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Is the world ready to end the coal era and embrace clean energy?

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Access to electricity has transformed the world, helping countries to develop their economies, and lifting millions out of poverty. However, this success has come at a great cost: the energy sector, heavily reliant on fossil fuels, is responsible for some 40 per cent of global carbon dioxide emissions – one of the so-called greenhouse gases, which trap heat in the atmosphere and warm the Earth – and almost two-thirds of these emissions come from coal.

But, despite the United Nations calling urgently for an end to fossil fuels, hundreds of new coal-fired power stations are still being built, and hundreds more are in the pipeline. Is the world ready for a new era of clean, cheap and accessible energy for all?

Kick the coal habit, and put a price on carbon, urges UN chief

The UN chief has called for taxes to be placed on carbon emissions, an end to the trillions of dollars’ worth of estimated subsidies for fossil fuels, and for the construction of coal-fired power stations to be halted by 2020, if we are to stand a chance of ending the climate crisis.

Many countries, particularly developed economies, are starting to heed the UN’s message. However, Southeast Asia, one of the fastest-growing economic regions in the world, appears to be stuck on fossil fuels as the answer to its energy needs: In November, Mr. Guterres told a meeting of the ASEAN (Association of Southeast Asian Nations) group in Thailand that coal “remains a major threat in relation to climate change”, adding that countries in Southeast Asia are some of the most vulnerable to climate change.

Asian development still fueled by coal

According to studies by the International Energy Agency, the region is expected to become a key driver of world energy trends over the next 20 years. Millions of people in Southeast Asia have gained access to electricity since 2000, and the region is on the way to achieving universal access by 2030.

The UN-backed Sustainable Energy for All (SEforALL), has compiled data showing that the region has the third highest number of coal power plants in the pipeline after China and India. Indonesia, Viet Nam and the Philippines have the largest coal plant pipeline of all South East Asian countries, with Malaysia and Thailand not far behind.

The wealthier Asian countries are also bankrolling coal beyond their borders: State-owned financial agencies in China, Japan, and South Korea are now, respectively, the largest sources of funding for coal plants in other countries: research from SEforALL shows that China was the largest international source international source of finance for coal, committing more than $1.7 billion in 2015/2016.

Coal is losing power

Nevertheless, the world, as a whole, is slowly moving in the right direction, and the number of plants currently being planned is falling. The amount of permits of new coal plants has dropped to record lows, and over a thousand have been cancelled,  a reflection of a tougher economic climate for coal plant developers, and the growing consensus for the need to limit global warming, and protect human health.

In November 2019, four years after the Paris Agreement, a key UN climate conference at which countries committed to step up efforts to limit global warming to 1.5°C above pre-industrial temperatures and boost climate action financing, the UN Secretary-General convened a Climate Action Summit in New York, where many nations announced beefed-up measures to combat the climate crisis, including putting limits on the amount of electricity produced from coal-based sources.

The UK, for example, is expected to completely phase out coal in the next few years, Germany – one of the world’s biggest users of coal – has agreed to stop by 2038, and eight other European Union countries have announced that they will put an end to coal use by 2030. Chile has pledged to close all of its coal-fired power stations by 2040, and South Korea will close 10 plants by 2022.

A “Powering Past Coal Alliance”, made up of 32 countries, 25 regional, provincial and municipal level governments, and 34 business members,  announced new members, including Germany and Slovakia, at the conference, committed to speeding up the transition from coal-based to clean energy, and to lead global efforts to curtail coal use.

Here comes the sun

In addition, more and more countries, and businesses, acknowledge that the use of renewable energy is not only the right thing to do for the planet, it also makes economic sense.

Technology already exists to enable the world to transition away from coal, and other fossil fuels; and also to connect the 840 million people who still don’t have access to electricity to clean, renewable energy sources. And it’s affordable.

SEforALL research shows that renewables are now the cheapest form of new electricity generation across two thirds of the world — cheaper than both new coal and new natural gas power – and, by 2030, wind and solar will undercut coal and gas almost everywhere.

Disconnect between words and actions

However, even with the decline in coal use, and growth in the use of renewables, the transition to clean energy is not taking place quickly enough, and there is still a big gap between countries’ climate commitments, and their planned production of fossil fuels, as demonstrated by the 2019 Production Gap report, the first of its kind, from the UN Environment Programme (UNEP) and research partners.

The gap is largest when it comes to coal: countries are currently planning to produce 150% more coal in 2030, than would be consistent with limiting warming to 2°C, and almost three times more than would be consistent with limiting warming to 1.5°C.

“Despite more than two decades of climate policy making, fossil fuel production levels are higher than ever,” Måns Nilsson, head of the Stockholm Environment Institute, one of the organizations that produced the study, said in a press release. “This report shows that governments’ continued support for coal, oil and gas extraction is a big part of the problem. We’re in a deep hole, and we need to stop digging.”

In 2020, the UN launches a Decade of Action, to kickstart efforts to achieve the goals that make up the 2030 Agenda for Sustainable Development. When it comes to energy, the goal is to ensure affordable, reliable, sustainable and modern energy for all: the challenge for the UN, and the world, is to rapidly speed up the move towards renewables, and kick the coal habit once and for all.

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Hydrogen in North-Western Europe: A vision towards 2030

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North-West Europe has a well-developed hydrogen industry that could be at the edge of an unprecedented transformation should governments keep raising their ambitions for reducing greenhouse gas emissions, according to a new joint report by the International Energy Agency (IEA) and the Clingendael International Energy Programme (CIEP). 

The report, Hydrogen in North-Western Europe: A vision towards 2030, explores hydrogen developments, policies and potential for collaboration in the region. It was commissioned to inform discussions among governments from North-West Europe about the potential development of a regional hydrogen market. This intergovernmental dialogue was established at the Clean Energy Ministerial Hydrogen Initiative in 2020.

The report finds that the current policy landscape provides some momentum for the transformation of the hydrogen industry in North-West Europe towards 2030, but that it is insufficient to fully tap into the region’s potential to develop a large-scale low-carbon hydrogen value chain. More ambitious policies in line with the targets defined by the EU Green Deal or the UK Climate Change Act would drive a faster transformation.

If such a supportive policy framework were to be adopted, hydrogen demand in the region could grow by a third and low-carbon hydrogen could meet more than half of dedicated production, up from about 10% today, according to the report.

North-West European countries have already made significant progress developing their vision for the role hydrogen should play in their long-term energy strategies. These countries now face the challenge of moving beyond national discussions to establish a regional dialogue, an indispensable condition to develop the fully integrated hydrogen market the region needs. 

With the aim of informing this dialogue, the report identifies four priorities that should be addressed:

  • Build on the large unused potential to co-operate on hydrogen in the north-western European region.
  • Identify what is needed to develop an integrated regional market.
  • Develop supporting schemes with a holistic view of the hydrogen value chain.
  • Identify the best opportunities to simultaneously decarbonise current hydrogen production and deploy additional low-carbon supply.

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Seven Countries Account for Two-Thirds of Global Gas Flaring

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In an unprecedented year for the oil and gas industry, oil production declined by 8% in 2020, while global gas flaring reduced by 5%, according to satellite data compiled by the World Bank’s Global Gas Flaring Reduction Partnership (GGFR). Oil production dropped from 82 million barrels per day (b/d) in 2019 to 76 million b/d in 2020, as global gas flaring reduced from 150 billion cubic meters (bcm) in 2019 to 142 bcm in 2020. Nonetheless, the world still flared enough gas to power sub-Saharan Africa. The United States accounted for 70% of the global decline, with gas flaring falling by 32% from 2019 to 2020, due to an 8% drop in oil production, combined with new infrastructure to use gas that would otherwise be flared.

Gas flaring satellite data from 2020 reveals that Russia, Iraq, Iran, the United States, Algeria, Venezuela and Nigeria remain the top seven gas flaring countries for nine years running, since the first satellite was launched in 2012. These seven countries produce 40% of the world’s oil each year, but account for roughly two-thirds (65%) of global gas flaring. This trend is indicative of ongoing, though differing, challenges facing these countries. For example, the United States has thousands of individual flare sites, difficult to connect to a market, while a few high flaring oil fields in East Siberia in the Russian Federation are extremely remote, lacking the infrastructure to capture and transport the associated gas.

Gas flaring, the burning of natural gas associated with oil extraction, takes place due to a range of issues, from market and economic constraints, to a lack of appropriate regulation and political will. The practice results in a range of pollutants released into the atmosphere, including carbon dioxide, methane and black carbon (soot). The methane emissions from gas flaring contribute significantly to global warming in the short to medium term, because methane is over 80 times more powerful than carbon dioxide on a 20-year basis.

“In the wake of the COVID-19 pandemic, oil-dependent developing countries are feeling the pinch, with constrained revenues and budgets. But with gas flaring still releasing over 400 million tons of carbon dioxide equivalent emissions each year, now is the time for action. We must forge ahead with plans to dramatically reduce the direct emissions of the oil and gas sector, including from gas flaring,” said Demetrios Papathanasiou, Global Director for the Energy and Extractives Global Practice at the World Bank.

The World Bank’s GGFR is a trust fund and partnership of governments, oil companies, and multilateral organizations working to end routine gas flaring at oil production sites around the world. GGFR, in partnership with the U.S. National Oceanic and Atmospheric Administration (NOAA) and the Colorado School of Mines, has developed global gas flaring estimates based upon observations from two satellites, launched in 2012 and 2017. The advanced sensors of these satellites detect the heat emitted by gas flares as infrared emissions at global upstream oil and gas facilities.

“Awareness of gas flaring as a critical climate and resource management issue is greater than ever before. Almost 80 governments and oil companies have committed to Zero Routine Flaring within the next decade and some are also joining our global partnership, which is a very positive development. Gas flaring reduction projects require significant investment and take several years to produce results. In the lead-up to the next UN Climate Change conference in Glasgow, we continue to call upon oil-producing country governments and companies to place gas flaring reduction at the center of their climate action plans. To save the world from millions of tons of emissions a year, this 160-year-old industry practice must now come to an end.” said Zubin Bamji, Program Manager of the World Bank’s GGFR Partnership Trust Fund.

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IEA supports Indonesia’s plans for deploying renewable energy

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The IEA is carrying out a large work programme on power system enhancement with the Government of Indonesia to help it modernise the country’s electricity sector, including support for overcoming challenges inherent in integrating variable renewables like wind and solar PV.

As part of the work programme, the IEA hosted a series of webinars in early 2021 where Indonesia’s Ministry of Energy and Mineral Resources and national power utility PLN could learn from other countries’ experiences of integrating and setting targets for variable renewable energy.

An introductory session on the principles of integrating renewable energy was held ahead of the country specific sessions. In this session, the IEA presented its framework for renewable integration phases to the Ministry and PLN, highlighting the different challenges often faced during renewable integration as well as what flexibility options can be deployed to tackle these challenges.

In the first country session, IEA presented the main findings of the Thailand flexibility study that the Agency carried out in cooperation with EGAT, the Thai electricity utility. The study shows that Thailand has the technical capability to integrate larger shares of variable renewables, but that the lack of commercial flexibility is a major barrier for operating the power system in a more flexible way and thus is the main obstacle for integrating large amounts of renewables.

In the second country session, the Danish Energy Agency presented its work programme with the Government of Viet Nam. The sessions focused on important aspects for integration of renewables, such as the assessing the needs and implications of reserves and forecasting. The session also included a discussion on the main learning points from the boom in rooftop solar that Viet Nam has experienced in 2020. 

The third and last country session was on India. The IEA presented both national as well as state-level modelling in order to show some of the contextual differences between national models and models that focus on specific geographical regions. In India, the spot market accounts for only 10% of electricity generation, which shows that India, like Thailand, has some issues with commercial flexibility. The discussion also covered India’s level of dependency on physical power purchase agreements and its impacts on the flexibility of the power system.

All sessions were held behind closed doors to allow for an open discussion between the participating organisations on the issues of renewable integration and possible ways of addressing barriers. The IEA will continue the work with the Indonesian Ministry and PLN on this topic in order to facilitate a path towards a clean, affordable, secure and modern power sector in Indonesia.

This work in Indonesia is undertaken within the Clean Energy Transitions in Emerging Economies programme.

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