In 2017, Global energy demand rose by 2.1% to 14,050 million tons of oil equivalent, more than twice the previous year’s rate. Over 70% of this demand growth was still met by oil, natural gas and coal. Globally, 1.1 billion people still lack access to electricity and 2.8 billion are currently without access to clean cooking facilities. Around two-thirds of global greenhouse gas (GHG) emissions stem from energy production and use. This puts the energy sector at the core of efforts to combat climate change.
The world is facing an energy trilemma. First, the reliability of energy supply must be ensured to meet current and future demand (energy security). Energy must also be accessible around the world, particularly in emerging markets, at an affordable cost (energy equity) and at the same time efforts must be made to reduce the carbon footprint of the energy sector (environmental sustainability).
Energy transition is critical in balancing these intertwined yet conflicting goals. Energy transition is a long-term structural change in energy systems. It entails shifting from current energy production and consumption systems, which rely primarily on non-renewable energy sources such as oil, natural gas and coal, to a more efficient, lower-carbon energy mix.
The global imperative to achieve sustainable growth and limit climate change, combined with a rapid decline in costs and rising investment into renewable energy, has put in motion a transition of the way that energy is produced, distributed and consumed.
Clean energy has become increasingly competitive. The global weighted average levelized cost of electricity (LCOE) of utility scale solar PV has fallen 73% since 2010, to US$ 0.10/kWh for new projects commissioned in 2017. Bioenergy-for-power, hydropower, geothermal and onshore wind projects largely fell within the range of generation costs for fossil-based electricity. The global weighted average cost of electricity was US$ 0.05 per kilowatt-hour (kWh) from new hydropower projects, US$ 0.06/kWh for onshore wind and US$ 0.07/kWh for bioenergy and geothermal projects.
Governments have a critical role in accelerating the energy transition. Governments have the responsibility to enact an enabling policy framework that provides long-term certainty for the private sector and ensures a positive environment for the energy transition. Market signals must be put in place to create financial incentives for low-carbon energy solutions.
In this global context, this paper discusses the need for energy transition in Cambodia. It assesses Cambodia’s clean energy potential, analyzes the policy environment and discusses the role of the private sector in accelerating the transition towards sustainable energy. The paper concludes with a set of recommendations to address the regulatory barriers and attract sufficient private financing to scale up renewable energy investment and harness wider socio-economic benefits for Cambodia.
