Ensuring effective and just energy transitions: The critical role of SAIs in Climate Governance

11.12.2024

As global efforts to combat climate change intensify, the international community reaffirms its commitment to limiting global warming and accelerating the shift from fossil fuels to cleaner energy sources. The importance of addressing the intertwined challenges of climate resilience, biodiversity preservation, and energy transitions has never been clearer. This transformation is not merely a technical endeavor; it also involves reshaping governance structures, realigning financial flows, and ensuring that no community is left behind. 

Recognizing the centrality of these challenges, INTOSAI Working Groups – such as the Environmental Auditing (WGEA) and Audit of Extractive Industries (WGEI) – together with Supreme Audit Institutions (SAIs) worldwide, have directed their efforts towards developing innovative frameworks and tools to address urgent global needs. 

A recent initiative led by SAI Brazil, the Energy Transition Audit Guide, draws on SAI Brazil’s experience to highlight the critical role of SAIs in promoting governance frameworks that ensure energy transitions are effective, equitable, and aligned with broader social, economic, and environmental priorities. While primarily focused on the shift from fossil fuels to renewable energy sources, this Guide also underscores wider considerations essential to a sustainable future. In doing so, it closely aligns with the WGEA’s priorities, helping SAIs better understand and audit the complex realities of governments’ energy transition efforts. 

The pressing need to move away from carbon-intensive energy systems has been highlighted by the Intergovernmental Panel on Climate Change (IPCC) and international agreements such as the Paris Agreement. Scientists have long warned that to curb climate change, we must rapidly decarbonize our economies and invest in renewable sources like wind, solar, and geothermal. However, the shift to cleaner energy systems goes beyond cutting emissions and must also ensure equitable access to affordable, reliable, and sustainable energy – a core target under the UN Sustainable Development Goals. This requires comprehensive policies that address the social, economic, and environmental dimensions of the transition.

The energy transition is therefore a governance challenge as much as it is a technological one. Traditional energy models are being redefined, large-scale infrastructure projects are reshaping landscapes, and complex market mechanisms are emerging. All of this occurs within a context where governments must harmonize fiscal incentives, regulatory frameworks, and long-term planning to meet ambitious climate targets. Without careful oversight and accountability, even well-intentioned policies can have unintended consequences, such as burdening vulnerable communities with higher energy costs, causing habitat disruptions from renewable infrastructure, or failing to mobilize adequate private investments.

How can auditors ensure an effective and inclusive energy transition?

A recent benchmark study supporting the development of the Energy Transition Audit Guide reviewed a wide range of policy documents, audit reports, and international best practices. This review revealed that SAIs are uniquely positioned to assess not only the implementation of renewable energy projects and emissions reduction strategies, but also the broader governance, financing, and social equity aspects that are essential to a successful energy transition. However, auditors may risk overlooking critical issues, such as just transition measures, stakeholder engagement, and the resilience of new energy infrastructure to future climate impacts, if they focus too narrowly on technical performance indicators.

The assessment examined dozens of cases across different regions, looking at how governments allocate public funds, incentivize private sector participation, and mitigate the socioeconomic impacts of phasing out fossil fuels. Findings highlighted that while investing in renewables is essential for climate action, it must be accompanied by robust policies that ensure local communities benefit – through job creation, capacity building, and equitable resource sharing. 

Nature-based solutions, such as restoring wetlands to improve grid resilience or protecting watersheds to maintain stable hydropower outputs, can provide co-benefits, by supporting both emission reductions and ecological integrity. Carefully designed policies can achieve these “win-win” outcomes, but doing so requires transparent decision-making, adaptive governance, and continuous learning. SAIs, through their mandates, can analyze policy coherence, assess cost-effectiveness, and verify the implementation of promised socio-environmental safeguards. They can highlight gaps, foster accountability, and encourage the refinement of policy instruments over time.

The Energy Transition Audit Guide offers a structured approach for SAIs to evaluate these multifaceted dimensions, covering governance arrangements, policy integration, financing mechanisms, and long-term planning horizons, as well as the social and environmental considerations that must underpin energy transition efforts. Designed to be fully adaptable, the Guide allows SAIs to tailor its use according to their specific national contexts and evolving policy landscapes. It is not intended to be a one-time solution, but rather a starting point for ongoing dialogue and collaborative improvement among SAIs, encouraging continuous feedback and the incorporation of new insights as the global energy sector continues to evolve.

By using this Guide and contributing to its enhancement, SAIs can play a crucial role in ensuring that strategies to reduce carbon emissions do not come at the expense of local communities or ecological stability, and that public funds are effectively mobilized for sustainable, inclusive growth. External auditors can play a central role in identifying areas for improvement, promoting cross-sectoral collaboration, and encouraging adaptive management practices. In doing so, they support governments in achieving not only cleaner energy systems, but also more just, equitable, and resilient societies.

To learn more, please access the Energy Transition Guide’s hostsite.

Alexandre Carlos Leite de Figueiredo
Guilherme Pereira Souto 
Katrina Narguis 
SAI Brazil