The world's energy system is 'no longer fit for purpose,' says energy council chief
The council's most recent report forecasts that around half of the global energy system will still not be electrified by 2050. This is due to the high cost of electrification and the fact that many countries lack the infrastructure to support it.
Important Points
According to data from the International Monetary Fund, 46 countries price emissions through carbon taxes or other emission trading programs.
Angela Wilkinson is the CEO of World Energy Council. She said that there has been a lackluster progress in moving towards a green energy plan.
Wilkinson, who is the director of CNBC's SquawkBox Asia on Wednesday, said that "the most recent energy pulse report from April shows the world energy system no longer fits for purpose." She was referring to the findings in her organization's Energy Pulse Reports which provide snapshots of trends within the energy ecosystem.
According to the council's latest report, around half of global energy systems will not be electrified until 2050. This would mean a major blow for many governments who have pledged net-zero.
She continued, "Most energy leaders are concerned that the pace of the change is too slow for us to stay on track with the Paris Agreement." In the report, 64% of energy leaders around the world expressed their concern.
In the 2015 Paris Climate Accord, governments from around the world agreed to limit global warming to well below two degrees Celsius, in comparison to pre-industrial levels. They also agreed to pursue efforts to limit temperature increases to 1.5 degrees Celsius.
Wilkinson stated that the slow pace of energy transition was due to the stress on energy capacity and security, even before the pandemic.
After the Covid-19 pandemic began, the global energy market was also impacted by several setbacks, including the Russian invasion of Ukraine, Europe’s decision to decouple itself from Russian hydrocarbons, and the impending global recession. This has led to the energy markets and global system being on a tightrope.
Wilkinson, speaking to CNBC, said: "We're trying to double the size of our energy system in order to meet the demand [and] decarbonize it faster than we have ever done before."
Is it possible to avoid taxes?
The journey towards net zero is underpinned by various toolkits that aim to shift energy mix away from fossil fuels and toward low or zero-emission energy sources. Carbon taxes are one way to achieve net zero. They charge greenhouse gas emitters a fee for every tonne of carbon dioxide they emit.
According to data from the International Monetary Fund, 46 countries price emissions through carbon taxes or other emission trading programs.
Wilkinson stated that a global carbon tax was impossible to administer. Wilkinson said that there is no true market price for energy or carbon because of the subsidies, regulations and uneven economics.
She added that the importance of a tax is its signaling price mechanism to both consumers and investors. "There's a carbon cost that has to be paid by society... the signal is important."