The ‘global stocktake’ COP in Dubai is seen as a final chance to get policies on track to keep the world on a 1.5-2.0 degree trajectory.
The UAE’s COP presidency, as well as the IEA and Irena are leading countries to align behind the ambitious aim of tripling renewable energy capacity by 2030, to around 11TW.
Such a target would not guarantee success, of course. But it would send a serious message that countries are prepared to make sure their energy objectives are aligned with climate goals and set the basis for concrete policy action that could propel us into a much faster deployment of wind power and other renewables.
Politics, supply chains and ‘wrecker’ states
However, the prospect of meeting this target is extremely challenging for two main reasons: politics and supply chains.
As the world gets hotter, politics have become more destructive.
The Ukraine invasion has created a new ambience of war, suspicion and bellicosity.
Relations between China and the US remain tense, with the two countries involved in tit-for-tat trade conflicts over a wide array of sectors.
“Wrecker” states that see their interests best served by adherence to fossil-fuel exports work behind the scenes to retard progress on climate, while publicly stating their willingness to support the energy transition.
At the G20 – held in Goa, India last week – most countries seethed while a group of just a few countries blocked all progress, leading to a watered-down ministerial statement that failed to commit to a fossil fuels phase-out or a coherent ambition for renewables growth. It was widely reported that just three countries – Russia, Saudi Arabia and South Africa – were responsible. Expect more shenanigans ahead in Dubai.
A daunting task
Meanwhile, even in the best of all worlds, the challenge of building enough supply chains for renewables to meet the expectations of government and people around the world is truly daunting.
For wind, net zero would require at least 8.0-8.5TW of wind power by 2050, meaning that we need an industry that is roughly eight times bigger than it is today – we recently celebrated reaching wind’s first terrawatt this year.
By 2030, we would need and expect to be deploying around 390GW, roughly four times this year’s expected annual installations.
The US Inflation Reduction Act (IRA) has set the scene for a steady ramp-up in wind energy deployment, the effects of which will be fully evident by 2025.
China continues with its heady pace for both onshore and offshore wind, while many newer wind markets foresee ambitious growth over the next decade, particularly for offshore wind.
However, the supply chain is woefully inadequate. According to analysis in GWEC's 2023 Global Wind Report, we are likely to face serious supply chain bottlenecks for a series of critical components by mid-decade in Europe and North America. For grid equipment, the situation is arguably even starker.
Confluence of challenges
Much of this is due to serial underinvestment in supply chain in the west, fed by misguided policies that have resulted in stop-go markets or overly slow growth, restrictive planning and race-to-the-bottom pricing.
Inflation and commodity price rises have exacerbated the problem, leading to stressed company balance sheets and cancelled projects.
The significant supply chain gap raises the possibility of delays to deployment, sharply rising prices for renewables, extended exposure to volatile fossil fuels, and higher energy prices for consumers – all of which could exacerbate political challenges to the transition.
Countries must work together
Instead of looking to the future and working together to ensure investment flows into supply chain, some parties are focused on lobbying for more restrictive trade and investment policies that will only make the economics for wind energy manufacturers and generators worse.
This includes a focus both on “keeping the Chinese out” and calls to decouple from China’s supply chain in a relatively short time frame.
We need to be very clear about what the energy transition – and wind energy’s expansion – will require in order to avoid being set up to fail.
Firstly, meeting the goals of net zero will require the joint efforts of economies across the world to produce the equipment needed for a ramped-up wind industry, as well as all the other elements required, such as grid equipment, electrolysers and batteries.
It will also require training tens of millions of new workers and the permitting and construction of thousands of new manufacturing and infrastructure facilities.
Destructive trade wars
Trade restrictions quickly lead to retaliation and spread distrust and conflict, and will only make it harder to achieve our mission. Even with everyone working together, the level of expansion needed will be a stretch. Working against each other, it will be impossible.
Secondly, achieving diverse supply chains and making sure local economies and communities see the benefit of investment is an essential part of maintaining political support for the transition and ensuring supply chains are resilient.
This will be achieved through incentivising industrial development and job creation and ensuring markets correctly reward clean energy generation rather than fossil fuels.
Match IRA’s ambition
The IRA does both. Unfortunately, policies in many places, including much of Europe, do neither.
On the one hand, market design in Europe is built around government tenders that make it near impossible for wind energy companies to make money because of so-called “negative bidding”, which has led to developers walking away from projects.
And on the other hand, governments expect a growing list of conditions to be fulfilled; from circularity, to guaranteed jobs, to locally sourced materials.
In a nutshell, governments need to unleash private-sector investment in the supply chain – and quickly – and this is best done by making sure that markets work and companies can make a return.
Use ‘blunt instrument’ policies
Thirdly, the focus should be on rapid growth, not on protecting markets that are already underperforming.
If the energy crisis of the past few years has taught us anything, it is that we need to act fast and decisively.
Hesitation only prolongs our dependence on volatile fossil fuels – and their exporters – and ends up causing huge additional costs to governments and consumers.
Governments should focus on ‘blunt instrument’ policies such as tax incentives, price floors and expedited planning that can achieve speed of deployment and scale. This will create enormous economic opportunities across the globe and keep our climate targets alive.
It will get worse before it gets better
None of this is going to be easy. The current divisive zeitgeist of politics is not going to be easy to put back in its bottle – and could get a lot worse before it gets better.
But we must do everything possible to be clear-sighted about the supply chains and international cooperation needed to achieve our collective global climate goals.
As John Kerry said in his recent meeting with Han Zheng, vice president of China – fittingly, on the hottest day in the country’s history – climate change is a “universal” and “free standing” challenge that must be separated from politics.
Let’s bear this in mind in the months and years ahead.
Ben Backwell is chief executive of the Global Wind Energy Council (GWEC)