What can the government do to help with the green energy transition
Written By: Lauren Rosenthal
Edited By: Vanessa Lu Langley
"Governments could make climate targets legally binding, set energy efficiency standards, or establish net zero building energy codes"
Although the green energy transition has already been set in motion, governments have an important role to play in ensuring that the transition persists and accelerates given the urgency of climate change. Government intervention can take many forms, such as policy, regulation, or financial measures, and is key in driving private investment in the sector.
Among policy measures, it is critical to set ambitious CO2 emissions targets and sector-wide targets. These targets can motivate other policies, such as trade agreements between countries that put a price on carbon imports or that provide tax exemptions to low-carbon products. Regulatory action is also necessary; for example, governments could make climate targets legally binding, set energy efficiency standards, or establish net zero building energy codes (Polack, 2021). Financial measures are another key element: putting a price on carbon, for instance, can make renewable energy more competitive by pricing fuels according to their environmental impact (Roth, 2021). Phasing out fossil fuel subsidies, which involve partially subsidizing fossil-fuel-based products and services in order to artificially reduce their price (Human Rights Watch, 2021), is another possibility (Roth, 2021). Government investment in the necessary infrastructure to host renewable energy at a large scale, such as expanding electricity grids (Nipper, 2021), and lending money for the research and development of new clean technologies are also potentially effective strategies that can make the clean energy sector more resilient and robust (Polack, 2021).
These strategies are merely a few examples of the numerous possibilities for government action to promote the energy transition. They also have an important, secondary function, which is to boost private investment in the renewable energy sector. Since over $131 trillion in investments will be needed before 2050, private investment is crucial in order to meet climate targets worldwide and is instrumental in boosting green energy by extension. Many investors still view green investments as too risky and uncertain, however, which is why bold government action is needed in order to encourage them. The aforementioned goal-setting, regulations, and policies prove to investors that governments are “all-in” on renewable energy and that they will see a return on their investments (Hutchinson et al., 2021). Overall, there are many ways that governments can help work towards a green energy transition, and such measures are necessary to ensure a sustainable energy future.
Human Rights Watch. (2021, June 7). Q&A on Fossil Fuel Subsidies. Retrieved October 31, 2021, from https://www.hrw.org/news/2021/06/07/qa-fossil-fuel-subsidies
Hutchinson, N., M. Dennis, E. Damgaard Grann, et al. (2021). Unlocking a Renewable Energy Future. Working Paper. Washington, DC: World Resources Institute. Available online at: https://doi.org/10.46830/wriwp.20.00077
Nipper, M. (2021, September 17). What the Energy Transition Needs. Project Syndicate. Retrieved October 31, 2021, from https://www.project-syndicate.org/onpoint/energy-transition-public-and-private-sector-to-do-list-by-mads-nipper-2021-09?barrier=accesspaylog
Polack, A (2021), ‘Enabling Frameworks for Sustainable Energy Transition’,
Commonwealth Sustainable Energy Transition Series 2021/03, Commonwealth Secretariat, London. Available at https://thecommonwealth.org/sites/default/files/inline/Sustainable%20Energy%20Transition%20Series_Enabling%20Frameworks%20for%20Sustainable%20Energy%20Transition.pdf
Roth, J. (2021, May 19). Green Taxation and Fossil Fuel Subsidy Reform: Two tools for a green recovery. International Institute for Sustainable Development. Retrieved October 31, 2021, from https://www.iisd.org/articles/energy-subsidy-reform-taxation-green-recovery