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Oil price rises in 2019 to be modest as U.S. production constraints ease: World Bank

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Growing global trade tensions are weighing on non-energy commodity prices and are leading to downward revisions to 2019 price forecasts, the World Bank said.

Oil prices are forecast to average $74 a barrel over 2019, only marginally up from a projected average of $72 a barrel in 2018, while metals prices are expected to remain broadly stable in 2019, the World Bank said in its October Commodity Markets Outlook.

Prices for energy commodities – which include oil, natural gas, and coal — are forecast to average 33.3 percent higher in 2018 than the previous year but to broadly stabilize in 2019, the World Bank said. U.S. oil production growth is expected to be robust whereas oil production losses are expected in Iran and Venezuela. Global demand is expected to hold steady.

Prices for agricultural commodities, including food commodities and raw materials, are anticipated to decline marginally in 2018 amid ample supply and trade tensions before rising 1.6 percent in 2019.

The metals index is expected to rise 5.4 percent this year and decline modestly in 2019. Prices could drop more than expected if global trade frictions intensify.

“Further escalation of trade restrictions between major economies could lead to large economic losses and cascading trade costs through global value chains,” said Shanta Devarajan, World Bank Senior Director for Development Economics and acting Chief Economist. “Any setbacks to growth in major economies would have significant negative repercussions for the rest of the world through trade, confidence, financial, and commodity-market channels.”

The imposition of both commodity-specific and broad-based tariffs this year has reduced and diverted trade flows; amplified price differentials between some countries among some commodities including soybeans, steel and aluminum; and more generally led to concerns about weaker global trade and growth prospects, the World Bank said in the report.

“The outlook for commodity prices is highly uncertain given a number of policy-related risks, which include the possibility of additional tariffs or sanctions,” said Ayhan Kose, director of the World Bank’s Development Economics Prospects Group. “In addition, demand for industrial commodities is likely to soften in coming years. A large number of emerging market and developing economies depend on raw materials for government and export revenues and should therefore be strengthening policy frameworks and rebuilding fiscal buffers.”

A special focus section examines changing patterns of demand for industrial commodities – energy and metals – and their implications for developing economies. Over the past 20 years, demand for commodities has surged in large part due to demand from China. As China’s economy matures and shifts toward less commodity-intensive activities, energy and metal demand growth is likely to slow.

“Slower growth in commodity consumption would likely dampen prices,” said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook. “Further, other factors, such as advances in technology, shifts in consumer preferences, environmental concerns, and policies to encourage cleaner fuels could lead to sharper declines in global use of some commodities than current trends indicate.”

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IRENA and RES4Africa Partner to Accelerate Renewables in Africa

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IRENA and the RES4Africa Foundation have agreed to cooperate to increase the speed of renewable energy development in Africa in the pursuit of the continent’s sustainable development and climate goals. The ‘Letter of Intent’ signed on 15 July 2019 in Rome, will see the two parties work together to explore public-private initiatives, knowledge creation opportunities, capacity building programmes and strategic dialogues to accelerate renewable energy deployment in Africa.

With more than 620 million Africans – nearly half the continent’s population – still without access to electricity, the RES4Africa Foundation works to address the water-energy-food nexus and promote the adoption of renewable energy in Africa. IRENA estimates the continent could meet nearly a quarter of its energy needs from indigenous and clean renewable energy by 2030, but to realise this potential a step-up in renewable energy action is necessary.

“To achieve the sustainable development goals and tackle climate change we must grow the share of global energy supplied by renewables to 50 per cent by mid-century,” said Francesco La Camera, Director-General of IRENA during the signing event. “That requires a significant scale up of renewable energy deployment. Stronger partnerships can accelerate the energy transformation lifting millions of people in rural villages across Africa out of energy poverty and delivering socioeconomic outcomes.”

Growing engagement in Africa

IRENA’s engagement with Africa on renewables dates back to the Agency’s formation nearly a decade ago. A key component of IRENA’s engagement and its effort to promote regional market integration in Africa, has been through the development of the Clean Energy Corridors. IRENA’s work informed the objectives of the African Renewable Energy Initiative (AREI), which now targets to develop 300 gigawatts of renewable energy capacity across the continent by 2030.

IRENA analysis suggests a transformation of Africa’s energy sector with renewables by 2030, would result in carbon-dioxide emission reductions of up to 310 megatonnes per annum and create millions of jobs across the continent.

IRENA

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IRENA Puts Renewables Centre-Stage at UN High- Level Meeting

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‘There can be no sustainable development without renewables’ – that was the takeaway from the 17th IRENA Council which concluded recently in Abu Dhabi. It was a message the Agency’s Director-General Francesco La Camera reinforced at every opportunity and a message that will once again take centre-stage during the United Nations High-Level Political Forum (HLPF) on Sustainable Development in New York this and next week.

The UN High-Level Political Forum takes place at the UN Headquarters in New York from 09–18 July 2019. Progress on six of the seventeen Sustainable Development Goals (SDGs) will be reviewed. Renewable energy plays a prominent role in goals being discussed this year, particularly those promoting sustained, inclusive and sustainable economic growth (SDG8); taking urgent action to combat climate change and its impacts (SDG13); and promoting peaceful and inclusive societies for sustainable development (SDG16).

Director-General Francesco La Camera will attend the Forum to engage dignitaries and IRENA members and partners. Mr. La Camera will also participate in a series of high-level discussions on topics including scaling-up climate action through the energy transformation and accelerating the energy transition in small island developing states.

Mr. La Camera will highlight the inter-linkages between the goals under review and access to affordable, reliable and modern energy for all (SDG7), a focus of  the last year’s HLPF. The essential role of renewable energy in powering growth, empowering people, and taking climate action will also be emphasised.

IRENA at HLPF

On 16 July, IRENA’s High-level side event on ‘Scaling up climate action through clean energy transitions: Delivering on the Paris Agreement and the SDGs’ will be co-convened by UN DESA, the European Union, and the Permanent Mission to the UN of the Federal Democratic Republic of Ethiopia. Building on findings and outcomes from reports and meetings, including the 2019 Tracking SDG7 Energy Progress Report and Climate Summit preparatory meeting in Abu Dhabi, outcomes from this discussion will feed into the UN Secretary-General’s Climate Action Summit and the SDG Summit in September 2019.

On 17 July, the High-level Side event on Scaling-Up Energy Transition in Small Island Developing States, will mark the launch of the policy brief on ‘Achieving SDG 7 in Small Island Developing States’ and pave the way for the Mid-term Review of the SAMOA Pathway taking place in September 2019. Organised by Saint Lucia, Samoa, Maldives, UN-OHRLLS and IRENA, the event will take stock of energy transition developments and renewable energy uptake in SIDS and explore the vital elements in making progress in the area of sustainable energy.

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IEA hosts high-level meeting on technologies for a clean energy future

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The discussion at the event was informed by two recent major reports from the IEA about nuclear power and hydrogen. Photo: IEA

The International Energy Agency on 11 July hosted a discussion among leading global energy sector figures about technologies that can help to bring about a clean energy future, including hydrogen and nuclear power.

The main speakers at the event were Dan Brouillette, Deputy US Energy Secretary; Jean-Bernard Lévy, Chairman and CEO of EDF; Hiroshi Oe, Japanese Ambassador to the OECD and Chair of the IEA Governing Board; and Dominique Ristori, Director-General Energy at the European Commission.

The discussion at the IEA’s headquarters in Paris was informed by two recent major reports from the IEA: Nuclear Power in a Clean Energy System and The Future of Hydrogen: Seizing Today’s Opportunities.

At a time of profound change in the global energy sector, countries will require all the tools at their disposal to meet their commitments to tackling emissions and air pollution while maintaining energy security.

“I’d like to thank our speakers for the robust and rewarding conversation,” said Dr Fatih Birol, the IEA’s Executive Director, who hosted the event. “There is no miracle technology that will solve the daunting environmental challenges the world faces. We need continued innovation across a range of technologies, including renewables, energy efficiency, batteries, carbon capture and more. The IEA sees hydrogen and nuclear power as important parts of clean energy transitions in many countries, but they need help from governments to overcome significant obstacles.”

Nuclear power is by far the largest source of low-carbon electricity in both Europe and North America, but many of their plants are aging. Without effective policies to spur new investment, advanced economies could lose as much as two-thirds of their nuclear capacity in the next 20 years, threatening global climate goals and energy security.

Hydrogen, which is currently enjoying unprecedented momentum, can help tackle various critical energy challenges. It offers ways to decarbonise a range of sectors where it is proving difficult to meaningfully reduce emissions, including long-haul transport, chemicals, and iron and steel. Hydrogen’s ability to store and transport energy could enable renewables to make a greater contribution to the global energy system. But it has experienced false starts in the past and still faces big challenges to scale up infrastructure and bring down costs.

The meeting on 11 July to discuss these important energy issues highlights the IEA’s role as the world’s leading energy authority and its commitment to covering all fuels and all technologies. Guests included Lithunia’s Minister of Energy Žygimantas Vaičiūnas. Lithuania has requested to join the IEA as a member country and the accession process has begun.

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