I still recall seeing articles, reading news and perusing opinions clamoring with a ‘no deal’ jargon. Belonging to the same pessimistic guild I was utterly hopeful of hopelessness regarding the first meeting in October when OPEC and Russia met, as they have many times before, to settle down the undulating oil market. But the sentiment and expectations turned topsy-turvy as soon as the mellifluous sound of ‘production cut’ was beginning to be feebly heard by those waiting outside the meeting room i.e. the world.
Words it is said have a lot of power yet it is easier said than done. Everyone was taken aback by the, otherwise aggressive OPEC, when words of cooperation were thrown into the air by Mr. Khalid Al-Falih in October meeting when it (OPEC) met with Russia on the side lines of World Energy Forum. Following at its heels was the World Energy Forum itself held in the former Ottoman kingdom now Turkey. Istanbul sprinkled positivism all around the oil markets when Russian President Mr. Putin adduced its consent that they are ready to, not to freeze, but cut its production. In a fit of reciprocity Saudi Arabia also vowed to reduce its production, an about turn from its former stance and shift of policy of maintaining the market share. The Sheikhs have promised to keep its production between 32 to 33.5 mbpd instead of 3.75 last month. Moreover, the fragile economies of OPEC and the arch competitor of KSA i.e. Iran have been exonerated from this production cut. Now these participants meet on 28thOctober in Vienna to probe more into the minutiae’s of the final verdict that is supposed to be pen down in November’s final meeting. This array of meetings has helped to elate the lolling bulls who were concerned with rising rig count and ballooning inventory levels. The bullishness is rife now with black gold touching a year high of $53.70.
However, a scrupulous rubbernecking glimpse into the well of positivism filling of-late one can see volatility and uncertainty seeping through the foundations. While KSA has decided to slow down its drilling machines in an attempt to ameliorate the pain it is feeling in the shape of budget holes, subsidy removals and cut in salaries of employees also a horde of grumbling public that are in wont of government largesse in shape of leisure and spending, the time superimposes with the commencement of winter season in which, as a common practice, the kingdom squeezes its production. Russia’s Rosneft (which has a 40% share in Russia’s total oil production) Head, Igor Sechin, also spilt cold water on the plans when he refused to be part of any deal. Ergo, the concern and questions regarding the implementation and sustainability of the impending deal.
Few days back Paris based IEA released its October oil market report which helped to balance the surging bullishness. It has reduced down the demand growth from 1.3mbpd in September to 1.2mbpd in its latest publication. Growth keeps on falling “dropping from a five-year high in 3Q15 to a four-year low in 3Q16” the reports say. The reason remains the same: “vanishing OECD growth and a marked deceleration in China”. About 0.6mbpd were injected into the glut mostly due to the record production by the 14 member cartel of about 33.64mbpd “in September as Iraq pumped at the highest ever and Libya reopened ports”. Due to the refinery maintenance season the inventory levels at Cushing, Oklahoma added up 4million barrels, the largest gain in six weeks. Rig count is also up as Baker and Hughes reported an additament of 4 rigs making the total 432. A bearish admonition can easily be deciphered by the aforesaid facts and figures.
Production from the Kashagan oil field has also started which is supposed to bring 370, 000 unwanted barrels per day into the already engorged oil market. While around $1trillion of E&P projects have been cut off by energy giants all around the world the production coming from this field, biggest ever to be discovered in 4 years, marks an oddity in the trend. Also note that Kazakhstan (the country in which the field is located) is not a member of OPEC hence, if the estimates are correct the middle-eastern producer is not going to pay any heed to the cries of those battered due to low oil prices.
Mr. Fereydoun Barkeshli, Head of Vienna Energy Centre, said to me in response to a question that does he share the recent bullishness: “As you are fully aware the international oil market is too complicated. I remember, late Robert Mabro once told me that you could easily be labeled as a great liar for having said something totally right and vise a versa. However, for OPEC it’s now a very crucial moment in that for the first time in its history, non-OPEC producer are coming onboard and show willingness to cooperate. That would mean an enlarged OPEC.A realization by other producers that OPEC cannot handle the supply/demand balance all by itself. Experts from OPEC and non-OPEC will meet end of October to discuss options for cooperation so that by November OPEC ministerial conference there should be an agenda on the table. Russia is a determining factor. If they come onboard, I would share that positivism.” I totally concur with his viewpoint.
It all comes down to one point: Demand. The re-balancing act will not and cannot be executed until or unless the maws of energy importers (like China) don’t open up wide enough to bibble down the excess oil. Otherwise, the circle will continue to start anew. Prices up, more rigs, more production… glut. Oil prices down, rigs fall, production fall consequently providing the buoyancy for the price and we will be stuck forever in this oily imbroglio.
Economic value of energy efficiency can drive reductions in global CO2 emissions
Ambitious energy efficiency policies can keep global energy demand and energy-related carbon-dioxide (CO₂) emissions steady until 2050, according to a new report by the International Energy Agency. Perspectives for the Energy Transition: The Role of Energy Efficiency shows that despite a near-tripling of the world economy and a global population that increases by nearly 2.3 billion, end-use energy efficiency alone can deliver 35% of the cumulative CO₂ savings through 2050 required to meet global climate goals.
Global energy demand grew by 2.1% in 2017 according to IEA estimates, more than twice the growth rate in 2016. At the same time, global energy-related CO₂ emissions increased for the first time in three years, as improvements in global energy efficiency slowed down dramatically to 1.7%.
“Among all energy trends in 2017, the one that worries me the most is the slowdown in energy efficiency improvements,” said Dr Fatih Birol, Executive Director of the International Energy Agency. “The rate of improvement that we saw is around half of the rate that is required to meet clean energy transition goals.”
IEA analysis in Perspectives for the Energy Transition: The Role of Energy Efficiency demonstrates that on top of a wide range of benefits including cleaner air, energy security, productivity and trade balance improvements, there is a compelling economic case for energy efficiency. But, without further policy efforts, these benefits are unlikely to be realised as less than a third of global final energy demand is covered by efficiency standards today.
Realising the full potential of energy efficiency will require a step-change in investments on the demand side of the energy equation, rising to USD 1.7 trillion per year through 2050, the majority of which is for energy efficiency and the electrification of transport. On the supply side, the focus is on reallocating investments towards renewables and other low-carbon technologies such as nuclear and carbon capture, utilisation and storage.
While the scale of the demand-side investment required may appear challenging, fuel cost savings over the lifetime of most technologies are larger than the investment required, which implies a strong economic benefit that arises from energy efficiency investment. Although there are still many low-hanging fruits that can pay back their initial investment quickly, payback periods are often too long to attract investment from consumers and businesses. Effective policy frameworks are needed to overcome economic and non-economic barriers to energy efficiency and to incentivise adoption of more efficient technologies.
Perspectives for the Energy Transition: The Role of Energy Efficiency demonstrates a compelling economic case for energy efficiency as being essential to make the energy transition affordable, faster and more beneficial to all. The IEA recommends that governments adopt a strategic approach to energy efficiency, supported by well-designed efficiency policies and a strong focus on implementation and enforcement.
Report: Powerful New Policy Options to Scale Up Renewables
A new report by the International Renewable Energy Agency (IRENA), the International Energy Agency (IEA), and the Renewable Energy Policy Network for the 21st Century (REN21), Renewable Energy Policies in a Time of Transition, is an unprecedented collaboration that sheds new light on the policy barriers to increased deployment of renewables and provides a range of options for policymakers to scale-up their ambitions.
Since 2012, renewable energy has accounted for more than half of capacity additions in the global power sector. In 2017 alone a record-breaking 167 GW of renewables capacity was added worldwide. 146 million people are now served by off-grid renewable power, and many small island developing states are advancing rapidly towards targets of 100% renewables.
One of the main rationales behind the call for a higher share of renewables in the energy mix is the urgent threat posed by climate change. Of the 194 parties to the United Nations Framework Convention on Climate Change 145 referred to renewable energy in their nationally determined contributions (NDCs), and 109 included quantified renewable energy targets. Air pollution is also a pressing issue, with an estimated 7.3 million premature deaths per year attributable to household and outdoor air pollution. Energy security is another influencing factor, with small island states particularly affected by security issues and resilience in the face of natural disasters. Finally, countries looking to expand energy access in rural areas are increasingly turning to renewables as the most cost-effective, cleanest and most secure option.
But the pace of the energy transition needs to be substantially accelerated to meet decarbonisation and sustainable development objectives. As outlined in IRENA’s recently-released Global Energy Transformation: A Roadmap to 2050, to achieve the two-degree goal of the Paris target, the share of renewables in the primary global energy supply must increase from 15% today to 65% by 2050. Gains in the electricity sector must be matched in end-use sectors such as heating and transportation, which together account for 80% of global energy consumption.
Renewable Energy Policies in a Time of Transition provides policymakers with a comprehensive understanding of the diverse policy options to support an accelerated development of renewables across sectors, technologies, country contexts, energy market structures, and policy objectives, to scale up renewable energy deployment. An updated joint classification of renewable energy policies to illustrate the latest policy developments around the world.
Key areas of focus:
Heating and Cooling
Heating accounted for over 50% of total final energy consumption in 2015, with over 70% of that met by fossil fuels. To increase the use of renewables, a range of policy instruments are required. These include mandates and obligations, which can offer greater certainty of increased deployment; building codes, which implicitly support renewable heating and cooling from renewables by setting energy performance requirements; renewable heat and energy efficiency policies that are closely aligned to leverage synergies and accelerate the pace of transition; fiscal and financial incentives, which reduce the capital costs of renewables; and carbon or energy taxes, which provide important price signals and reduce externalities.
Transport is the second largest energy end‑use sector, accounting for 29% of total final energy consumption in 2015, and 64.7% of world oil consumption. With the exception of biofuels, there is little practical experience of fostering renewables in transport. Policies and planning should help overcome the immaturity or high cost of certain technologies, inadequate energy infrastructure, sustainability considerations and slow acceptance among users as new technologies and systems are introduced. They should also build improved understanding between decision makers in the energy and transport sectors, so as to enable integrated planning and policy design. Removal of fossil fuel subsidies is also essential, especially in shipping and aviation.
Although the power sector consumed only about a fifth of total final energy consumption in 2015, it has received the most attention in terms of renewable energy support policy. Investments in the sector are largely driven by regulatory policies such as quotas and obligations and pricing instruments, supported by fiscal and financial incentives. Quotas and mandates cascade targets down to electricity producers and consumers, but require a robust framework to monitor and penalize non-compliance. Administratively set pricing policies (like feed-in tariffs and premiums) need to continuously adapt to changing market conditions and the falling cost of technology. Auctions are being increasingly adopted, given their ability for real-price discovery, and have resulted in a five-fold price reduction between 2010 and 2016, though auction design is crucial.
A number of countries and regions are reaching high penetrations of VRE in their power systems, and implementing policies to facilitate their system integration. Strategies for system integration of renewables are crucial to minimise negative impacts, maximize benefits and improve the cost effectiveness of the power system. As VRE shares grow in the power system, so do the challenges of system integration.
A wide range of policies have been adopted to support the growth of renewable energy around the world. The nature of those policies in a given country depends on the maturity of the sector, the particularities of the market segment, and wider socio-economic conditions. As this report shows, as deployment of renewable energy has grown and the sector has matured, policies must adapt and become more sophisticated to ensure the smooth integration of renewables into the wider energy system – including the end-use sectors – and a cost-effective and sustainable energy transition.
Better information needed to improve gender diversity in the clean-energy sector
Recognizing that the energy sector lags when it comes to gender diversity, the Italian Agency for New Technologies, Energy and Sustainable Economic Development (ENEA) and the International Energy Agency (IEA) brought together over 80 experts from governments, industry, academia and other organisations for a day-long workshop last week to discuss ways to improve data on women’s participation in the clean-energy sector.
Only limited data on the participation of women in the energy sector is currently available – data that will be critical to building a better understanding of how to make the sector more gender balanced. Without better information, reaching the goal of gender equality by 2030, set under the United Nations Sustainable Development Goal (SDG 5), will be impossible to reach.
Participants shared experiences on data collection and methods of assessment to analyse gender diversity as well as employment opportunities offered to women by the clean energy transition. The workshop was held under the Clean Energy Education and Empowerment Technology Collaboration Programme (also known as the C3E TCP), which seeks to promote higher participation of women in the clean-energy sector.
“The extraordinary and recognised capacity of women to handle complex and multivariable contexts, their openness to innovation and their responsiveness to environmental issues constitute an important asset for the energy transition” said Massimo Gaiani, Director General for Global Affairs of the Italian Ministry of Foreign Affairs and International Cooperation.
Four key messages emerged from the discussions:
1) Participants recognised the importance of collecting more detailed gender disaggregated data, but stressed the need to clearly define what information was needed and why;
2) Quantitative data should be supplemented with qualitative information to identify key barriers for women pursuing careers in the energy sector and to develop more targeted solutions to overcoming these challenges;
3) While comprehensive data is limited, a significant number of national and international efforts to collect information and promote gender already exist and there is opportunity for the Clean Energy Education and Empowerment Technology Collaboration Programme (C3E TCP) to collaborate with other leading institutions working on gender diversity to help build and disseminate knowledge;
4) Finally, the increased engagement of men to promote and support women’s advancement into leadership roles is critical in meeting gender equity and should be fostered.
The meeting also included a dialogue with leading Italian energy companies on a proposal to adopt a common pledge to take action and commitments to achieve gender equality by 2030 (SDG 5). Led by Sweden and Canada with support from the IEA, this new campaign will be launched at a side event to take place at the next Clean Energy Ministerial meeting in Copenhagen on 24 May.
Companies recognised the valuable role that women play in driving innovation and sustainability. Francesca Magliulo, Head of Sustainability and Corporate Social Responsibility of EDISON S.p.A Italy said, “Edison supports this initiative, our experience shows that inclusion and gender diversity creates new capacity to offer innovative solutions to new markets and new customer communities.”
Participants also confirmed that the current momentum to advance and accelerate progress on gender equality represents a tremendous opportunity. While the workshop focused on building knowledge and improving data, Elisabeth Marawba of the Department of Energy of South Africa stressed that “we also need to pay attention to the empowerment of women as business-owners and investors and not just focus on the employment aspects of women in clean energy.”
The C3E TCP and IEA will work together to expand data and indicators as well as undertake analysis to help fill the knowledge gap on gender diversity and women’s empowerment in the energy sector.
Find out more about the C3E TCP programme
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