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World’s Energy Transition in Doubt as Progress on Affordability, Sustainability Stalls

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The world’s energy systems have become less affordable and are no more environmentally sustainable than they were five years ago. While access to energy has substantially improved, with less than one billion people now living without access to electricity, concerns over affordability and equity of energy transition are increasing. These are the findings of latest edition of the World Economic Forum’s Fostering Effective Energy Transition report, which was published today.

The report’s Energy Transition Index (ETI) measures economies in two ways. Firstly, each economy is assessed for its energy “system performance”. This takes into account three criteria regarded as critical for transitioning to the future, namely: security and access, environmental sustainability and economic growth and development. The latter measures economic impact to households, industry and export revenues.

Over the past five years, the measurement that has seen the most improvement has been energy access and security, followed by economic growth and development and, lastly, environmental sustainability. The average system performance score had been improving since 2014, but it stalled last year as gains in energy security and access were offset by reductions in affordability and sustainability. Continued use of coal for power generation in Asia, increasing commodity prices and slower than needed improvements in energy intensity have contributed to this year’s stagnation in performance.

The second part of the ETI measures economies’ success in putting in place the necessary conditions for transition. This “transition readiness” looks at six individual indicators: capital and investment; regulation and political commitment; institutions and governance; institutions and innovative business environment; human capital and consumer participation; and energy system structure.

Transition readiness scores vs annual emissions per country

Small economies achieved higher scores on readiness, with the UK the only G7 economy in the top 10 of this subset. With the exception of Singapore, all are in Western Europe. The major challenge facing any attempt to future-proof global energy is the lack of readiness in the world’s largest economies. For example, the 10 countries that score the highest in terms of readiness account for just 2.6% of global annual emissions.

“We need a future where energy is affordable, sustainable and accessible to all. Solid progress in bringing energy within the reach of more and more people is not enough to mask wider failures, which are already having an impact on our climate and on our societies. Urgent action is needed now to accelerate transition that works for business, consumers and our environment,” said Roberto Bocca, Head of Future of Energy and Materials, Member of the Executive Committee, World Economic Forum.

However, there is some ground for optimism. While the world’s two most populous economies, China and India, score low in terms of system performance (ranking 97 and 86 respectively) they rank considerably higher when it comes to readiness (45 and 61 respectively). This suggests that, while their current outdated energy systems are not ready for transition, an enabling environment is being built to support future transition. In this respect, China ranks seventh in the world for regulation and political commitment.

The Energy Transition Index 2019

Advanced economies continue to lead the rankings table, demonstrating the maturity of their energy systems. Sweden (1) retains the top spot from last year, followed by Switzerland (2) and Norway (3). Australia (43), Canada (35), and Republic of Korea (48) are the only advanced economies with scores below the top quartile on the ETI, due to the high carbon intensity of their fuel mix, and high per capita energy consumption and carbon emissions. Affordability is emerging as a growing concern in advanced economies, as the gap between household and wholesale electricity prices increases.

Results show that energy transition in the world’s largest emitters has stalled in the past year. While the United States (27) has made progress in reducing the use of coal in power generation, it slipped in the rankings by two places reflecting concerns about the affordability of energy to households, and regulatory uncertainty on environmental sustainability

Countries in emerging and developing Asia observed significant improvements towards universal access to electricity, led by India (76), Indonesia (63) and Bangladesh (90). Malaysia (31) is the highest-ranking emerging country from this region, Vietnam (56) showed the greatest improvement in the ETI rankings since last year, while Thailand (51) improved on all three dimensions of the energy triangle as well as transition readiness. This region remains important for the future of energy transition because urbanization, industrialization and rising living standards continue to drive increases in energy demand. The Forum will support the Association of Southeast Asian Nations (ASEAN) in its progress towards energy transition, leveraging the ETI and its platform to enhance public-private collaboration.

In Sub-Saharan Africa, the report emphasizes the necessity of regulatory and policy stability, as well as strong institutional frameworks to leverage the abundant natural resources in a way that enables an effective energy transition. The progress on energy access for electricity and clean cooking fuels faces challenges from the rapidly growing population in countries throughout this region. Namibia (62) is the highest-ranking country in this group, Kenya (71) and Ethiopia (95) are showing improvements. South Africa (114) and Nigeria (109), the two largest consumers in this group, continue to face challenges in the form of over-reliance on coal and the lack of enabling infrastructure, respectively.

Latin America and the Caribbean region has the highest average scores on environmental sustainability of all regions, primarily due to its significant hydroelectric capacity. However, large economies like Brazil (46) and Mexico (37) did not show improvements on the previous index, while Colombia (34) and Dominican Republic (78) moved up the rankings. Regional integration of electricity markets and infrastructure, electrification of mobility, along with increasing operational efficiency of energy infrastructure can help unlock further improvements.

There is an urgent need for swift action on energy transition. Critical measures to accelerate energy transition include decoupling economic growth from energy consumption, particularly in emerging economies, mainstreaming breakthrough technological innovations to improve efficiency and sustainability, and developing addressing equity and justice in energy transition. Given the interconnectedness of the energy system throughout economic, social, and political systems, there is greater need than ever for different stakeholder groups to seek common understanding on the vision and priorities for energy transition.

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What COVID-19 taught us about risk in a complex, inter-connected world

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A new UN report has shed fresh light on the ways that the COVID-19 pandemic unleashed cascading risks, particularly on vulnerable people, worldwide.

From the mangroves of West Bengal to the vast archipelago that makes up Indonesia, and from the bustling port city of Guayaquil, Ecuador, to the tropical shores of southern Togo, systemic risks from the COVID-19 pandemic have been exposed in stark human terms.

Millions of people who were already struggling to make ends meet, often working in the informal economy in agriculture and surviving below the poverty line, had to contend with a host of new risks that they could not possibly have foreseen.

These included joblessness, debt, civil and domestic violence, children’s education derailed, and opportunities severely diminished. In many locations, women suffered disproportionately due to pre-existing gender biases in society. 

Taken together, these human experiences are not just a catalogue of suffering from places in the world that are not often in the headlines. They also bring into sharp focus a very real challenge: how to better understand and manage the cascading, systemic risks that resulted from COVID-19 as it spread across borders.

Life-threatening domino effect

The report, “Rethinking risks in times of COVID-19” shows how, in each of these four locations – part of five field studies carried out in 2021 by the UN University’s Institute for Environment and Human Security (UNU-EHS) and the UN Office for Disaster Risk Reduction (UNDRR) – a clear picture emerges of a domino effect, resulting from the outbreak of COVID-19, that rippled across societies far beyond the immediate effects of the pandemic itself.

This starkly illustrates that our world is interconnected through systems that come with associated, volatile risks that have revealed, and reinforced, vulnerabilities across society.

In the Ecuadorian port city of Guayaquil, for instance, families already living in overcrowded housing suffered more from stay-at-home orders than those in more favourable living situations.

The city’s health-care system reached a tipping point in a matter of weeks after the first case was detected in February 2020, resulting in a high number of corpses being left unattended in hospitals and care homes, as well as on the streets. The images of bodies accumulating in the streets that circulated in the global media were among the first to show what happened when COVID-19 arrived in densely populated urban areas.

A complex, fragile web

Yet before COVID-19, the interconnectedness of such risks may not have been immediately obvious in our daily lives. Nor was the systemic nature of these risks, meaning how they affected, or can potentially affect, whole societies beyond the initial problem.

For one thing, we have tended to think about systemic risks in relation to what happened as a result of the 2008 financial crash, where the failure of big banks rippled across the global economy, leaving millions out of work and sparking a global economic recession.

Other examples can be seen in how climate change, natural hazards and, more recently, the global consequences of the war in Ukraine have brought home how our world relies on a complex, often fragile, web of interdependent factors that, if destabilized, can have devastating effects on whole societies. For example, Ukraine and Russia are both key global cereal and fertilizer producers. One of the ripple effects of the war can be seen in rising global food prices, resulting in higher costs of living for those who can afford it and pushing those who cannot deeper into food insecurity. 

Time for a broader perspective

The emergence of COVID-19 has forced a broadening of perspective on systemic risks. The good news is that it has expanded understanding of these risks, and how to address them.

Hazards and shocks can emerge from outside and within the system. Exposure to them can be indirect, meaning that effects can be felt in places that are not directly affected by the hazard — in this case, COVID-19 — but end up being affected as a result of interconnectedness. Finally, the vulnerability of one system can also turn into a hazard or shock for other interdependent systems.

What, then, are the actions that can be taken to improve risk management, given that traditional approaches fall short in more complex settings?

One is to understand how things are connected. The cascading effects originating from COVID-19 made it possible to spot the interconnections that exist in many such systems and to assess whether a system is functioning as intended.

Another is to identify the trade-offs implicit in policy measures: several measures to combat COVID-19, such as school closures, stay-at-home orders or travel restrictions, had widespread effects.

This highlights the need to assess and evaluate possible trade-offs and cascading effects involved in introducing such measures, because they can have unexpected repercussions and can exacerbate existing societal vulnerabilities.

A third action is to focus on processes for systemic recovery while leaving no one behind. The interconnected nature of systems presents an opportunity for positive turning points, by creating positive effects. In the pandemic context, this was made real through the job creation that followed the provision of financial assistance from governments, charities and NGOs, or advances in digitalization following stay-at-home orders.

Today’s interconnected world is an evolving system, and disastrous events are often the results of systemic failures. The report shows that It’s time to develop a deeper understanding of systemic risks, how they trigger other hazards and shocks, often in unpredictable ways.

It also demonstrates that managing these risks needs to be properly embedded in how policymakers, planners, and other stakeholders approach risk management, with the aim of creating more resilient, equitable and prosperous communities and societies around the world.

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Free Trade Pact Could Help Lift Up to 50 Million Africans from Extreme Poverty

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The African Continental Free Trade Area (AfCFTA) has the potential to bring significant economic and social gains for the region, leading to higher incomes, lower poverty, and faster economic growth, according to a new World Bank report done in partnership with the AfCFTA Secretariat.

If fully implemented to harmonize investment and competition rules, the trade pact could boost regional incomes by as much as 9 percent—to $571 billion. It could create almost 18 million more jobs, many of them higher-paying and better-quality jobs, with women workers seeing the biggest gains. By 2035, the resulting jobs and income growth could help up to 50 million people exit extreme poverty.

The implementation of the trade agreement would also lead to larger wage gains for women and skilled workers. Wages of female workers are expected to be 11.2 percent higher in 2035 as compared to the wage level without the agreement, outpacing 9.8 percent growth of male workers’ wages.

The report, Making the Most of the African Continental Free Trade Area, extends the work done in 2020 (www.worldbank.org/afcfta2020report), when the World Bank initially assessed the economic potential of AfCFTA. As part of its first phase, which took effect in January 2021, the AfCFTA will gradually eliminate tariffs on 90 percent of goods and reduce barriers to trade in services. The new report, released today, examines the effects of the larger trade market on the continent’s ability to attract investment – both from within Africa and outside—and the resulting economic impact.

“The AfCFTA comes at a critical time when regional cooperation is needed to navigate compounded risks and enhance the resilience of supply chains, to support green, resilient and inclusive growth in Africa,” said Mari Pangestu, Managing Director for Development Policy and Partnerships, World Bank. “Countries must work together to make the AfCFTA a reality and reap its many benefits – including reducing barriers to trade and investment, enhancing competition, and ensuring markets function fairly and efficiently through clear and predictable rules.”

The report discusses two scenarios to assess the benefits for a market of more than 1.3 billion people with a combined GDP of US$3.4 trillion.   

The key findings indicate that the AfCFTA has the potential to encourage greater foreign direct investment (FDI) required for Africa to diversify into new industries, such as agribusiness, manufacturing, and services, and reduce the region’s vulnerability to commodity boom-bust cycles. A deeper integration beyond trade and trade facilitation measures, that harmonizes policies on investment, competition, e-commerce, and intellectual property rights could boost market efficiency and competitiveness, reduce regulatory risks, and attract even more foreign direct investment. By 2035, this integration would increase incomes by 9 percent, or $571 billion, and create 18 million new jobs, with 2.5 percent of the continent’s workers moving to new industries. This would expand the number of people leaving extreme poverty to 50 million.

The report finds that greater FDI could raise Africa’s exports up to 32 percent by 2035, with intra-African exports growing by 109 percent, especially in the manufactured goods sectors.  All countries in Africa will see their intra-African exports increase, that includes Tunisia (165%), Cameroon (144%), Ghana (132%), Tanzania (126%), and South Africa (61%).

As barriers to trade and investment are reduced, export sectors likely to grow the most are textiles and apparel; chemical, rubber and plastic products; and processed foods. Deeper integration would lower trade costs and boost capital inflows boosting exports from services sectors such as transport; communications and hospitality. 

“Today Africa is one of the least integrated regions globally. African countries trade more with the outside world than with each other. The pact can help countries to simplify and harmonize trade and transit procedures, improve infrastructure, transport and logistics and spur the flows of goods, services, capital, and people that are so vital for development,” said Wamkele Mene, Secretary-General of the AfCFTA Secretariat.

To unlock these potential gains in trade, investment, and jobs, countries must first successfully conclude the negotiations and the treaty’s most ambitious goals must be carried out by each country. The report highlights several other areas countries could reform to amplify economic gains from trade.

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Education Cannot Wait: 222 Million Crisis-Impacted Children in Urgent Need of Educational Support

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Image source: educationcannotwait.org

The United Nations global fund for education in emergencies and protracted crises, Education Cannot Wait (ECW), released a shocking new report today that indicates the number of crisis-impacted school-aged children requiring educational support has grown from an estimated 75 million in 2016 to 222 million today.

Of the 222 million crisis-affected children and adolescents in need of urgent support, the study indicates that as many as 78.2 million are out of school, and close to 120 million are in school, but not achieving minimum proficiency in math or reading. In fact, just one in ten crisis-impacted children attending primary or secondary education are actually achieving these proficiency standards.  

The analysis indicates that 84% of the out-of-school crisis-impacted children are living in areas with protracted crises. The vast majority of these are in countries specifically targeted through ECW’s ground-breaking multi-year investments, including Afghanistan, Democratic Republic of the Congo, Ethiopia, Mali, Nigeria, Pakistan, Somalia, South Sudan, Sudan and Yemen. The war in Ukraine is pushing even more children out of school, with recent estimates indicating the conflict has impacted 5.7 million school-aged children.

These alarming new figures are released against the backdrop of a recent ECW study showing that the response to education in emergencies and protracted crises remains chronically underfunded, and that the funding gap appears to have gotten even worse since the COVID-19 pandemic. 

To respond to this pressing global education crisis, ECW and strategic partners launched the #222MillionDreams resource mobilization campaign in Geneva today. The campaign calls on donors, the private sector, philanthropic foundations and high-net-worth individuals to urgently mobilize more resources to scale up ECW’s investments, which are already delivering quality education to over 5 million children across more than 40 crisis-affected countries.

The campaign rallies together donors and other strategic partners in the lead up to the Education Cannot Wait High-Level Financing Conference ­- co-hosted by ECW and Switzerland, and co-convened by Germany, Niger, Norway, and South Sudan – taking place 16-17 February 2023 in Geneva.

“The financial resources to ensure that every child and young person can receive a quality education exist in the world. Now, we need to take responsible action for the 222 million children and youth in emergencies and protracted crisis. Governments, private sector and foundations can and must unlock these resources. Only then can we empower them to reach their potentials and realize their dreams,” said Gordon Brown, the UN Special Envoy for Global Education and Chair of the ECW High-Level Steering Group.

“This is a global call to action: we speak of the 222 million dreams representing each of the 222 million children and adolescents sustaining the extreme hardship of emergencies and protracted crises. Their dreams are profoundly driven by their experience of wars and forced displacement. This is our moment to empower them to turn their dreams into reality. While the world struggles with the devastating impacts of armed conflicts, COVID-19 and climate change, 222 million children and adolescents live through these horrific experiences. They dream to become their potential rather than a victim. Do not let them down. It is our duty to empower them through an education and to make their dreams come true,” said Yasmine Sherif, Director of Education Cannot Wait.

“In times of crisis, children experience uncertainty with regard to their future and are faced with a total disruption of their routines. Going to school provides children with protection, a sense of normalcy and hope and is a means to provide longer-term perspectives. We know that after school disruption and closures, many children will not continue their education. Switzerland is committed to contribute to reducing the risk of lost generations through its support to education in emergencies. We are thus partnering with Education Cannot Wait and look forward to co-hosting the High-Level Financing Conference in Geneva,” said Patricia Danzi, Director General of the Swiss Agency for Development and Cooperation.

Global leaders have committed to “ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all” through the 2030 Agenda for Sustainable Development (SDG4). The new estimates indicate that COVID-19 and other factors have derailed two decades of education gains. According to UN reports, basic school infrastructure is lacking in many Least Developed Countries. Only 54% of schools have access to safe drinking water, 33% have reliable electricity and 40% have handwashing facilities.

United Nations Secretary-General António Guterres is convening the “Transforming Education Summit” in September 2022. The Summit seeks to “mobilize political ambition, action, solutions and solidarity to transform education: to take stock of efforts to recover pandemic-related learning losses; to reimagine education systems for the world of today and tomorrow; and to revitalize national and global efforts to achieve SDG4.”

On the heels of the Summit, the Education Cannot Wait High-Level Financing Conference is the opportunity for leaders to turn commitments into action, by making substantive funding contributions to ECW that will help turn dreams into reality for the children left furthest behind in crises.    

Read UN Secretary-General António Guterres Statement.

#222Million Dreams

The #222MillionDreams campaign encourages people everywhere to call on world leaders and world-leading businesses to address the concerning rise in the number of crisis-impacted children requiring educational support. Join the campaign by making a $222 individual donation to Education Cannot Wait, and by sharing your support on social media with videos, posts and calls to action to support #222MillionDreams.

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