About this report
In the context of Italy’s G20 presidency, its Ministry of Economic Development requested the International Energy Agency (IEA) to undertake this Security of Clean Energy Transitions report. It aims to support discussions among the G20 countries and to provide insights and direction for the review and update of the G20 energy collaboration principles, which were endorsed at the G20 Brisbane Leaders’ Summit in 2014.
The global energy sector is going through a fundamental transformation as countries undertake clean energy transitions at various depths and speeds. The concept of energy security is becoming broader and more dynamic today than it has been in the past. Ensuring uninterrupted and reliable fuel supplies and critical energy-related commodities at affordable prices remains a fundamental policy goal. Traditional energy security risks have not dissipated, but as clean energy transitions progress new considerations arise.
On the way to net zero, energy security will only rise in importance. Countries that represent 70% of global emissions of carbon dioxide (CO2) have pledged to reach net-zero emissions by mid-century or soon after. In 2021, the IEA Net Zero by 2050: A Roadmap for the Global Energy Sector (hereafter referred to as the Net Zero Roadmap in this report) outlined how the global energy system can shift towards net zero. Energy security concerns include probabilities of interruptions and induced price volatility, with oil and gas supplies being concentrated in a small number of low-cost producers with low-carbon footprints, a shift from the need to secure availability of fuels to critical minerals and a more central role of electricity security amid rising electrification.
Energy efficiency is the “first fuel” to achieve clean energy transitions in a secure manner. Efforts to strengthen and expand efficient technologies and practices need to be scaled up significantly, as energy savings and related behavioural changes have so far been much slower than needed.
Clean energy transitions in the period to 2030 will largely rely on variable renewables for electricity generation. Dramatic cost reductions in wind and solar photovoltaic (PV) power generation over the last decade are underpinning their record levels of expansion. Solar PV capacity increased by 135 gigawatts (GW) and wind by 114 GW in 2020, even as the Covid-19 pandemic dampened global electricity demand. The Net Zero Roadmap relies on the rapid scale up of solar and wind in this decade to four-times the levels seen in 2020. Renewable deployment brings major benefits for energy security, but needs a shift in policy and market design.
Electricity is becoming a main driver of the pathway to clean energy transitions and security of its supply is essential. The IEA report Power Systems in Transition 2020 provides advice on how governments can integrate higher shares of variable renewables into the power system, as traditional dispatchable generation decline; boost resilience against new and rising threats, such as extreme weather events and cyberattacks.
G20 governments need to boost flexibility of power systems. First, this includes increased investment in dispatchable generation, including hydropower, nuclear and natural gas depending on national circumstances. Also to maximise the use of low-carbon generation sources to cut emissions and boost security. Second, it calls for cost-effective use of existing energy infrastructure by using low-carbon fuels, such as ammonia, hydrogen, biofuels and synthetic fuels. Third, it requires mechanisms to reward flexibility in electricity systems, and to expand energy storage, demand response and digital solutions as well as regional integration of electricity markets. In the period to 2030, existing resources will provide the bulk of flexibility and capacity contributions. The use of dispatchable generation sources that support clean energy transitions is critical.
Governments need to promote investment in diversity - our best bet against security risks. In the period beyond 2030, diverse low-carbon technologies that currently are at the demonstration or prototype phase need to be developed and deployed, in particular dispatchable generation technologies that can add capacity and flexibility to power systems. Examples include various forms of storage and demand-side response technologies, which are projected to provide the bulk of electricity flexibility options by 2050. Carbon capture, utilisation and storage (CCUS) and advanced nuclear technologies such as small modular reactors are also important options for the clean energy transition. All effective technologies must be mobilised to achieve climate goals in a cost optimal and secure way. This requires that governments strategically direct and quickly increase spending on research and development. Developing, demonstrating and deploying clean energy technologies will boost the availability of innovative technologies as a hedge against technological uncertainty – this will enhance energy security.
Addressing emissions from existing energy-related infrastructure while making best use of their system value are critical elements of a secure clean energy pathway. All of today’s power and industrial plants, buildings and vehicles – if they continue to rely on unabated combustion of fossil fuels – will generate a certain level of future emissions. Detailed analysis in the IEA World Energy Outlook 2020 shows that if today’s energy infrastructure continues to operate as it has in the past, it would lock in a temperature rise of 1.65°C. Fossil fuels dominate the energy supply of many G20 countries, as illustrated in the figure. Transitioning the existing energy infrastructure presents significant challenges.
Modifications to existing fossil fuel-related infrastructure offer opportunities for secure and affordable energy transitions. Coal- and gas-fired power plants can be retrofitted to burn fuels such as ammonia and hydrogen that contribute to security of electricity supply. In the transition, hydrogen can be blended into natural gas for distribution and natural gas pipelines can be repurposed to carry hydrogen or biomethane.
Policy makers need a comprehensive assessment of the inventory and value of existing assets from which to craft a framework that provides incentives for owners and operators to adequately address emissions, environmental impacts and security aspects. This includes to repurpose existing infrastructure assets and to mitigate adverse impacts on communities.
Oil and gas markets may experience heightened market volatility and concentration. This can happen if reductions in oil and gas demand are outpaced by decreases in supply due to lack of investment in existing fields, or if available supply is concentrated in fewer countries. Both the oil supply chain and the refinery sector will need to adapt to shifts in product markets, including more biofuels, and still ensure adequate oil product supplies. The IEA’s oil emergency response system will continue to be a critical tool for ensuring oil supply security. However, it will need to be modernised as global oil demand is transitioning.
Global energy systems face increasing risks including changing climate patterns, cyber threats and the availability of critical minerals.
Governments need to address the rising significance of critical minerals for clean energy technologies. In 2021, IEA presented analysis on the Role of Critical Minerals in Clean Energy Transitions with six key recommendations to strengthen the resilience of global supply chains, promote technological advances, scale up recycling, maintain high environmental and social standards, and strengthen international collaboration between producers and consumers, including under the G20.
Digitalisation provides opportunities to enhance energy security but comes with new risks. Digitalisation supports improved energy planning, real-time monitoring, facilitating the use of distributed energy resources to provide services to power systems and response to critical situations. Governments need to ensure that emergency preparedness and response capabilities continue to be robust in a more digitalised and electrified system.
There is an urgent need for action by policy makers, utilities and stakeholders to enhance their energy systems’ resilience to climate change. The electricity and energy system face increasing adverse impacts of climate change, resulting in rising global temperatures, erratic patterns of precipitation, sea level rise and more frequent or intense extreme weather events. More resilient electricity systems reduce damage and loss from climate impacts. Weather proofing of the energy infrastructure is part of a strategy to increase the robustness, resourcefulness and recovery of the system.
Clean energy transitions cannot succeed without putting people at the core. Governments should be prepared to address the impact of the energy transition on people and communities, notably with regard to employment, inclusiveness and equity. To ensure public support clean energy transitions need to enhance energy access, the security, affordability and reliability of energy supply.
Security and resilience of the energy system remain of fundamental importance as G20 countries transition to clean energy. Guiding clean energy transitions by boosting energy security, affordability and sustainable economic growth remains the critical task for G20 governments.
The G20 Principles on Energy Collaboration were established in 2014 by energy ministers, and endorsed by G20 leaders at their Brisbane Summit. This broad set of principles called for enhancing energy security through dialogue and collaboration on emergency response measures, high quality energy data, and well-functioning, open, competitive, efficient, stable and transparent energy markets that promote energy trade and investment. These principles were reaffirmed in 2018 at the G20 energy ministers meeting in Argentina, highlighting the importance of investment in infrastructure, the role of digitalisation and flexibility in the power sector, including the role of natural gas in the G20 countries. In 2019, under Japan’s presidency, G20 energy ministers stressed the importance of resilience, protection and development of reliable energy infrastructure to prevent energy supply disruptions.
In a time of unprecedented international turbulence in the global oil market, an extraordinary meeting of G20 energy ministers was convened in April 2020 under Saudi Arabia’s presidency. G20 ministers agreed to strengthen energy security and market stability by promoting market and data transparency, digital resilience and investment in the reliability of energy systems, which was endorsed by G20 Leaders at their Riyadh Summit. Italy holds the G20 presidency in 2021 and has set an objective to update the 2014 G20 Principles on Energy Collaboration, and broaden the energy security concept in line with evolving energy systems. Italy requested the IEA to support the discussions on broadening the energy security concept with a set of principles for G20 action.
As an update of the security provisions in the 2014 Brisbane principles, G20 governments need to broaden their energy security and preparedness towards seven key principles for the security of clean energy transitions:
1. Prioritise energy efficiency.
2. Secure integration of wind and solar PV in power systems. Ensure best use of existing sources of flexibility in power systems and enable effective smart grids and digitalisation.
3. Develop and deploy a portfolio of low-carbon generation sources to increase diversity of power supply and hedge against technology risks.
4. Ensure the cost-effective use of existing energy infrastructure for an affordable, secure and clean energy pathway.
5. Modernise oil security systems and boost transparent, open and competitive energy markets to accommodate traditional and emerging energy security concerns.
6. Prepare for new and emerging risks to energy security. Boost the resilience of global supply chains including for critical minerals. Foster digital security and climate resilience of energy infrastructure.
7. Promote a people-centred and inclusive approach to ensure energy access and reduce poverty, and foster economic diversification in producer economies.