Writing Prompt: Energy Sector Considerations in Long-term Strategies

Energy production and use account for about two-thirds of global GHG emissions. As such, this sector plays an outsized role in countries’ efforts to develop and implement long-term strategies which meet climate goals. The sector is highly diverse, spanning electric power generation, transportation, buildings (heating and cooling), and industry.

Because investment cycles for energy infrastructure are long, decisions made today have long-term implications for both climate and development goals. Energy planning that considers the impacts of the extended lifetimes of energy assets increases the likelihood of both meeting climate goals and avoiding technology “lock-in”, which can result in substantial stranded assets and act as a drag on economic growth.1 Further delaying action on significant emission reductions from energy production and use while at the same time planning for future energy demand would increase future investments and by some estimates could potentially double stranded assets. For example, estimates of viable energy pathways for 2-degrees would involve stranding about 1,500 GW of coal and natural gas power plants globally after 2030 (UNEP, 2017).

Continuing business-as-usual with the existing energy system and current levels of CO2-intensity would likely lead to over 4-degrees of warming by end-of-century (ETC, 2017). And current NDCs imply that the energy sector would emit almost 1,260 GT of CO2 by 2050, roughly 50 to 60 percent more than the available carbon budget (IEA/IRENA, 2017).

In this prompt, we ask you to consider the following questions. Please note you do not have to address every question in your response.

  • To what extent does the creation of long-term strategies offer countries an opportunity to revisit existing energy plans in light of the 1.5-2C global temperature goal? How could this opportunity be brought to bear?

  • What are the objectives of addressing specific sectors, such as energy, in the broader long-term strategy? What would be important elements of a component of the strategy that focused on the energy sector? For example, quantitative goals (GHG (when net zero emissions will be achieved in sector) or non-GHG (renewable or zero-carbon energy targets), interim milestones for such goals, list of prioritized actions for the short- and medium-term, needed reforms for the energy market, assessment of RD&D needs, analysis of financing of the transition, etc.?

  • How can long-term energy plans inform the development of the long-term strategy, and how can the long-term strategy inform long-term energy plans?

  • How can the results of the long-term planning process inform long-term planning in the sector?

  • What data, modeling and other analysis can be helpful in the design of a component of the long-term strategy that focuses on the energy sector?

  • How can energy-related policies and investments be screened for lock in of a carbon intensive pathway to inform the design of the long-term strategy?

  • What short-term investment and policy decisions need to be prioritized today to make the energy transition possible? What are the pros and cons of detailing these decisions in the long-term strategy?

  • How can a long-term strategy be designed to shift incentives to value long-term planning, given many decisions are currently based on near-term costs, reliability, technologies, etc.?

  • How do institutional arrangements need to change to support the energy transition, given the interactions between power, transport and industry, and how can the long-term strategy support such changes? Should a long-term strategy foster greater coordination between these sectors? How?

  • Given that a significant portion of the world lacks energy access, and populations will be growing, how can a long-term strategy for the energy sector be designed in a way that delivers affordable and reliable energy service to all members of a country, including the poorest? How can the strategy explicitly support economic growth and alleviate energy poverty?

  • Given that transition to low- and zero-carbon emissions in the sector will require early retirement of a large portion of existing coal-fired capacity, avoiding construction of new coal-fired assets, and shifting from unabated fossil fuel consumption, there will be significant implications for workers and companies. How can such stakeholders be involved in strategy discussions early? To what extent should an energy strategy in a long-term strategy detail how the energy transition will be managed justly (e.g. consequences on jobs)?

  • How should the broader systemic considerations such as new infrastructure requirements and transboundary energy trade be considered in long-term planning?

1 In this context, stranded assets refer to energy capital assets that must be retired prematurely or is underutilized because of climate polices (e.g., a carbon tax) or competition with lower-cost clean technologies, and fossil fuels that cannot be burned if a GHG target is to be reached (UNEP, 2017).