The volatility in energy markets since the outbreak of the Covid-19 pandemic in 2019/2020 has continued, with unprecedented uncertainty about global energy supply developing over the course of 2022 in the wake of Russia’s invasion of Ukraine, against a backdrop of weakening macroeconomic conditions and high inflation. While some perceived this as a potential setback for the energy transition, others saw it as an opportunity to move away from fossil fuels and accelerate the development of clean technologies. This Policy Brief explores five recent trends that are likely to shape the transformation of the energy system in 2023 and highlights clean technology challenges to accelerate the transition to a greener future.
2022 was a tumultuous year for global energy systems. The world experienced its worst energy crisis in decades this year, fueled by a range of economic and geopolitical disruptions, with ripple effects on countries worldwide. The success of COP27, in Sharm el-Sheikh, Egypt, in November 2022, highlighted by an agreement on establishing a “loss and damage” fund, was tempered by many missed opportunities, ranging from stronger language on emissions reductions, a push to reduce the use of all fossil fuels, or clear signals to developing countries that adaptation funding will effectively double by 2025.
Yet despite all the headwinds, 2022 brought a remarkable acceleration of the energy transition, driven in part by the energy crisis, with record renewable energy capacity installations and electric vehicles (EVs) sales worldwide. This was despite a global context of soaring energy and commodity prices, shortages of critical minerals, semiconductors and other components.
As the energy crisis continues, 2023 will be critical to accelerating a just energy transition. While it is never easy to predict the future, with 2023 energy forecasts being no exception, as conflicting factors are at play, this Policy Brief examines five recent trends that are likely to shape this energy system transformation in 2023 and highlights the clean technology imperatives needed to accelerate the transition to a greener future.