Optimism For Climate Action in 2023: Five Key Transformations This Year
So far this year, I’ve noticed an accelerating determination to make real progress on climate change – not just in the future, but increasingly, right now. Stakeholders across the energy transition value chain are moving faster and focusing on action. This building of momentum is critical, as we approach the middle of what is thought of as the critical “decade of action.”
Fortunately, two months into the year, I predict that 2023 will be historic and transformative. The public and private sectors started the year by working together in unprecedented ways toward shared goals and mutual success. This transformation—with businesses increasingly taking leadership for addressing the energy transition in close partnership with the public sector and other stakeholders—is leading to an overdue focus on action over words.
My unprecedented optimism for 2023 going down in the history books as a transformative year is based on five levers of progress that are quickly emerging early in the year:
1. Alignment of government policies with private sector pragmatism: Around the world, countries and regions are stepping up with tangible actions such as putting resources and the regulatory and legal systems in place to deliver real progress. Increasingly, we are seeing tighter alignment between government policies and the way businesses actually work, thus accelerating the opportunities for progress to be made.
In the United States, the Inflation Reduction Act provides a decade’s worth of reliable climate action funding to support both the supply and demand side of the equation—beyond sheer dollars, the ten years of certainty may be the biggest benefit in the long term to catalyze investments. Similar programs to accelerate domestic clean energy deployment are under consideration this year in Canada, and countries in Africa and the Middle East. The European Union is similarly inviting companies to the table as it crafts its next generation of climate policies, from the EU Taxonomy—which evolved into a pragmatic, technology-neutral approach to the energy transition—to investing in energy security and independence as drivers for clean energy and grid modernization.
2. Electrification: Increasingly, electrification is becoming a top-tier driver of near-term action while we make longer-term progress toward decarbonization goals. The war in Ukraine and extreme weather events are intensifying the urgency to address infrastructure today—investments that increase resiliency and security in the grid today while enabling the success of clean energy longer term. In addition, as more sectors such as transportation, heating, and heavy industry decarbonize, they will focus on electrification, which increases the need to harden the grid in preparation. To ensure this happens smoothly, we must modernize existing grids in places like North America, Europe, Asia, and Latin America, where the grid is already mature and needs to be prepared for growing threats of weather and cyber risks, the variability of more generation, and increasing demand. Grid interconnection is an additional tool that can help, something being expanded in the Middle East and Southeast Asia.
At the same time, there is growing investment in building durable grids in emerging economies and regions to develop the best-in-class infrastructure at the outset and prepare for both renewable energy growth and increased energy reliability, affordability, and sustainability. This is crucial to ensuring that everybody benefits from a cleaner energy future and an equitable energy transition.
3. Preparing the ecosystem: With momentum shifting to action from the private and public sectors, it’s time to prepare the broader ecosystem for long-term success. At the outset, this means modernizing outdated regulatory and permitting systems that can cause many years to decades of delay. The EU, UK, and US are all showing greater consensus around such reforms than we’ve seen in decades.
But beyond governments, the private sector also needs to prepare the workforce and supply chain to ensure that the people and factories are ready to keep up with the growing demand. Here, companies increasingly are announcing innovative visions of clean energy manufacturing that combines sustainability, workforce training, benefiting underserved communities, and transitioning from fossil fuel jobs to new opportunities. With both the public and private sector investments, it gives me optimism that the ecosystem will be ready to produce the technology needed for accelerating the energy transition.
4. Public-private partnerships: Perhaps the most impactful but least visible transformation this year is the growing collaboration between the public and private sectors. At this stage, almost everything a company does to enable decarbonization and electrification technology is done in close collaboration and coordination with numerous public and private stakeholders. This has a force multiplier effect, enabling bigger, better, and quicker outcomes than any one entity could alone.
In just the past several months, as I have spoken with GE customers and governments around the world, the growing wave of public-private partnerships supporting the energy transition is continuing to accelerate. Examples abound, including one in Egypt that brings multinational and Egyptian companies and banks together to support efforts by the Egyptian Ministry of Petroleum and Mineral Resources to decarbonize select downstream facilities in the country. The UK’s Teesside brings together government and the private sector to create a green hydrogen industrial cluster.
5. The UAE’s game changer impact in 2023: I’ve been speaking a lot recently about my optimism around the hosting of COP28 in the UAE and why I am predicting that it will emerge as the most significant COP since Paris. With significant—but arguably underappreciated—experience with renewable energy and sustainable development both at home and internationally, the country is an emerging global leader of the energy transition. I believe the UAE will have an oversized impact in 2023 to the extent that the nation in and of itself will be a key driver in the broader transformation we are seeing toward meaningful action.
The UAE is a country with a track record for delivering results and action. Despite an enormous demand for energy – not only from economic activity, but also from cooling demands where high temperatures remain above 35°C for six months of the year – renewables already account for a significant share of supply. The Emirate of Dubai has announced that solar power accounted for 14% of capacity in 2022, well on its way to 25% by 2030. Meanwhile, Abu Dhabi’s Emirates Water & Electricity Company (EWEC) reported in December that on at least one day that month, more than 60% of total system power demand was supplied by nuclear and renewable energy. The UAE is on target to have 14 gigawatts of zero-emission renewables and nuclear power capacity by 2030, on its way to net zero by 2050.
The UAE is operationalizing COP28 with the same mindset that the world’s most successful companies achieve in their missions and goals. I’m confident they are going to motivate a diverse set of public and private actors and leave a lasting legacy on leadership and pivoting the world toward action.
With so many forces aligned to deliver real progress this year on climate change mitigation, I’m optimistic about what the global community can achieve, not only in 2023, but in coming years to deliver an energy transition that achieves our Paris Agreement goals, while ensuring expanded energy access and equitable development opportunities for all.
Roger Martella – Group Vice President and Chief Sustainability Officer – GE Vernova