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Renewable energy investment in 2018 hit USD 288.9 billion

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Global investment in renewable energy hit USD 288.9 billion in 2018, with the amount spent on new capacity far exceeding the financial backing for new fossil fuel power, according to new figures published today.

These numbers, produced by BloombergNEF (BNEF), are being published today as part of REN21’s Renewables 2019 Global Status Report.

The numbers show that while investment was 11 per cent down over the previous year, 2018 was the ninth successive year in which it exceeded USD 200 billion and the fifth successive year above USD 250 billion. The figure does not include hydropower above 50MW, which saw an additional USD 16 billion invested – also down on 2017, when USD 40 billion was invested.

The dip in investment in 2018 can be partly attributed to falling technology costs in solar photovoltaics, which meant that the required capacity could be secured at a lower cost, and a slowdown in solar power deployment in China.

However, globally, solar was still the largest focus of investment, with USD 139.7 billion in 2018, down 22 per cent. Wind power investment increased two per cent in 2018, to USD 134.1 billion. The other sectors lagged far behind, although investment in biomass and waste-to-energy increased 54 per cent, to USD 8.7 billion.

The figures compare the amount invested in new renewable power capacity, which was USD 272.3 billion  globally in 2018 (excluding large hydro), with that in new coal- and gas-fired generating capacity, which was USD 95 billion.

China leads, Europe and developing countries rally

A geographical breakdown of the USD 288.9 billion figure for total renewable energy investment in 2018 shows that China led investment worldwide for the seventh successive year, at USD 91.2 billion. However, this was down 37 per cent from 2017’s record number, due to a number of factors including a mid-year change in the government’s feed-in tariff policy, which hit investment in solar power.

China also accounted for 32 per cent of the global total investment, followed by Europe at 21 per cent, the United States at 17 per cent, and Asia-Oceania (excluding China and India) at 15 per cent. Smaller shares were seen in India at 5 per cent, the Middle East and Africa at 5 per cent, the Americas (excluding Brazil and the United States) at 3 per cent and Brazil at 1 per cent.

If China is excluded, renewable energy investment in the developing world actually increased 6 per cent to USD 61.6 billion, a record high.

“When overall investment falls, it is easy to think we are moving backwards, but that is not the case,” Angus McCrone, Chief Editor at BloombergNEF, commented: “Renewable energy is getting less expensive and we are seeing a broadening of investment activity in wind and solar to more countries in Asia, Eastern Europe, and the Middle East and Africa.”

Investment in Europe jumped 39 per cent to USD 61.2 billion, the highest level in two years, driven largely by large on- and off-shore wind investments.

In the United States, investment edged up 1 per cent to USD 48.5 billion, the highest level since 2011, also driven by an increase in wind power financing.

Investment in the Asia-Pacific region (excluding China and India) increased 6 per cent to USD 44.2 billion, the highest level in three years, while the Middle East and Africa saw investment leap 57 per cent to a record USD 15.4 billion. However, in the Americas (excluding Brazil and the United States), investment declined 23 per cent (excluding large hydropower) to USD 9.8 billion. 

“It is reassuring to see investment growing in the US,” said Prof. Dr. Nils Stieglitz, President of Frankfurt School of Finance & Management, involved in the report, “Ironically, this renewables investment growth may in part be driven by projects rushing to qualify for the current tax-support scheme, which is due to expire in only a few years as chances for extension are currently quite low.”

A wealth of more detailed information on global investment in the financing of renewables in 2018 will be shared in the Global Trends in Renewable Energy Investment report, to be released in September ahead of the Global Climate Action summit of the UN Secretary-General. That report has been published every year since 2007. this year’s edition is co-funded by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. It will feature a look back on a decade of renewable energy investment.

UN Environment

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Unprecedented momentum for green hydrogen

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photo: IRENA

Hydrogen from renewable energy could play a central role in the global energy transformation, the latest report by the International Renewable Energy Agency (IRENA) finds. ‘Hydrogen: a renewable energy perspective’ estimates that hydrogen from renewable power, so called green hydrogen, could translate into 8 per cent of global energy consumption by 2050. 16 per cent of all generated electricity would be used to produce hydrogen by then. Green hydrogen could particularly offer ways to decarbonise a range of sectors where it is proving difficult to meaningfully reduce CO2 emissions.

Decarbonisation impacts depends on how hydrogen is produced. Current and future sourcing options can be divided into grey (fossil fuel-based), blue (fossil fuel-based production with carbon capture, utilisation and storage) and green (renewables-based) hydrogen. Blue and green hydrogen can play a role in the transition and synergies exist.

Falling renewable power cost and falling capital cost for electrolyzers is creating an economic case for green hydrogen

With falling cost of renewables, the potential of green hydrogen particularly for so called ‘hard-to-decarbonise’ sectors and energy-intensive industries like iron and steel, chemicals, shipping, trucks and aviation is rapidly becoming more compelling given the urgency to limit CO2 emissions. This includes direct hydrogen use but also the production of liquid and gaseous fuels such as ammonia, methanol and synthetic jet fuel from green hydrogen. Electrolyzer deployment is currently ramping up from MW to GW-scale as witnessed by dozens of projects worldwide.

Large-scale adoption of hydrogen could also fuel an increase in demand for renewable power generation, IRENA’s report finds. In total, IRENA sees a global economic potential for 19 exajoule (EJ) of hydrogen from renewable electricity in total final energy consumption by 2050. This translates into around 4-16 terawatts (TW) of solar and wind generation capacity to be deployed to produce renewable hydrogen and hydrogen-based products in 2050.

However, deployment of hydrogen-based solutions will not happen overnight, IRENA’s report cautions. Hydrogen might likely trail other strategies such as electrification of end-use sectors, and its use will target specific applications. The need for a dedicated new supply infrastructure may also limit hydrogen use to certain countries that decide to follow this strategy. Existing natural gas pipelines could be refurbished, but implications must be further explored.

Low-carbon, clean hydrogen should be understood as part of a larger energy transition effort

Green hydrogen could make a substantial contribution to the energy transition in the long run. The report recommends acknowledging the strategic role of hydrogen in the transition and at the same time calls on governments and private sector to better understand energy system benefits, cost-reduction and investment requirements to tap into the potential of a hydrogen future.

Download IRENA’s report ‘Hydrogen: a renewable energy perspective’. 

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Ramp up nuclear power to beat climate change

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Without significantly increasing the use of nuclear power worldwide, it will be difficult to achieve the goal of reducing harmful emissions and fighting climate change, the head of the International Atomic Energy Agency (IAEA), said on Monday.

Cornel Feruta, the acting Director-General of the agency, was speaking in Vienna, at the opening of the first-ever International Conference on Climate Change and the Role of Nuclear Power.

It brought together some 550 participants from 79 countries, and 18 international organizations, to exchange science-based information, and hold objective discussions on the role of nuclear power in mitigating the climate crisis.

The IAEA pointed out that nuclear power contributes around one-third of all low carbon electricity, producing practically no greenhouse gases, and some 10 per cent of the total electricity produced worldwide.

Radioactive waste and security concerns must be addressed

However, the IAEA accepted that there are persistent public concerns about the potential dangers to health and the environment caused by radioactive waste from nuclear plants, and Mr. Feruta said that advances concerning the disposal of such material may alleviate fears about the long-term sustainability of the energy source.

Also speaking at the event, Mr. Liu Zhenmin, the Under-Secretary-General for Economic and Social Affairs (DESA), echoed Mr. Feruta’s remarks, and said that the problem of radioactive waste is an “unresolved issue” that needs to be addressed.

In his keynote address, Mr. Zhenmin also raised nuclear safety, which he described as “a significant public concern, especially after the Fukushima accidents and terrorism related fears”.

The large up-front costs of nuclear power remain an important issue, continued Mr. Zhenmin, and renewable energies, such as solar and wind, are continuing to drop in price, becoming increasingly competitive with conventional, fossil-fuel based sources. Meeting the capital costs of building nuclear plants will require government commitments, and public acceptance.

Nuclear technology’s ‘important role in society’

Nuclear technology plays an important and positive role in society, added Mr. Zhenmin. He outlined some of the benefits, such as monitoring pollution, and assisting in the diagnosis and treatment of cancers and other major diseases, and pointed out that radiation technology helps prevent food from spoiling, and to create new crop varieties, which supports climate change adaptation.

Both Mr. Feruta and Mr. Zhenmin referred to the work of the Intergovernmental Panel on Climate Change (IPCC), the UN body tasked with providing objective, scientific reports on the changing climate, which has shown that far-reaching changes to the way we produce energy must occur if we are to limit global warming to 1.5 degrees above pre-industrial levels.

In its various models for a sustainable energy future, the IPCC has included significant increases in nuclear power generation by 2050, ranging from a 59 per cent increase, to a 501 per cent rise.

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New IEA policy review offers recommendations for Estonia’s energy transition

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Estonia is on the brink of a major energy transition that will involve a substantial change in the role of domestically produced oil shale in its energy mix, the International Energy Agency said today in its in-depth review of the country’s energy policies.

Estonia’s energy supply is unique among IEA member countries because of its strong reliance on domestically produced oil shale, which dominates electricity generation. This provides the country with a high degree of energy independence, but it also gives Estonia the highest carbon intensity of all IEA countries. Oil shale, an energy-rich sedimentary rock, and the shale oil produced from it are different from light tight oil (sometimes also referred to as shale oil), which is produced from shale formations, often together with shale gas, in hydraulic fracturing. This is not done in Estonia.

In the future, Estonia’s transport and power sectors will need to shift to lower-carbon energy sources. Its industry is set to move towards extracting higher value from the country’s oil shale resources by producing more liquid fuels that also have environmental benefits.

“This transition represents a major economic and social challenge, and we recommend that it be supported by identifying cost-effective pathways for the decarbonisation of the energy sector,” said Dr Fatih Birol, the IEA’s Executive Director.

The in-depth review of Estonia’s energy policies is the first by the IEA since the country became the 29th member of the organisation in 2014. The report discusses the energy challenges Estonia faces and recommends possible solutions to help it to achieve a secure and sustainable energy future.

Estonia made strong progress in the deployment of wind power until 2015, but significant administrative barriers have since emerged. As wind power is likely to be the lowest-cost technology for future large-scale renewable energy projects in Estonia, the IEA encourages the government to quickly address the barriers to its deployment. 

“I congratulate Estonia on already achieving its mandatory EU emissions reduction and renewable energy targets for 2020,” Dr Birol said. “The IEA believes that reaching the ambitious targets for 2030 can be possible but requires more determined action, taking economic and energy security considerations into account.”

Estonia’s main challenge in the transition to a cleaner energy future – one shared by many IEA countries – is the decarbonisation of its transport sector, which is currently not on track to meet short-term emissions and energy efficiency targets. The IEA recommends that the government review the energy taxation of all fuels to better reflect their carbon content. That would accelerate the switch to low emission technologies, notably in the transport sector.

Following the expansion of regional energy infrastructure and improved cooperation between Estonia and its EU neighbours, the country is now firmly embedded in the European energy system, which brings significant energy security benefits. Instead of pursuing energy independence as a major energy policy target, the IEA recommends that Estonia work with its EU neighbours to prioritise the identification of market-based solutions to diversify supply and enhance security of supply.

Today, Estonia’s level of electricity interconnection is already substantially higher than the target set for EU countries. The expected synchronisation of the Baltic electricity grid with the continental European grid by 2025 will further increase Estonia’s security of electricity supply. This will also alleviate any potential supply concerns arising from the expected reduction of electricity generation from oil shale.

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