Policy options for the energy transition

The energy transition will require a major transformation of the current policy frameworks. It should start with the alignment of energy policies with the targets of the 2030 Agenda, followed by prioritizing technologies to deliver the energy transition in a cost-effective manner. Without creating an enabling investment climate to stimulate private investment, the energy transition will be impossible, particularly with regard to financing the growth of renewable energy and energy efficiency. Long-term energy procurement policies, fiscal incentives such as a corporate tax holiday, and enabling easy access to finance have the potential to derisk capital investment and increase private sector participation. Phasing out fossil fuel subsidy deserves urgent consideration in order to discourage wastage of energy, prevent draining of fiscal resources, and improve the cost-effectiveness of renewable energy and energy efficient technologies. Market instruments, such as a price on carbon or a levy on fossil fuel, are instrumental in generating funds to cover the cost of damage by fossil fuel combustion as well as level the playing field for renewable energy. Finally, regional cooperation is essential to combating some of the crucial policy and technological challenges, such as allowing a higher share of variable renewable energy penetration in the grid by expanding the coverage of an interconnected network.

Sustainable Development Goals:

Affordable and Clean Energy