Recent wars in Ukraine and the Middle East have led to an increase in electric vehicle (EV) sales. This action is taken to prevent inflation in fuel prices and reduce demand for gas in favor of other energy production sources. Ahead of the COP31 summit, some participants have indicated that faster electrification could be the focus of this event.
Emphasis on Electrification
Chris Bowen, Australia's Minister for Climate Change and President of the COP31 negotiations, has expressed hope for stronger outcomes in the field of electrification. He stated that he would consider the summit successful if all participating countries commit to increasing the share of electricity in their final energy demand mix. Final energy is the type of energy that is actually consumed and is defined differently from primary energy. For example, crude oil is considered primary energy, while gasoline, diesel, and jet fuel are recognized as final energy.
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Challenges Facing Electrification
According to estimates, over 80 percent of the world's primary energy comes from hydrocarbons. This amount decreases to 65 percent in the transition from primary energy to final energy. Electrification, as an energy efficiency solution, reduces primary energy demand without affecting the beneficial outcomes that citizens seek. However, this electrification must be supplied from renewable sources such as wind, solar, and nuclear energy to align with greenhouse gas reduction goals.
In the past decade, significant investments have been made toward the goal of electrification, with investments in energy transition reaching $2.3 trillion last year. This figure is 8 percent higher than the total investment in the previous period. The largest share of these investments has been allocated to the electrification of transportation, followed by wind and solar energy generation capacities. Although progress in this area has been remarkable over the past 10 years, its results in reducing carbon emissions are not globally observed.
While electric vehicle sales have surged in the past decade, demand for crude oil as a transportation fuel continues to rise globally. One of the biggest barriers to electrification is its high costs. Despite significant reductions in the cost of solar energy production over the past 30 years, countries with high solar energy penetration pay some of the highest electricity prices. This phenomenon is due to government subsidies and backup production costs.
Overall, electrification seems very logical in theory, but in practice, it faces challenges and problems for which solutions have not yet been found. Although COP31 participants may reach an agreement on electrification, such an agreement will not have a significant practical impact.
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