Fear and hope were both on offer during the debates on energy and climate at the World Economic Forum’s Annual Meeting 2025 in Davos this January.
Sobering statistics on climate collapse jostled for attention with signs of hope from the low-carbon transition. A cloud of geopolitical uncertainty also hung over the meeting as the US, among others, signalled a shift away from the energy transition and towards extracting more fossil fuels – all in the name of securing cheap, reliable energy supplies.
But does sustainability have to be the enemy of energy security and affordability, or can the world have all three?
Sobering climate statistics
Last year was the hottest in human history as temperatures breached the 1.5°C barrier for the first time ever. Climate luminaries take to the stage at Davos every year to discuss how much grimmer things have become since their last appearance – it sometimes feels like standing in front of a firing squad. Each statistic on Earth’s tipping points or rising emissions whizzes past with unimaginable lethality. Here are a few examples from this year's meeting:
• "The accumulated amount [of pollution in our atmosphere] now traps as much extra heat as would be released by 750,000 first generation atomic bombs exploding every day on the earth. That's insane for us to allow that to continue." – Al Gore, Vice-President of the United States (1993-2001); Chairman and Co-Founder, Generation Investment Management LLP
• "Extreme heat kills 500,000 people a year, 30 times more than any of these severe weather events that you are well aware of." – Andrea Celeste Saulo, Secretary-General, World Meteorological Organization
• "We may be looking back at 2024, the most expensive year in human history, as a relatively harmonious year – because we're in for a tougher future before it gets better." – Johan Rockström, Director of the Potsdam Institute for Climate Impact Research.
In May 2021, the International Energy Agency (IEA) launched a roadmap for the global energy sector to hit net zero by 2050. It called for the development of all new oil reserves, gas fields and coal mines to halt immediately. Since then, global fossil fuel consumption reached a new high in 2023 and continued to climb in 2024, emitting a record 37.4 billion tonnes of CO2 – 89.9% of all greenhouse gas emissions.
Getting the right data is essential. Gore told delegates that Climate TRACE, a coalition he backs that monitors emissions from 660 million assets across the world using satellite data and artificial intelligence (AI), discovered the fossil fuel sector is emitting "four times more emissions than are being reported to the UN – the only sector where that’s the case".
Despite record growth in renewables, fossil fuels still account for 81.5% of the world’s primary energy consumption. Facing a cyclone of geo-economic headwinds, how do delegates at Davos plan to stay on course with the transition?
Hope amid fear - 'I heard it in the chillest land'
As it so often is, hope was given voice by many of the youngest participants at Davos. Sharing a stage with Gore, Katherine Gao Haichun – at the age of 31 – leads Trina Solar, a solar manufacturing firm. She revealed some astonishing news: the cost of solar has dropped from 30 cents per kWh to just 3 cents. For some of Trina’s projects in the Middle East, the energy cost is 1 cent per kWh – "the lowest energy price in human history" according to Gao.
"With that economic foundation, it really resets the entire logic for an energy transition," she said. But the solution is not just about installing more solar or wind power – the world needs a "revolution in infrastructure", similar to that which powered internet connectivity. This requires investment in intelligent and decentralized grids, using AI to balance out fluctuating supply and demand, plus far greater energy storage to make renewables more stable and reliable.
Amid headlines that AI will gobble up gigawatts of power to develop new large language models, even the techies had a message of hope. Yes, electricity consumption by AI and other digital technologies could double by 2026 compared to current levels. But it will be a blip, they said, as technologies become more energy efficient themselves and drive efficiencies across other sectors.
Uljan Sharka, CEO of AI company iGenius, told Davos participants that Nvidia’s latest chips consume 25 times less energy than the previous generation while delivering 30 times more computing power – and that jump happened in just 12 months. Antonio Neri, CEO of Hewlett Packard Enterprise, said AI offers "an amazing opportunity to accelerate the energy transition and innovation". His company is building data centres on top of water, which is used to cool servers. The hot water generated is then used to heat the buildings.
Greg Jackson, CEO of Octopus Energy, spoke about how, by using AI to balance the UK’s power grid, people can now charge their EVs at home for three times less than the average price of electricity. This is making EVs seven times cheaper per mile to run than a diesel or petrol car, Jackson said. AI-driven grid optimization can maximize use of renewable power when it is generated, freeing up the rest of the grid for base load and solving wind and solar’s variability problem. "Moving to renewables then becomes cheaper than a fossil fuel grid," he explained.
Sustainability is the ally – not the enemy – of energy security
The so-called "energy trilemma" is about not only sustainability and affordability, but also security of supply. Europe learned a bitter lesson about energy security three years ago when 45% of its gas was Russian, but war in Ukraine forced a rapid search for alternatives. Launching the Global Energy Transition Forum at Davos this January, Ursula von der Leyen, President of the European Commission, pointed out that the bloc had raised its target for renewables to over 42%, up from 23% today.
"Energy transition is not the rival of energy security" – this was the top-line message that Fatih Birol, Executive Director of the IEA, shared at every opportunity. When asked which is more important, Birol shot back: "I decline to answer that question – because we can do both! With well-designed energy transition policies, we can have the best energy security, we can bring prices down, we can bring prosperity to the people and we can create jobs." Critically, this can all be achieved while reducing energy dependence on unreliable partners, he said.
Birol also pointed towards positive trends: investment in clean energy technologies topped $2 trillion in 2024, which is double the amount that went into coal, gas and oil. Global solar today is the "cheapest form of electricity generation in 90% of the world" he added, while battery storage costs fell 20% in 2024. Then Birol cited "the data that breaks my heart": Africa holds 60% of the world’s top quality solar resources, yet sub-Saharan Africa generates less solar electricity than the Netherlands.
What needs to happen to change this?
Climate investments in the right place at the right price
The major challenge to be addressed is that 85% of the $3 trillion pouring into energy is invested in developed economies and China. Meanwhile, just 15% is invested in countries home to 60% of the world’s population. This often leaves vast swathes of humanity quite literally in the dark – in Africa, more than 600 million people live without access to electricity.
"How are we going to make sure that the clean energy investments and the projects in these countries are going to meet? This is the fault line for me, the biggest problem," said Birol, adding: "Africa is the biggest challenge".
Although it accounts for only 2-3% of global emissions from energy and industrial sources, Africa is one of the continents suffering most from the impacts of both climate change and energy poverty. This prompted a spirited debate in a session at the Open Forum in Davos: Should Africa be allowed to develop its fossil fuel reserves as part of a just transition?
The answer is complex, according to Ipeleng Selele, Chairperson of Brand South Africa, the country’s official marketing agency. She spoke of the importance of a diversified energy mix. South Africa is developing a liquified natural gas (LNG) terminal to supply the base load required for industry, while aiming to exploit abundant renewable resources of sun and wind, as well as exploring the potential for green hydrogen. But the grid needs urgent modernization to absorb and distribute power efficiently – a 10-year project. "When you impose the transition overnight, it’s impossible – we cannot go straight to green," Selele said.
The energy transition needs money – lots of it. Since the lion’s share of investment goes to developed economies, Africa has to borrow – and at sky-high interest rates. Analysis from the non-profit The ONE Campaign reveals African countries are paying a 500% premium on private loans, compared to rates they could achieve by borrowing from the World Bank. With Africa’s debt servicing topping $102.6 billion in 2024, there is more money pouring out of the continent in loan repayments than flowing in as official development assistance or new debt.
Cyril Ramaphosa, South Africa’s president, told Davos participants that tackling the inequality of Africa’s debt burden is a top priority during his country’s presidency of the G20 this year.
A new era for the global energy transition
The last word on the future of the energy transition should go to the next generation. Sitting beside Gore, whose Oscar-winning film An Inconvenient Truth inspired her as a 13-year old girl, Gao said: "Climate change is not just an environmental crisis. It's a test for the entire human civilization."
Reflecting on her eight years in the energy industry, she added: "I know for sure that this has to be the beginning of a new era. The energy transition is not just about energy – it’s also human dignity, it’s security and it’s opportunities."
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