Strategies for Affordable and Fair Clean Energy Transitions

INTERNATIONAL ENERGYAGENCY The IEA examines thefull spectrumof energy issuesincluding oil, gasand coal supply anddemand, renewableenergy technologies,electricity markets,energy eficiency,access to energy,demand sidemanagement andmuch more. Throughits work, the IEAadvocates policiesthat will enhance thereliability, afordabilityand sustainability ofenergy in its31 member countries,13associationcountries andbeyond. IEAassociationcountries: IEA membercountries: AustraliaAustriaBelgiumCanadaCzech RepublicDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIrelandItalyJapanKoreaLithuaniaLuxembourgMexicoNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenSwitzerlandRepublic of TürkiyeUnited KingdomUnited States ArgentinaBrazilChinaEgyptIndiaIndonesiaKenyaMoroccoSenegalSingaporeSouth AfricaThailandUkraine This publication and anymap included herein arewithout prejudice to thestatus of or sovereignty overany territory, to thedelimitation of internationalfrontiers and boundariesand to the name of anyterritory, city or area. The EuropeanCommission alsoparticipates in thework of the IEA Revised version, June 2024Information notice found at:www.iea.org/corrections Source: IEA.International Energy AgencyWebsite: www.iea.org The last few years have been tough for many energy consumers around the world, with highenergy prices putting a lot of pressure on the cost of living. The effects have been most severefor low-income countries and households. This has rightly put issues of affordability andfairness at the centre of the energy debate. For an honest assessment of the situation, we need to be clear about where these pressureson the cost of living have come from. The global energy crisis that escalated in early 2022was not caused by clean energy. Since the early days of the crisis, I have been speakingregularly with energy policy makers from around the world. None of them have complainedof relying too much on clean energy. On the contrary, they wish they had more, because theresult of investing in these technologies today is a more affordable energy system forconsumers tomorrow – as well as less severe impacts from climate change, majorimprovements in air quality and greater energy security. When people misleadingly blame clean energy and climate policies for the recent spikes inenergy prices, they are, intentionally or not, moving the spotlight away from the main cause– the major cuts that Russia made to natural gas supply. That said, there is still an important debate to be had about affordability and fairness in cleanenergy transitions – notably in terms of how the costs and benefits will be shared. And thatis why we have produced this important new analysis. We wanted to provide an evidencebase and actionable advice for policy makers as they consider their strategies for the future. A key risk is that poorer households, communities and countries are excluded from the newclean energy economy that is emerging around the world because they cannot pay theupfront costs of the switch to a safer and more sustainable energy system. As a result, theyremain vulnerable to swings in fuel prices, which already disproportionately affect theirbudgets and well-being compared with their wealthier counterparts. Well-designed policies are essential to addressing this. This special report provides examples– from across advanced, emerging and developing economies – on ways to make cleanenergy technologies more accessible to all. This is an important and growing area of work forthe International Energy Agency (IEA), as demonstrated by our longstanding work on energyaccess globally and, more recently, by our Global Summit on People-Centred Clean EnergyTransitions in April 2024 and our Summit on Clean Cooking in Africa in May 2024, whichmobilised USD 2.2 billion in new announcements from governments and private sources toincrease clean cooking access in Africa. Both summits were firsts of their kind – but theywon’t be the last as we continue to address these critical issues with stakeholders fromaround the world and work with them to drive progress. As we consider the energy technology pathways available for communities and countriesworldwide, it is essential to keep in mind that many of the clean and efficient choices arealso the most cost-effective ones – typically because they require much lower day-to-dayspending on fuels to operate. Putting the world on track to reach net zero emissions by 2050requires additional investment but also reduces the operating costs of the global energy system by more than half over the next decade compared with a trajectory based on today’spolicy settings, this special report shows. Pursuing such a path has considerable implications for economies across the globe, notablyfor fuel importers and exporters. This is why we have produced this special report to help allcountries understand the costs, benefits, opportunities and challenges of moving rapidlytowards a cleaner and more affo