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The energy transition

The energy transition

What is meant by the term ‘the energy transition’? Why is it so important to combat climate change? What can help speed up this process? What is the role of electrification in this process? Here is everything we need to know about this century’s biggest challenge.


The energy transition

The Earth is getting warmer.

In 2023, according to the United Nations World Meteorological Organization, the global annual average temperature was nearly 1.5 degrees Celsius above pre-industrial levels (more precisely, 1.45 ± 0.12 °C).

This is a dramatic figure, because the 2015 Paris Agreement on climate change aims to limit the long-term temperature rise (i.e., the average for a decade, rather than a single year such as 2023) to no more than 1.5 degrees Celsius.

In addition to causing the polar ice caps to melt and sea levels to rise, global warming is causing other types of climate change, like desertification and an increase in extreme weather events such as hurricanes, floods and fires: the distortion of the climate risks causing incalculable damage.

The scientific community is in agreement that this is due to anthropogenic emissions of greenhouse gases into the atmosphere, especially since the Industrial Revolution. The main such gas, carbon dioxide, originates largely from the energy sector (including but not limited to the generation of electricity).

In December 2023, COP28 in Dubai closed with an explicit agreement to put an end to the use of fossil fuels, but it did not set precise targets to phase out nonrenewable energy sources. At the same time, it admitted that the world's countries are not yet on track to meet the goal of containing the global temperature rise to within 1.5° C.

COP28 called on parties to take action on a global scale to triple renewable energy capacity and double progress in energy efficiency by 2030. It also called on them to put forward ambitious emission reduction targets, covering all greenhouse gases (GHGs), economic sectors and categories. This is in line with the 1.5°C limit in the next round of national climate action plans for 2025.

The goal by 2050 is still to achieve so-called Carbon Neutrality, in other words, to reduce and avoid greenhouse emissions by offsetting the remaining emissions through the use of so-called carbon credits.

To achieve this goal, which was enshrined at COP26 in Glasgow, our main tool is the energy transition, i.e., the shift from an energy mix based on fossil fuels to one that produces very limited, if not zero, carbon emissions, based on renewable energy sources. A huge contribution to decarbonization comes from the electrification of consumption, replacing fossil fuel-generated electricity with energy generated from renewable sources, which also makes other sectors like transport cleaner; the digitalization of grids also contributes by improving energy efficiency.

Historically speaking, energy transitions are not new. In the past we have seen huge epoch-marking shifts like the transition from using wood to using coal in the 19th century or from coal to oil in the 20th century. But what distinguishes this transition from its predecessors is the urgency of protecting the planet from the greatest threat it has ever had to face, and of doing so as quickly as possible. 

This impetus has accelerated the changes in the energy sector: between 2010 and 2022, according to Irena data, the cost of renewable technologies decreased by 83% in the case of solar PV and 42% in the case of onshore wind.

The energy transition is not, however, only limited to the gradual closure of coal-fired power stations and the development of clean energies: it is a paradigm shift that concerns the entire system.

This solution can provide benefits not only for the climate but also for the economy and for society. 

The digitalization of electricity grids can usher in the age of smart grids and open the way for new services for consumers. From the environmental perspective, renewable sources and electric mobility reduce pollution, while coal-fired power stations can be repurposed in line with the principles of the circular economy

Concerning social sustainability, the new jobs created can absorb those people who were previously working in the thermoelectric sector. It is important that the energy transition be inclusive and ensure that no one is left behind. 

Climate crisis

The climate crisis: the causes, the effects and the solutions

Why is climate change such a concern? What has caused it and what are the risks? The causes of the greenhouse effect that is the result of human activity and the commitments made to invert the trend.

  • 1.45°

    1.45° The temperature increase in 2023 compared to pre-industrial levels

  • 1.5°

    1.5° The rise in temperature by 2030, if no steps are taken

  • 97%

    97% The percentage of scientists who attribute global warming to human activities

Actions that are driving the energy transition

A genuine paradigm shift is taking place. On the one hand, there is the replacement of fossil fuels with renewables. On the other, we have the development of new technologies such as energy storage and hydrogen, the electrification of certain sectors, and digitalization.

Developing renewable energies lies at the very core of the energy transition. In recent years, photovoltaic and wind energy have joined more mature technologies such as hydroelectric and geothermal power, quickly becoming the star performers of the transition that is underway. The result is a genuine paradigm shift focused on decarbonization, with a gradual move away from fossil fuels and the consequent decommissioning of coal-fueled power stations. Developments in new sectors such as tidal power and green hydrogen may soon contribute to the transition, while energy storage technologies, systems that can warehouse power to make up for the intermittent nature of sources such as solar and wind, will be decisive. The process of electrification of consumption and of certain sectors, and the digitalization of both industrial procedures and electricity grids, are all helping to improve energy efficiency and complete the energy transition.


Renewables for the energy transition

The growing use of renewable energy sources is the cornerstone of the energy transition: thanks to continuous innovation, these are becoming increasingly efficient and competitive, while new technologies are on the horizon. 


Let’s electrify the world!

This is the decade of electrification: electricity generated by renewables is the pivotal energy vector in spearheading the energy transition towards decarbonization.


Decarbonization – how to transition from fossil fuels to renewables

Although the ultimate aim of the energy transition is a move to renewables, in the shorter term, grid stability and resilience need to be guaranteed as we move away from the use of coal. Natural gas will have a key role to play in this. 


From power plants to grids: the digitalization of energy

The digital transformation is aiding the transition of the entire energy sector, from power plant management to new consumer services and smart grids.

Economy and society

What the energy transition means to the economy and society

The advantages of the energy transition are not confined solely to the environment. The development of renewables and the conversion of old power stations are helping the economy and creating new jobs. The important thing, however, is that no one is left behind.  

The energy transition is vital to saving the planet from the effects of climate change. But anyone who thinks it will only benefit the environment is very much mistaken. Of course, renewable sources and electrification do reduce pollution and improve air quality (even in terms of e-mobility alone), but the paradigm shift involved in the energy transition also affords a huge opportunity to boost economic well-being, employment growth, and the social development of the communities involved. The evolution of renewable technologies goes hand in glove with the creation of completely new green jobs, while the decommissioning of the old coal-fueled power stations can be accompanied by retraining technicians and operational staff who may then be re-employed in other sectors. The battle against energy poverty in many areas of the planet and investments that will help guarantee access to clean energy for all are another important development opportunity for local communities. The important thing is that the energy transition should be inclusive and must not leave anyone behind. It has to be a just transition, in other words. 


Sustainability creates value for the economy and society

The benefits of the energy transition and the green revolution mainly concern the environment, but they also have a positive impact on the economy, society and the wellbeing of the population.

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A just transition for all

The transition to renewables must not generate new forms of poverty and inequality. We look at what’s being done in order to ensure that progress benefits everyone.

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How sustainable consumption is guiding the energy transition

Sustainability, protecting the environment, the fight against climate change: consumers, and especially the younger generations, are paying increasing attention to issues that concern the future of the planet. And this is having an impact on businesses and investors.

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