Cooling
- Transport (electrical mobility >EVs> Florence School Global in New Delhi 5th November)
- Industry processes > Energy Transitions Commission report “Mission Possible” for harder
to abate sectors
Climate neutral by 2050: cement, steel, plastics, heavy road transport, shipping, aviation
- Hydrogen for chemistry?
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 Energy Transitions Commission report “Mission Possible”: Total costs 0.5% GDP
(EU: Euro 100bn a year – Euro 200 per capita)
• Green steel approximately US$180 on price car.
• Green shipping <1% price imported pair of jeans.
• Low-carbon plastics 1 US cent on bottle of soda.
• Heavy-duty transport, electric trucks & buses: either battery or hydrogen fuel cells
likely cost-competitive by 2030
• Shipping and aviation, liquid fuels likely preferred option for long distances but can
be made zero carbon by using bio or synthetic fuels
• In industry, more efficient use of materials + increased recycling & reuse within
more circular economy could reduce emissions by 40% globally –more in
developed economies – with greatest opportunities in plastics & metals.
4- Main challenges of these
energy transition(s)?
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 Energy Transitions Commission report “Mission Possible”: Total costs 0.5% GDP
(EU: Euro 100bn a year – Euro 200 per capita)
Across all sectors of the economy:
• Direct & indirect electrification (through hydrogen) to play significant role in
most sectors of industry & transport, leading sharp increase power demand:
x4-6 times from today’s 20,000 TWh to 100,000 TWh by 2050.
• Hydrogen use increases dramatically (x7-11 times by 2050), with 2 routes to
zero-carbon hydrogen: electrolysis (likely to dominate in long term) and steam
methane reforming (natural gas + CCS).
4- Main challenges of these
energy transition(s)?
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** ** Reducing energy needs (= increasing energy efficiency) (I do not expand)
- Building retrofitting
- Smart buildings & smart devices
- Circular economy
** *** Agriculture & Human food
*** *** Human & Social Transition for fossil fuel regions & countries (Germany, Euro70bn)
*** *** * Financing
Surprisingly it is not seen as the most problematic
Growing understanding that LT value of assets and of invested money is to be greatly
impacted tomorrow >> so need to act before
2015 Governor of BoE Mark Carney: > $20,000bn of assets at Climate Threat
2019 IMF Head Christine Lagarde: to exclude Fossil Fuel from CBanks eligible assets?
2019 CEO World Bank at “Global Commission on Adaptation” > Today at IMF Head
4- Main challenges of these
energy transition(s)?

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*** *** * Financing
Green Finance, Green Bonds Euro already 200bn in 2019 (~ 3% World Bonds)
Far from $6,000bn a year for 2°C (7% today world GDP according to IPCC)
But the good questions are asked.
Issues: - defining Green Bonds (EU works on it), - labelling Green Funds (only 400 labelled
on 60,000 in EU), - pricing seriously Carbon
All of it is on the European agenda (and on BloombergNEF’s agenda)
4- Main challenges of these
energy transition(s)?

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*** *** * Financing: Green Bonds
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4- Main challenges of these
energy transition(s)?

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*** *** * Financing: Total Green or Sustainable
assets
make around S31,000bn (Up +34% from 2016)
4- Main challenges of these
energy transition(s)?
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5- Opportunities for the citizens?
Humans did many energy transitions
Producing fire; domesticating ox, donkey, camel, horse, etc. To coal; oil; gas
What’s new today or tomorrow?
IRENA Geopolitics
Renewables are distributed; new actors will emerge
IEA Forecasts
Rooftop PV becomes irresistible; already 25% of Australians; 1.5m Germans; Indian
farmers equipped with PV + PV-driven water pumps; African villagers renting PV rooftop as
“Pay2Go”
My own work: 2 big waves converging
*RES distributed resources with lower entry size & costs (for individuals, business, or
communities)
**Digitalisation of trade (# activation of “retail-size” units: Peer2Peer; Platforms;
Blockchains) and (#asset fleet managers: EV fleets; ZNC Buildings; mini-grids for
allotments; IoT)
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Energy
Transition:
What’s
new…
& Beyond?
??
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Today, Tomorrow:
An ocean of changes…

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Fasten
your seat
belt:
Take-off!
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A sea of opportunities for citizens
& communities…

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And the 5th November
FSR Global settles in New Delhi…

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Daniel…
Fasten
your seat
belt:
Take-off!
32
The 5th November
FSR settles in New Delhi…

33. Muchas Gracias… for your
attention
Email contact: jean-michel.glachant@eui.eu
Follow me on Twitter: @JMGlachant near to 57,000 tweets
My web site: http://www.fsr.eui.eu