How a system value approach can help Ireland meet its climate targets

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Pat O’Doherty, CEO of ESB, President, Eurelectric

• COVID-19 pandemic has highlighted a global spirit of cooperation – we must build on this to achieve climate targets.
• The World Economic Forum’s System Value Framework offers a way to consider economic and social issues in climate action planning.
• We examine how Ireland can apply this framework to help meets its ambitious climate goals for a successful energy transition.

We are in an age of climate action. More than 100 countries have committed to become net-zero economies in the next 30 years and I’m hopeful that we will see more big names on that list come COP26 in Glasgow this November.

As we are seeing with the COVID-19 pandemic, we can respond faster and achieve better results when we cooperate globally. We must build on this spirit of cooperation and apply it to the climate crisis. Private sector companies, academia and global institutions such as the World Economic Forum all have a role to play.

What is the System Value Framework?

The System Value Framework developed by the World Economic Forum and Accenture is a good example of this collaborative approach. The framework is a practical tool that can be applied anywhere in the world, regardless of different contexts and starting points, to identify decarbonization solutions. The framework looks beyond the cost of decarbonization and quantifies the benefits that different measures will deliver to the societies where they are applied. This, in turn, enables decision makers to consider the value to the wider economy and society when they are developing climate action plans.

Reading the framework results from Europe, the US and China, I’m struck by the critical role electricity will play in decarbonizing the globe. The world will produce a massive amount of zero carbon electricity from wind and solar and this will displace fossil fuels in heating transport and industry. Of course, other solutions will be required to get to zero carbon, but they will only make sense after energy efficiency and electrification options have been exhausted. This framework reinforces this strategy as being the correct pathway for every nation.

What’s the World Economic Forum doing about the transition to clean energy?

Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated.

Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010.

Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.

Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.

To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.

Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission.

Is your organisation interested in working with the World Economic Forum? Find out more here.

How can Ireland apply the framework?

I am delighted that ESB has been able to collaborate with Accenture to apply this framework to Ireland. We are at a seminal time in our climate action journey. Under the Government of Ireland’s Climate Action Plan, by 2030 a quarter of our building stock will be retrofitted and nearly half of domestic cars will be electric, and 70% of our electricity will come from renewable sources.

Legislation currently going through our national parliament will set a net-zero target for 2050, along with an ambitious 2030 target to reduce emissions by half in accordance with the UN gap report.

By applying the framework to Ireland, we can see the additional measures required in the coming decade.

• Zero carbon power system: We need to address the requirements for dispatchable net-zero power to complement wind and solar energy and deliver a zero carbon, resilient power system. This will require swift action in energy storage, hydrogen production and carbon capture and storage.
• Industrial energy demand: Globally, industry represents 30% of total global CO2 emissions; decarbonization of this sector is key for countries in terms of maintaining jobs, relevance and competitiveness. Approximately half of industrial emissions come from light industries that are less energy-intensive and easier to abate. The application of the framework to Ireland shows there is significant potential to electrify industry in a power system with very high levels of variable renewables.
• Demand response: Very high levels of electrification will require the interactions between consumers of electricity and the electricity network to fundamentally change. Signals to consumers to increase or decrease demand must be effective in driving the required response to increase efficiency. The framework identifies the potential for data centres to provide demand response on a grand scale, shifting workload to follow the wind and sun.
• Agriculture: Ireland’s significant agriculture sector exports food globally, but also contributes to around 35% of Ireland greenhouse gases which come predominately from enteric methane. The framework illustrates the potential impact of measures such as selective breeding and feed additives.

Building blocks for successful energy transition

The System Value Framework highlights a few key building blocks of the transition which we must get right.

• Energy efficiency: The framework shows that the societal benefits of energy efficiency in terms of health and fuel poverty make it an imperative in the energy transition. Significant upgrades are needed to the existing building stock in the coming decades and all new buildings should be zero carbon.
• Finance: The transition requires significant investment in areas where transitional financiers might not have ventured. We need to ensure that the flow of money into low carbon projects is seamless while green bond standards and low carbon taxonomies will be important.
• Regulation: We need regulators to support their system operators in transitioning to low carbon energy systems, to drive out barriers to electrification, and to ensure the most efficient use of the power system.

Climate change, if unchecked, is a threat to humanity as we know it. Different parts of the world will bear the impacts of climate change in different ways. We must turn net-zero commitments into roadmaps and actions plans as quickly as possible. The System Value Framework is a good place to start.