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Caribbean Leaders Launch Ambitious Plan to Create the World’s First “Climate-Smart Zone”

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Recent hurricanes have left unprecedented devastation across the Caribbean, and it is a traumatic time for all those who live in the region. Whole communities and towns have been decimated, and the global community needs to act quickly and give generously to relieve suffering and help to rebuild.

Alongside the ongoing emergency response, Caribbean leaders today announced the launch of a new public-private coalition to create the world’s first “climate-smart zone.” The Caribbean Climate-Smart Coalition aims to find a way to break through the systemic obstacles that stop finance flowing to climate-smart investments. With the right domestic and international reforms, the world can step up – and help unleash the means to catalyze an ambitious US$8 billion investment plan to bring greater energy and infrastructure resilience to 3.2 million Caribbean households. This would help Caribbean islands to eliminate their costly dependency on fossil fuels so that they can meet close to 100% of their energy needs from renewable sources, and to embed resilience into communities and livelihoods to realize the bold ambitions of all Caribbean people.

The announcement came at the One Planet Summit hosted by French President Emmanuel Macron in Paris to review progress made on the Paris Agreement adopted by global governments two years ago today.

Caribbean leaders have brought together a Coalition of global organizations such as the Inter-American Development Bank, the World Bank, and the Caribbean Development Bank, as well as businesses and supporters from the Caribbean and the international community. The Coalition aims to reinvigorate the islands that have been impacted by recent hurricanes Irma and Maria, and help build more resilient infrastructure and communities across the region as the likelihood of future extreme weather events increases.

Coalition members will help to establish partnerships that can make investment deals happen. They will also bring their collective abilities together to break down the technological and financial barriers, which represent the last obstacles to Caribbean people grasping the transformational opportunities that are in reach.

Specifically, the Coalition’s work will focus on catalyzing four initial critical priorities:

  • Scale renewable energy as rapidly as possible to help free Caribbean countries from the high cost of imported fossil fuels and the high vulnerability of centralized distribution systems.
  • Build low-carbon and resilient infrastructure including nature-based approaches, to better withstand future extreme weather events.
  • Create innovative financing models such as a debt-for-resilience swap initiative in exchange for demonstrated progress on policy reforms and investments to strengthen resilience and promote climate-smart growth pathways. Build platforms to help facilitate the large public and private investments required. 
  • Strengthen the capacity of Caribbean countries and key regional institutions to plan for long-term resilience and climate-smart growth strategies.

Prime Minister Keith Mitchell of Grenada, Chair of CARICOM, said: “Caribbean leaders have come together as a powerful collective to build a better future for the people of the Caribbean. We welcome the financial commitments from our partners – around US$1.3 billion for recovery efforts and US$2.8 billion toward the vision shared by all members of the Coalition and others. This is a great first step. Now we need to turn this possibility into a set of realities that benefit all our people. We all need to work together to change the rules of the game to accelerate climate-smart financial flows for the Caribbean and other small island developing states. Together we can build thriving economies fuelled by clean energy, nature-based resilient design and innovation. The time for action is now.”

Prime Minister Roosevelt Skerrit of Dominica, said: “Despite the immense human suffering and economic damage caused by the recent hurricanes, the people of the Caribbean do not want to be just passive victims of climate change. Rather, they want to be active participants in designing and implementing solutions, and for their Caribbean region to serve as a beacon of hope for island nations all over the world.

Supported by funding and resources from the Inter-American Development Bank Group, the World Bank Group and the Caribbean Development Bank, a Caribbean Climate-Smart Accelerator with an estimated budget of $6-10 million for a three-year period is being established to catalyze billions of further public and private resources.

Luis Alberto Moreno, Inter-American Development Bank Group President, said: “The IDB Group reaffirms its continued and historical commitment to the Caribbean and will work with leaders of the region to improve lives by creating climate-smart and vibrant economies, where people are safe, productive, and happy. We hope that through this Climate Smart Coalition, in addition to offering new affordable financing, we will use our wide physical presence on the ground to work closely with the people of the region to design their Caribbean of the future, today.

Jim Yong Kim, World Bank Group President, said: “The Caribbean is in the ‘eye of the storm’ and we need coordinated international support to rebuild and better plan for the future. At the World Bank Group, we welcome the Caribbean Climate-Smart Coalition and plan to support it so countries get back on their feet and are better able to deal with the growing frequency and intensity of storms and hurricanes.

Warren Smith, President of the Caribbean Development Bank, said: “The destruction our Region experienced during the 2017 Atlantic Hurricane Season emphasises that we cannot afford to take a business-as-usual approach in tackling climate change. CDB, therefore, welcomes the establishment of the Caribbean Climate-Smart Coalition. The Bank shares the vision of the Coalition and we look forward to supporting and investing in solutions to accelerate progress towards achieving this goal.”

Achim Steiner, Administrator of the United Nations Development Programme, said: “The next hurricane season is only six months away so achieving climate-smart and resilient development for the Caribbean is critical. Affected individuals are the focus of the $5 billion recovery process, but this effort will only be successful if it involves the private sector, civil society and governments at all levels working together for a more resilient Caribbean. Last month, close to $2.5 billion was pledged at a conference co-organized by CARICOM and UNDP for recovery and resilience in the Caribbean, and it is our objective to facilitate joint efforts with the work of the Caribbean Climate-Smart Coalition.

Allen Chastanet, Prime Minister of St. Lucia, said: “Ultimately, we will only win the battle on climate change when investments in climate action and broader resilience become the economically sensible decision to make every time. It’s not just about protecting against negative impacts – climate action needs to be about enhancing competitiveness, creating jobs, improving our economies. Otherwise, our people cannot make the sacrifices needed. I’m pleased by the level of support from our Coalition partners and others. But I’m excited about the possibility for the Caribbean to incubate new powerful ideas, and accelerate their implementation.

Sir Richard Branson, Founder Virgin Group, said: “Much of the Caribbean has been going through immense human suffering and economic damage caused by the recent hurricanes. But I never had any doubts about the spirit and the resilience of Caribbean people. They have come together and decided to turn the Caribbean into a spark of hope for the world. The work of the Caribbean Climate-Smart Coalition will help to break down the remaining barriers between vision and reality, and will see the region not only recover from the catastrophic impacts of Irma and Maria. It will set a shining example of resilient reconstruction and clean energy transition.

THE RISE Fund said: “The RISE Fund is committed to investing in businesses that create positive and measurable social or environmental impact alongside competitive financial returns. We’re excited about the Coalition’s work to help rebuild the power infrastructure in the Caribbean to provide more cost effective, resilient, and cleaner power. We look forward to working with the Coalition to identify investment opportunities that will drive positive commercial outcomes while helping to rebuild and strengthen local communities across the Caribbean.

Mary Robinson, Chair of the Mary Robinson Foundation – Climate Justice, said: “Climate justice is all of our responsibility. We must stand alongside all the people of the Small Island Nations who will be most impacted by climate change. The recent hurricanes in the Caribbean have been devastating to watch, with people still homeless, without electricity and without livelihoods. We need to provide support in the form of immediate relief, and we also need to start working with them to build a resilient future where the people of the Caribbean can thrive. I’m thrilled to see the Caribbean Climate-Smart Coalition being announced in Paris. It is wonderful to see Caribbean Leaders coming together with partners from all over the world to ensure that the Caribbean can serve as a beacon of hope for other Island Nations.

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Libya’s Energy Puzzle: Every Challenge is an Opportunity

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Libya’s energy sector remains divided between two authorities, the National Oil Corporation (NOC) and the Petroleum Facilities Guard, and three governments namely the House of Representatives in Tobruk, the General National Congress and the Presidential Council in Tripoli. Failure to conduct a fair and expedient election in late December 2021 is expected to prolong division of Libya’s oil wealth between East and West. This would cement the presence of foreign powers and mercenaries in and around Libyan oil and gas installations.

The country’s oil and gas reserves are estimated at approximately 48 billion barrels of crude oil and 52 trillion cubic feet of gas. Libya’s oil production was 1.3 million barrels per day (bpd) on average throughout 2020, with plans for oil production to reach up to 2 million bpd within the next five years.

These plans, however, can prove futile because of militant attacks on oil and gas installations, increased number of leaks due to lack of infrastructure maintenance, and the possibility of renewed months-long blockades on energy facilities. The December closure of Shahara field, Libya’s largest oil field in the southwest part of the country, by militants was translated into temporary reduction of oil production by around 350 thousand bpd. That means overall oil production easily decreased at approximately 700 thousand bpd, thus constituting Libya’s lowest production level within a year period.

In addition, months-old blockades on energy facilities, throughout the last few years, have led to the halt of significant part of exports. According to the central bank in Tripoli, oil and gas revenues for 2020 plummeted to 652 million dollars from around 7 billion dollars in 2019, which is, practically, a drop by 92 percent.

Overall, militant attacks and blockades prevent oil exports and deprive Libya from revenues that could be otherwise funneled to its reconstruction. It is also noteworthy that the under-funding of the NOC due to failure to pass a national budget has starved it of economic resources, preventing upgrades to the aging or damaged oil infrastructure, and limiting oil and gas production. 

Foreign Energy Investment Flows

Despite the challenges, foreign investment plans continue unabated. French Total, through its subsidiary Total Energies, foresees the execution of a 2-billion-dollar investment plan to increase the production capacity of the North Gialo and NC-98 oil fields.

Concurrently, Total Energies partners with American ConocoPhilips exploration and production company for the acquisition of American Hess Corporation’s 8.16 percent interest in the six Waha oil concessions located in the Sirte Basin in eastern Libya. The commercial deal will increase the French company’s stake in the concessions to 20,4 percent from the current 16,3 percent, thus solidifying the energy footprint of France in Libya.

On a parallel level, Royal Dutch Shell announced its plans not only to re-develop ageing fields like the block NC-174 in the Murzuq basin but also to develop new fields offshore the Cyrenaica basin and onshore the Ghadames and Sirte basins. Shell’s investment plans signal its re-entry in Libya after a decade’s absence attributed to the 2011 first Libyan civil war.

The attraction of substantial international investment in the energy sector of Libya, however, remains dependent on improved security and a stable and united government that is outcome of elections.

Russia and Turkey at the Forefront of Actions

In the meantime, foreign powers persist in their battle for control over Libya’s energy wealth, with Russia and Turkey being at the forefront of the evolving dominance process. Russian security contractors and Russian-aligned mercenaries are stationed in Libya to protect critical energy assets operated by Russian oil companies like Gazprom and Rosneft.  Moscow wants to export Libyan oil to Europe in accordance with the relevant provisions of a Memorandum of Understanding (MoU) signed between Russian major Rosneft and NOC that foresees the sale of Libyan crude oil to third markets, and the signing of additional energy deals that will allow Moscow to maintain its position as a leading supplier of energy to Europe.

Moscow also looks eager to get a piece of the reconstruction pie in Libya with the renewal of a 2.6-billion-dollar contract for a railway that will connect the city of Sirte to Benghazi, and with the execution of other infrastructure projects. On top of that, Moscow maintains military interests in Libya and persistently pursues its bid to gain a permanent naval facility on the 1,900-kilometer Libyan coast that will serve as a Russian gate to Africa.

For its part, Turkey looks eager to collect Qaddafi-era debt owed to Turkish businesses, to participate in the 50-billion-dollar of reconstruction contracts, and to establish a Turkey-Libya axis that would disrupt the alignment between Greece, Israel, Cyprus, and Egypt. This was the specific goal of the Turkey-Libya MoU on the demarcation of maritime boundaries, which is nevertheless invalid for two reasons: Firstly, it was not ratified by the Libyan Parliament and, secondly, it was not approved unanimously by members of the Presidential Council in breach of the UN-sponsored Libyan Political Agreement.

Alarming bells have started to ring in western capitals over the alleged close cooperation between Russia and Turkey on the basis that they have practically divided Libya, on the patterns of Syria, into distinct spheres of influence between them. There are worries that Libya is divided along Islamic lines supported by Turkey. Turkish support of Islamic militias with military equipment is allegedly used to damage Libyan critical energy infrastructure. The ultimate Turkish goal is to control a large portion of Libya’s offshore gas, to disrupt the unimpeded flow of energy, and thus control a significant part of Libyan energy reserves.

The Way Out

To prevent a security breakdown and another round of civil conflict that will negatively impact development and production of energy resources in Libya, a new definite elections date must be declared. The UN can serve as valuable vehicle in this direction by ensuring that Libyan presidential and parliamentary elections are held as soon as possible, while enabling the resolution of pending matters that postponed them in the first place. Failure to meet a new elections’ deadline would trigger a constitutional crisis, undermine the legitimacy of the political system, create an opening for domestic spoilers, and provide a pretext for foreign powers to maintain their malign military presence in Libya.

Evidently, time is of essence. But still, there is a window of opportunity for Libya to escape the vicious cycle of instability and uncertainty that prevents the realization of its full energy potential. It is beyond the shadow of a doubt that the international community can play a constructive role to this end.

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Energy transition is a global challenge that needs an urgent global response

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COP26 showed that green energy is not yet appealing enough for the world to reach a consensus on coal phase-out. The priority now should be creating affordable and viable alternatives 

Many were hoping that COP26 would be the moment the world agreed to phase out coal. Instead, we received a much-needed reality check when the pledge to “phase out” coal was weakened to “phase down”. 

 This change was reportedly pushed by India and China whose economies are still largely reliant on coal. The decision proved that the world is not yet ready to live without the most polluting fossil fuels. 

 This is an enormous problem. Coal is the planet’s largest source of carbon dioxide emissions, but also a major source of energy, producing over one-third of global electricity generation. Furthermore, global coal-fired electricity generation could reach an all-time high in 2022, according to the International Energy Agency (IEA).

 Given the continued demand for coal, especially in the emerging markets, we need to accelerate the use of alternative energy sources, but also ensure their equal distribution around the world.

 There are a number of steps policymakers and business leaders are taking to tackle this challenge, but all of them need to be accelerated if we are to incentivise as rapid shift away from coal as the world needs. 

 The first action to be stepped up is public and private investment in renewable energy. This investment can help on three fronts: improve efficiency and increase output of existing technologies, and help develop new technologies. For green alternatives to coal to become more economically viable, especially, for poorer countries, we need more supply and lower costs.

 There are some reasons to be hopeful. During COP26 more than 450 firms representing a ground-breaking $130 trillion of assets pledged investment to meet the goals set out in the Paris climate agreement. 

 The benefits of existing investment are also becoming clearer. Global hydrogen initiatives, for example, are accelerating rapidly, and if investment is kept up, the Hydrogen Council expects it to become a competitive low-carbon solution in long haul trucking, shipping, and steel production.

 However, the challenge remains enormous. The IEA warned in October 2021 that investment in renewable energy needs to triple by the end of this decade to effectively combat climate change. Momentum must be kept up.

 This is especially important for countries like India where coal is arguably the main driver for the country’s economic growth and supports “as many as 10-15 million people … through ancillary employment and social programs near the mines”, according to Brookings Institute.  

This leads us to the second step which must be accelerated: support for developing countries to incentivise energy transition in a way which does not compromise their growth. 

Again, there is activity on this front, but it is insufficient. Twelve years ago, richer countries pledged to channel US$100 billion a year to less wealthy nations by 2020, to help them adapt to climate change. 

The Organization for Economic Cooperation and Development estimates that the financial assistance failed to reach $80 billion in 2019, and likely fell substantially short in 2020. Governments say they will reach the promised amount by 2023. If anything, they should aim to reach it sooner.

There are huge structural costs in adapting electricity grids to be powered at a large scale by renewable energy rather than fossil fuels. Businesses will also need to adapt and millions of employees across the world will need to be re-skilled. To incentivise making these difficult but necessary changes, developing countries should be provided with the financial support promised them over a decade ago.

The third step to be developed further is regulation. Only governments are in a position to pass legislation which encourages a faster energy transition. To take just one example, the European Commission’s Green Deal, proposes introduction of new CO2 emission performance standards for cars and vans, incentivising the electrification of vehicles. 

This kind of simple, direct legislation can reduce consumption of fossil fuels and encourage industry to tackle climate change.

Widespread legislative change won’t be straightforward. Governments should closely involve industry in the consultative process to ensure changes drive innovation rather than add unnecessary bureaucracy, which has already delayed development of renewable assets in countries including Germany and Italy. Still, regardless of the challenges, stronger regulation will be key to turning corporate and sovereign pledges into concrete achievements. 

COP26 showed that we are not ready as a globe to phase out coal. The priority for the global leaders must now be to do everything they can to drive the shift towards green energy and reach the global consensus needed to save our planet.

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Pakistan–Russia Gas Stream: Opportunities and Risks of New Flagship Energy Project

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source: twitter

Russia’s Yekaterinburg hosted the 7th meeting of the Russian-Pakistani Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation on November 24–26, 2021. Chaired by Omar Ayub Khan, Pakistan’s Minister for Economic Affairs, and Nikolai Shulginov, Russia’s Minister of Energy, the meeting was attended by around 70 policy makers, heads of key industrial companies and businessmen from both sides, marking a significant change in the bilateral relations between Moscow and Islamabad.

Three pillars of bilateral relations

Among the most important questions raised by the Commission were collaboration in trade, investment and the energy sector.

According to the Russian Federal Customs Service, the Russian-Pakistani trade turnover increased in 2020 by 45.8% compared to 2019, totaling 789.8 million U.S. dollars. Yet, there is still huge potential for increasing the trade volume for the two countries, including textiles and agricultural products of Pakistan and Russian products of machinery, technical expertise as well as transfer of knowledge and R&D.

Another prospective project discussed at the intergovernmental level is initiating a common trade corridor between Russia, the Central Asia and Pakistan. Based on the One-Belt-One-Road concept, launched by China, the Pakistan Road project is supposed to create a free flow of goods between Russia and Pakistan through building necessary economic and transport infrastructure, including railway construction and special customs conditions. During the Commission meeting, both countries expressed their intention to collaborate on renewal of the railway machines fleet and facilities in Pakistan, including supplies of mechanized track maintenance and renewal machines; supplies of 50 shunting (2400HP or less) and 100 mainline (over 3000HP) diesel locomotives; joint R&D of the technical and economic feasibility of locomotives production based in the Locomotive Factory Risalpur and other. The proposed contractors of the project might be the Russian Sinara Transport Machines, Uralvagonzavod JSC that stand ready to supply Pakistan Railway with freight wagons, locomotives and passenger coaches. In order to engage import and export activities between Russian and Pakistani businessmen, the Federation of Pakistan Chamber of Commerce signed a memorandum with Ural Chamber of Commerce and Industry, marking a new step in bilateral relations. Similar memorandums have already been signed with other Chambers of Commerce in Russian regions.

— Today, the ties between Russia and Pakistan are objectively strengthening in all areas including economic, political and military collaboration. But we, as businessmen, are primarily interested in the development of trade relations and new transit corridors for export-import activities. For example, the prospective pathways of the Pakistan-Central Asia-Russia trade and economic corridor project are now being actively discussed at the intergovernmental level, — said Mohsin Sheikh, Director of the Pakistan Russia Business Council of the Federation of Pakistan Chambers of Commerce and Industry. — For Islamabad, this issue is one of the most important. Based on a similar experience of trade with China, we see great prospects for this direction. That is why representatives of Pakistan’s government, customs officers, diplomats and businessmen gathered in Yekaterinburg today.

However, the flagship project of the new era of the Pakistan-Russia relations is likely to be the Pakistan Gas Stream. Previously known as the North-South Gas Pipeline, this mega-project (1,100 kilometers in length) is expected to cost up to USD 2,5 billion and is claimed to be highly beneficial for Pakistan. Being a net importer of energy, Pakistan will be able to develop and integrate new sources of natural gas and transport it to the densely populated industrialized north. At the same time, the project will enable Pakistan—whose main industries are still dependent on the coal consumption—to take a major step forward gradually replacing coal with relatively more ecologically sustainable natural gas. To enable this significant development in the Pakistan’s energy sector, Moscow and Islamabad have made preliminary agreements to carry on the research of Pakistan’s mineral resource sector including copper, gold, iron, lead and zinc ores of Baluchistan, Khyber Pukhtunkhwa and Punjab Provinces.

A lot opportunities but a lot more risks?

The Pakistan Stream Gas Pipe Project undoubtedly opens major investment opportunities for Pakistan. Among them are establishment of new refineries; the launch of virtual LNG pipelines; building of LNG onshore storages of LNG; investing in strategic oil and gas storages. Yet, it seems that Pakistan is likely to win more from the Project than Russia. And here’s why. The current version of the agreement signed by Moscow and Islamabad has been essentially reworked. According to it, Russia will likely to receive only 26 percent in the project stake instead of 85 percent as it was previously planned, while the Pakistani side will retain a controlling stake (74 percent) in the project.

Another stranding factor for Russia is although Moscow will be entitled to provide all the necessary facilities and equipment for the building of the pipeline, the entire construction process will be supervised by an independent Pakistani-based company, which will substantially boost Pakistan’s influence at each development. Finally, the vast bulk of the gas transported via the pipeline will likely come from Qatar, which will further strengthen Qatar’s role in the Pakistani energy sector.

Big strategy but safety first

The Pakistan Stream Gas Pipeline will surely become an important strategic tool for Russia to reactivate the South Asian vector of its foreign policy. Even though the project’s aim is not to gain a fast investment return and economic benefits, it follows significant strategic goals for both countries. As Russia-India political and economic relations are cooling down, Moscow is likely to boost ties with Pakistan, including cooperation in economy, military, safety and potentially nuclear energy, that was highlighted by Russian Foreign Minister Sergey Lavrov during visit to Islamabad earlier this year. Such an expansion of relations with Pakistan will allow Russia to gain a more solid foothold in the South Asian part of China’s BRI, thus opening up a range of new lucrative opportunities for Moscow.

Apart from its economic and political aspects, the Pakistan Stream Project also has clear geopolitical implications. It marks Russia’s growing influence in South Asia and points to some remarkable transformations that are currently taking place in this region. The ongoing geopolitical game within the India-Russia-Pakistan triangle is yet less favorable for New Delhi much because of the Pakistan Stream Project. Even though the project is not directly aimed to jeopardize the India’s role in the region, it is considered the first dangerous signal for New Delhi. For instance, the International “Extended troika” Conference on Afghanistan, which was held in Moscow last spring united representatives from the United States, Russia, China and Pakistan but left India aside (even though the latter has important strategic interests in Afghanistan).

With the recent withdrawal of the U.S. military forces from Afghanistan, Moscow has become literally the only warden of Central Asia’s security. As Russia is worried about the possibility of Islamist militants infiltrating the Central Asia, the main defensive buffer in the South for Moscow, the recent decision of Vladimir Putin to equip its military base in Tajikistan, which neighbors Afghanistan, seems to be just on time. Obviously, Islamabad that faces major risks amidst the Afghanistan crisis sees Moscow as a prospective strategic partner who will help Imran Khan strengthen the Pakistani efforts in fighting the terrorism threat.

From our partner RIAC

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