The energy transition is redefining markets, and companies that adapt now will lead the sustainable future.
Companies that integrate the energy transition into their strategy not only reduce emissions but also create a competitive edge in the global market, according to industry experts.
The energy transition is no longer a choice, but a global necessity. The shift from fossil fuels to renewable energy is accelerating, driven by public policies, technological innovation, and changing consumer behavior. However, this transformation brings significant challenges for governments, companies, and investors.
With the goal of limiting global temperature rise to 1.5°C, as established by the Paris Agreement, countries and companies are racing against time to reduce carbon emissions and implement new energy solutions. According to the International Energy Agency (IEA), clean energy investment must double by 2030, reaching US$ 4 trillion annually.
In this context, corporate governance plays a key role by helping define strategic guidelines, allocate resources efficiently, and ensure that companies truly transition to a sustainable model in a structured and transparent manner.
The Challenges of the Energy Transition
The shift to a cleaner energy system does not come without hurdles. In addition to the need for significant investments, the sector faces challenges such as infrastructure modernization, energy market volatility, and resistance from industries traditionally reliant on fossil fuels.
1. Infrastructure and Smart Grids
The current energy infrastructure was designed for a fossil-fueled world. The transition demands the modernization of transmission and distribution networks, making them more efficient and prepared for intermittent sources like solar and wind.
So-called smart grids emerge as a solution to this issue. They enable real-time monitoring of energy consumption, optimizing distribution and reducing losses. According to a BloombergNEF study, smart grids could improve global energy efficiency by up to 15%.
2. Energy Storage and Renewable Intermittency
Another central challenge is energy storage. Since sources like solar and wind do not generate electricity continuously, investing in long-duration batteries (BESS) is necessary to ensure supply stability.
Bloomberg estimates that the global energy storage market will grow 15-fold by 2030, driven by advances in lithium-ion batteries and new technologies such as sodium batteries.
3. High Transition Costs and Government Incentives
The energy transition requires billion-dollar investments. For many companies, upfront costs are a barrier. However, government incentives such as tax credits and green financing have helped make this shift viable.
In the United States, the Inflation Reduction Act (IRA) allocated US$ 369 billion for clean energy projects. In Brazil, BNDES has already invested over R$ 20 billion in energy transition initiatives.
The Role of Corporate Governance
Corporate governance plays a crucial role in the energy transition, ensuring companies adopt sustainable practices in a structured way.
“Companies that integrate ESG into their organizational strategy are more successful in innovation and long-term value creation,” states a report by the World Economic Forum.
1. Innovation as Part of Strategy
For innovation to occur consistently, it must be part of the company’s core strategy. Developing new technologies, such as green hydrogen and smart grids, depends on a continuous and structured commitment.
2. Transparency and ESG Metrics
Clear governance practices allow investors and consumers to trust a company’s sustainability initiatives. Sustainability reports, audits, and ESG certifications ensure energy transition promises are actually fulfilled.
Today, 90% of companies listed on the Ibovespa already publish ESG reports — a significant advancement in corporate transparency.
3. Strategic Boards and Internal Incentives
Companies that create innovation and sustainability committees are able to accelerate the energy transition process. Additionally, adopting goals and financial incentives for executives and employees has proven to be an effective strategy.
A McKinsey study shows that companies linking executive compensation to ESG goals achieve better financial performance and greater stakeholder engagement.
Innovations Transforming the Sector
Technological advancement has been one of the main drivers of the energy transition. New solutions are emerging to solve long-standing challenges and accelerate the shift to a sustainable future.
1. Green Hydrogen: Revolutionizing Heavy Industry
Green hydrogen is one of the biggest bets to decarbonize sectors such as steelmaking, aviation, and shipping. It is produced by water electrolysis using renewable energy, with zero CO₂ emissions.
The European Union has already invested over €5 billion in green hydrogen projects, and in Brazil, the Port of Pecém (CE) is becoming a hub for exporting this technology.
2. Electric Mobility and Charging Infrastructure Expansion
The automotive sector is undergoing a revolution with the electrification of vehicles. Traditional automakers like Volkswagen and GM plan to end combustion vehicle production by 2035.
In Brazil, electric car sales grew 90% in 2023, and the market is expected to keep expanding as new charging stations are installed.
3. Solar and Wind Energy Cheaper Than Fossil Fuels
According to the IEA, solar energy is already the cheapest energy source in several regions. The cost of solar generation has dropped 89% over the past decade, making it a viable solution for global electrification.
In Brazil, solar energy has surpassed thermal power and now represents 16% of the energy mix.
The Importance of COP30 in the Energy Transition
COP30, to be held in Brazil in 2025, marks a milestone for the global energy transition. The event will bring together world leaders to discuss concrete actions against climate change.
Companies and governments must seize this opportunity to accelerate commitments and strengthen partnerships that enable investment in renewable energy.
“We are facing the decisive decade to transform the energy sector. Corporate governance, combined with innovation and public policy, will be essential to ensure a sustainable transition,” concludes a study by the Instituto Clima e Sociedade.
The energy transition is a one-way path, and those who know how to lead this transformation will gain a competitive edge in an increasingly sustainable world.
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