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Transforming the energy system—a post-COVID-19 win-win for people and planet

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As large parts of the world hunker down and social distance to slow the spread of the coronavirus pandemic, more and more research is being released and studied suggesting that we can build back better to create a healthy, resilient, prosperous, just, and decarbonized world after the current crisis dies down.

Employment opportunities are a key consideration in planning for low-carbon economic growth. The widespread adoption of renewable energy technologies creates employment opportunities up and down the supply chain. Worldwide, the sector employed 11 million people at the end of 2018, according to the International Renewable Energy Agency (IRENA).

Advancing a renewable-based energy transformation, it says, is an opportunity to meet international climate goals while boosting economic growth, creating millions of jobs, and improving human welfare.

“Post COVID-19 fiscal stimulus packages provide an opportunity for initiating a transformational and green recovery with the creation of green jobs,” says United Nations Environment Programme (UNEP) energy and climate expert Mark Radka.

The IRENA study, Renewable Energy and Jobs – Annual Review 2019, finds that transforming the energy system could boost cumulative global Gross Domestic Product gains above business-as-usual by US$ 98 trillion between now and 2050. It would nearly quadruple renewable energy jobs to 42 million, expand employment in energy efficiency to 21 million, and add 15 million in system flexibility.

While leading markets like China, the United States and the European Union hosted the greatest concentration of jobs in renewables, other Asian countries have emerged as exporters of solar photovoltaic (PV) panels, the report notes.

Employment remains concentrated in a handful of countries—with Brazil, China, India, the United States, and members of the European Union in the lead—but the increasingly diverse geographic footprint of energy-generation capacities and, to a lesser degree, assembly and manufacturing plants, has created jobs in a rising number of countries.

Solar photovoltaic—the top employer

Solar PV remained the top employer among renewable energy technologies in 2018, accounting for a third of the sector’s workflow. Asia hosted over 3 million PV jobs, or nearly nine-tenths of the global total.

Rising output pushed biofuel jobs up 6 per cent to 2.1 million. Brazil, Colombia, and Southeast Asia have labour-intensive supply chains, whereas operations in the United States and the European Union are far more mechanized.

Employment in wind power supports 1.2 million jobs. Onshore projects predominate, but the offshore segment is gaining traction and could build on expertise and infrastructure in the offshore oil and gas sector.

Hydropower has the largest installed capacity of all renewables but is now expanding slowly. The sector employs 2.1 million people directly, three-quarters of whom are in operations and maintenance.

Off-grid renewables—along with expanding electricity access—have contributed to job creation across Africa and Asia.

What determines employment growth in renewables?

Several factors shape how and where employment is generated along the renewable energy supply chain. These include governmental policies; the diversification of supply chains; trade patterns; and industry reorganization and consolidation trends. Aside from these factors, labour productivity grows in importance over time.

Quality and inclusion

As important as it is to shed light on the quantity of jobs created in renewable energy, job quality is a critical aspect.

A well-paying job that requires well-honed skills and is performed in a safe, rewarding workplace is a greater multiplier of socioeconomic benefits than one that pays little, carries few benefits, or is temporary.

Employment also needs to be inclusive, providing opportunities for people with different talents and skills, and ensuring that no population group, such as women, is systematically excluded.

Widening the talent pool

The global shift to renewables demands a growing array of skills—technical, business, administrative, economic and legal, among others. Widening the talent pool is thus a pragmatic reason for boosting the participation of women in renewable energy.

The report found that because of its multidisciplinary dimension, the renewable energy field appeals to women in ways that the fossil fuel industry does not. Women currently represent 32 per cent of the renewable energy workforce, substantially higher than the 22 per cent average reported for the global oil and gas industry.

Overcoming gender gaps in electricity access advances several Sustainable Development Goals. Access to clean, affordable, renewable energy also lowers barriers to women’s market employment (IEA, IRENA, UNSD, WB, WHO, 2019).

“Renewable energy provides an opportunity for `building back better’, creating green jobs, facilitating the transition to carbon neutral economies, and protecting ourselves from future global threats, including pandemics,” says UNEP climate change expert Niklas Hagelberg. “Humanity depends on action now for a resilient and sustainable future.”

UN Environment

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Korea shares experience of electric vehicles and renewable energy with Thailand

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The United Nations Industrial Development Organization (UNIDO) is supporting South-East Asian countries in combatting climate change through policy consultation and capacity building in the areas of renewable energy and energy efficiency.

At an event organized in cooperation with the Korea Energy Agency (KEA) and Thailand’s Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy, Stein Hansen, UNIDO Regional Director and Representative of UNIDO Regional Office Hub in Thailand, highlighted the UNIDO project’s study on electric vehicle promotion in Thailand and the impact on the biofuel industry throughout the supply chain, and a road map to achieve 100% renewable energy use by industrial sector. 

Prasert Sinsukprasert, the Director General of DEDE, spoke about Thailand’s 20-year National Strategy plan and said the DEDE is delighted to partner with the project to come up with the draft policy of electric vehicles and roadmap to 100% renewable energy in Thai industry.

In a presentation on the current status and policies of electric vehicle distribution in the Republic of Korea, Minkoo Park remarked that in Korea the authorities provide incentives in the form of discounts on highway and parking charges and financial support for people purchasing electric vehicles. Hyein Jin provided information about Korea’s 2050 Carbon Neutrality Strategy.

All speakers agreed that the eco-friendly energy is challenging both in electric vehicles and renewable energy but that it is worth it to achieve sustainable growth.

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It’s time to make clean energy investment in emerging economies a top global priority

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The world’s energy and climate future increasingly hinges on whether emerging and developing economies are able to successfully transition to cleaner energy systems, calling for a step change in global efforts to mobilise and channel the massive surge in investment that is required, according to a new report by the International Energy Agency.

The special report – carried out in collaboration with the World Bank and the World Economic Forum – sets out a series of actions to enable these countries to overcome the major hurdles they face in attracting the financing to build the clean, modern and resilient energy systems that can power their growing economies for decades to come.

Annual clean energy investment in emerging and developing economies needs to increase by more than seven times – from less than USD 150 billion last year to over $1 trillion by 2030 to put the world on track to reach net-zero emissions by 2050, according to the report, Financing Clean Energy Transitions in Emerging and Developing Economies. Unless much stronger action is taken, energy-related carbon dioxide emissions from these economies – which are mostly in Asia, Africa and Latin America – are set to grow by 5 billion tonnes over the next two decades.

“In many emerging and developing economies, emissions are heading upwards while clean energy investments are faltering, creating a dangerous fault line in global efforts to reach climate and sustainable energy goals,’’ said Fatih Birol, the IEA Executive Director. “Countries are not starting on this journey from the same place – many do not have access to the funds they need to rapidly transition to a healthier and more prosperous energy future – and the damaging effects of the Covid-19 crisis are lasting longer in many parts of the developing world.”

“There is no shortage of money worldwide, but it is not finding its way to the countries, sectors and projects where it is most needed,” Dr Birol said. “Governments need to give international public finance institutions a strong strategic mandate to finance clean energy transitions in the developing world.”

Recent trends in clean energy spending point to a widening gap between advanced economies and the developing world even though emissions reductions are far more cost-effective in the latter. Emerging and developing economies currently account for two-thirds of the world’s population, but only one-fifth of global investment in clean energy, and one-tenth of global financial wealth. Annual investments across all parts of the energy sector in emerging and developing markets have fallen by around 20% since 2016, and they face debt and equity costs that are up to seven times higher than in the United States or Europe.

Avoiding a tonne of CO2 emissions in emerging and developing economies costs about half as much on average as in advanced economies, according to the report. That is partly because developing economies can often jump straight to cleaner and more efficient technologies without having to phase out or refit polluting energy projects that are already underway.

But emerging market and developing economies seeking to increase clean energy investment face a range of difficulties, which can undermine risk-adjusted returns for investors and the availability of bankable projects. Challenges involve the availability of commercial arrangements that support predictable revenues for capital-intensive investments, the creditworthiness of counterparties and the availability of enabling infrastructure, among other project-level factors. Broader issues, including depleted public finances, currency instability and weaknesses in local banking and capital markets also raise challenges to attracting investment.

“A major catalyst is needed to make the 2020s the decade of transformative clean energy investment,” said Dr Birol. “The international system lacks a clear and unified focus on financing emissions reductions and clean energy – particularly in emerging and developing economies. Today’s strategies, capabilities and funding levels are well short of where they need to be. Our report is a global call to action – especially for those who have the wealth, resources and expertise to make a difference – and offers priority actions that can be taken now to move things forward fast.”

These priority actions – for governments, financial institutions, investors and companies – cover the period between now and 2030, drawing on detailed analysis of successful projects and initiatives across clean power, efficiency and electrification, as well as transitions for fuels and emissions-intensive sectors. These include almost 50 real-world case studies across different sectors in countries ranging from Brazil to Indonesia, and from Senegal to Bangladesh.

“As we expand energy access, we also need a global transition to low-carbon energy. It is critical to develop solutions that make energy systems more resilient to climate change and other crises. With the right policies and investments, countries can achieve lasting economic growth and poverty reduction without degrading the environment or aggravating inequality. The broader financial sector can and must play a key role in achieving the goals of the Paris Agreement by mobilizing capital for green and low-carbon investments, while managing climate risks. The World Bank will continue to support countries that seek assistance to transition away from fossil fuels and scale up low-carbon, renewable energy, and energy efficiency investments,” said Demetrios Papathanasiou, the World Bank Global Director for Energy and Extractives.

“The need to scale clean energy in emerging economies offers a massive investment opportunity. This report shows that current challenges to get this capital to the right places can be overcome through a combination of smart policies, financial innovation, as well as bold collective action. The World Economic Forum is committed to enabling multistakeholder cooperation to accelerate progress in this important area, said Børge Brende, President of the World Economic Forum.

The report calls for a focus on channelling and facilitating investment into sectors where clean technologies are market-ready, especially in the areas of renewables and energy efficiency, but also laying the groundwork for scaling up low-carbon fuels and industrial infrastructure needed to decarbonise rapidly growing and urbanising economies. It also calls for strengthening sustainable finance frameworks, addressing barriers on foreign investment, easing procedures for licensing and land acquisition, and rolling back policies that distort local energy markets.

The report underscores that clean energy investments and activities can bring substantial economic opportunities and jobs in industries that are expected to flourish in the coming decades as energy transitions accelerate worldwide. It calls for clean energy transitions to be people‐centred and inclusive, including actions that build equitable and sustainable models for universal access to modern energy. Spending on more efficient appliances, electric vehicles, and energy‐efficient buildings can provide further employment opportunities, and can especially support the role of women and female entrepreneurs in driving change and improved gender equality.

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IEA welcomes G7 Leaders’ commitment to reach net zero by 2050

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IEA Executive Director Fatih Birol congratulated the leaders of the Group of Seven (G7) nations for their landmark Summit at which they committed to reaching net-zero emissions by 2050 and made a series of other significant energy and climate pledges. 

G7 leaders concluded the closely watched Summit on Sunday, issuing a communiqué in which they set out their net zero commitments and called on all countries, in particular major emitting economies, “to join us in these goals as part of a global effort.” In this context, the leaders noted the IEA’s “clear roadmap” for achieving net zero globally by 2050. 

“I’m very proud to see recognition of the IEA’s comprehensive Roadmap for the global energy sector to reach this critical and formidable goal,” said Dr Birol. “The IEA looks forward to helping governments design and implement the strong policy actions that are needed to move the world onto a narrow yet achievable pathway to net zero by 2050. In the lead-up to COP26 in November, I look forward to seeing additional firm commitments to improve and increase clean energy financing for developing economies.”

The communiqué said that G7 leaders had committed to aligning official international financing with the global achievement of net zero greenhouse gas emissions no later than 2050 and for deep emissions reductions in the 2020s.

The IEA’s Roadmap to Net Zero by 2050 was released on 18 May. It is the world’s first comprehensive study of how to transition to a net zero energy system globally by 2050 while ensuring stable and affordable energy supplies, providing universal energy access, and enabling robust economic growth. In the pathway laid out in the IEA Roadmap, strong and credible policy actions by governments around the world drive a historic surge in clean energy investment and deployment, thereby reducing demand for fossil fuels, creating millions of new jobs and lifting global economic growth. 

The G7 countries are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Leaders of the countries have gathered together annually since the 1970s, alongside the heads of the European Union. This year’s Summit was hosted by the United Kingdom.

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