The Success of Energy Transition Starts With Strong National Energy Planning

Even though global transition-related investments reached a record of USD 2 trillion in 2023, the world faces a critical challenge: current investment patterns are disproportionately concentrated in advanced economies and a few large emerging markets like China, India, and Brazil. Meanwhile, much of the developing world receives just 10% of energy transitions investments. This imbalance jeopardizes not only the pace of the energy transition but also the equitable distribution of its benefits.

This imbalance underscores the importance of strong national energy planning frameworks - supported by international collaborations - which are universally critical but hold particular promise in addressing underinvestment challenges in the Global South. By improving enabling conditions for investment in regions that are currently underfunded, such frameworks have the potential to drive significant progress in accelerating the energy transition.

To achieve this, a well-established institutional framework, coupled with a well-coordinated and transparent planning process, is essential. Such frameworks enable countries to create robust investment strategies, address potential risks, build investors' confidence, and attract private capital. Moreover, good alignment between climate and energy planning processes enhances the credibility of planning outcomes, which is key to unlocking climate finance. Brazil, which held the G20 presidency in 2024, serves as a compelling example of the transformative potential of long-term energy planning. By implementing a comprehensive de-risking process - which entails effective governance of the planning process, financial instruments, and project execution - Brazil has significantly boosted investments in its renewable energy sector.

During the G20 Energy Transition Working Group discussions, Brazil spearheaded the establishment of the Global Coalition for Energy Planning (GCEP). This initiative aims to enhance national planning efforts globally by fostering international collaboration, building institutional capacity, and facilitating knowledge exchange. This approach seeks to empower countries, especially in the Global South, to strengthen their energy planning capabilities, to develop and execute their unique, nationally determined energy transition strategies.

The GCEP leverages insights from the Global Network of Long-term Energy Scenarios (LTES) - a network of national energy planning institutions across different regions and development contexts. The LTES network provides sustainable support through inclusive partnerships and collective wisdom. It fosters collaboration across all regions - North-to-North, North-to-South, South-to-South, and South-to-North - bringing together champions of energy planning to share expertise, address common challenges, and strengthen their planning processes.

The LTES network's success is amplified by partnerships with key organisations, including the International Atomic Energy Agency, the International Energy Agency, the World Bank, and the United Nations Framework Convention on Climate Change. At the same time, collaboration with the Clean Energy Ministerial (CEM) has deepened members engagement. With Denmark and Germany's guidance, the LTES has become one of CEM's most active and impactful programmes over the past six years.

One of the main topics within the LTES network is how to effectively use long-term energy planning processes to mobilise finance. Through the collection of numerous real-world examples and advice from financiers, the network has identified three key areas where effective energy planning can support investment mobilisation:

1. Create enabling conditions: Energy planning can help design forward-looking regulations and policies, address potential bottlenecks across the value chain, and empower governments to make informed decisions.
2. Address investors' needs: Long-term plans become more accessible to financiers when they also include shorter-term investment plans and financial strategies, active engagement with the financial sector, and a focus on socioeconomic benefits.
3. Ensure credibility through strong governance: Plans must be credible, with clear communication to promote policy directions; with participatory processes to identify risks and increase alignments among stakeholders, including well-coordinated governance frameworks to increase trust, reliability and accountability of the plans.

These findings directly address the key questions raised by the GCEP, which explores the critical link between planning and finance. Another key focus of GCEP is streamlining international capacity-building efforts in energy planning, which has long been supported by the International Renewable Energy Agency (IRENA).

A notable example of IRENA's support to better equip countries with the tools and strategies to mobilise energy transition is its collaboration with the African Union Development Agency on the development of the Continental Power Sector Masterplan (CMP). The collaboration includes a capacity-building programme that helped African power pool experts develop sustainable institutional capacity to prepare and maintain the CMP.

Diverse approaches in energy planning allow countries to craft planning frameworks tailored to their unique circumstances. In this regard, countries are enabled to make informed decisions to shape their own energy transitions, based on robust data, sound methodologies, and inclusive stakeholder engagement, rather than using predefined technological solutions that might not be suitable for their respective contexts.

Through GCEP, these governance and collaboration principles are elevated, reinforcing national ownership and inclusive planning as central pillars of the global energy transition. Furthermore, GCEP offers a broader platform for countries to engage with a wide range of international initiatives, highlighting the importance of all energy planning initiatives to enhance the role of energy planning as a tool for mobilising investments in the energy transition.

For more discussion on GCEP and energy planning, watch a session of IRENA's 15th Pre-Assembly on 11 January 2025, titled 'Global Coalition for Energy Planning: Shaping the Agenda for Action'. This session marks a critical milestone ahead of the GCEP's full launch later this year in Rio de Janeiro, Brazil. Watch the livestream here.