In this week’s Infrastructure Policy Watch, the state of energy in the last year, and how infrastructure can address inequality.
World Energy Outlook addresses the need for climate action
Extreme weather events, made worse by decades of high emissions, are already affecting energy supply.
This was the key message from the International Energy Agency (IEA)’s annual World Energy Outlook report.
The report identifies and explores the biggest trends in energy demand and supply, as well as what they mean for:
- The reliability of energy services;
- greenhouse gas emissions levels and their effect on the planet; and
- economic development.
Links between energy and climate change
The report outlines that reliable energy services and climate action are closely linked.
Energy makes up a large percentage of global emissions – tackling these is key when it comes to climate action.
And making progress on renewable sources of energy will mean the service is more secure, as providers aren’t relying on sources that could run out.
There’s more clean energy than ever before – more than 560 gigawatts of new renewable energy were created in 2023 – but the way it’s used is inconsistent.
Nevertheless, the transition to clean energy is moving along. By the end of the decade, the global economy can continue to grow without using additional amounts of oil, natural gas or coal.
Threats to energy security
This year’s outlook was published amid a backdrop of conflict in the Middle East threatening energy security.
Global energy markets have been affected, which can lead to supply shortages and result in energy services being unreliable.
Threats to energy security can also make it harder to co-ordinate action on reducing emissions due to tensions between different nations.
The report highlights that more clean, green and efficient energy systems can reduce these security risks.
The ICE’s view
Resilience is a continuous process.
The choices made today about infrastructure have impact for decades to come. Governments need to build in resilience, not lock in vulnerability.
The ICE’s policy position statement on climate resilience and adaptation outlines that investment in resilience and adaptation is essential to protect countries from natural disasters.
Prioritising resilience now will enable countries to develop stronger infrastructure systems in the long term. Having reliable infrastructure services can help support economic development.
There’s also a need for a diverse energy mix to address current and future concerns around energy security and rising costs, outlined in the ICE’s latest insights paper on nuclear energy.
Infrastructure can help boost African economies, G20 countries agree
Infrastructure can play a key role in reducing poverty and investment in African countries is vital, the G20 Infrastructure Working Group has concluded.
During Brazil’s G20 presidency, the group held a series of discussions about Africa, infrastructure and development.
Infrastructure projects provide jobs, improve connectivity and attract further private investment, boosting economic growth across communities.
Even though the African continent is larger than two of the world's major powers, China and the United States, it only holds 4% of the world's infrastructure stock.
The importance of a strategic approach
Eric Ntagengerwa, head of the transport and mobility division at the African Union, stressed that African countries need to move towards a unified and strategic approach to infrastructure investment to tackle poverty and inequality.
A more strategic approach can help make the most of investment by selecting projects that address people’s needs efficiently. This is outlined in the ICE’s Enabling Better Infrastructure (EBI) programme.
Investing in economic infrastructure can aid development, allowing countries across the African continent to connect with each other and work together on shared goals, like reducing greenhouse gas emissions.
The ICE’s view
As the G20’s Infrastructure Working Group has said, infrastructure is key to reducing inequality.
For example, many countries around the world have commitments to reach net zero in the next few decades. This will require industries to transition to green sources of energy.
If this transition isn’t managed carefully, it could widen the poverty gap through higher energy prices for consumers.
Governments need long-term plans in place to ensure a fair transition takes place.
In the ICE’s Financing Net Zero Next Steps programme, we outlined that international governments need to have long-term plans in place that link to key national objectives (like net zero) and sustainable funding.
This can speed up a fair net zero transition where benefits are enjoyed equally.
