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Falling clean energy costs provide opportunity to boost climate action in COVID-19 recovery packages

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As COVID-19 hits the fossil fuel industry, a new report shows that renewable energy is more cost-effective than ever – providing an opportunity to prioritize clean energy in economic recovery packages and bring the world closer to meeting the Paris Agreement goals.

Global Trends in Renewable Energy Investment 2020 – from the UN Environment Programme (UNEP), the Frankfurt School-UNEP Collaborating Centre and BloombergNEF (BNEF) – analyzes 2019 investment trends, and clean energy commitments made by countries and corporations for the next decade.

It finds commitments equivalent to 826 GW of new non-hydro renewable power capacity, at a likely cost of around USD 1 trillion, by 2030 (1GW is similar to the capacity of a nuclear reactor). Getting on track to limiting global temperature rise to under 2 degrees Celsius – the main goal of the Paris Agreement – would require the addition of around 3,000GW by 2030, the exact amount depending on the technology mix chosen. The planned investments also fall far below the USD 2.7 trillion committed to renewables during the last decade.

However, the report shows that the cost of installing renewable energy has hit new lows, meaning future investments will deliver far more capacity. Renewable energy capacity, excluding large hydro-electric dams of more than 50 MW, grew by 184 GW in 2019. This highest-ever annual addition was 20 GW, or 12 percent, more than the new capacity commissioned in 2018. Yet the dollar investment in 2019 was just 1 per cent higher than the previous year, at USD 282.2 billion.

The all-in, or levelized, cost of electricity continues to fall for wind and solar, thanks to technology improvements, economies of scale and fierce competition in auctions. Costs for electricity from new solar photovoltaic plants in the second half of 2019 were 83 per cent lower than a decade earlier.

“The chorus of voices calling on governments to use their COVID-19 recovery packages to create sustainable economies is growing,” said Inger Andersen, Executive Director of UNEP. “This research shows that renewable energy is one of the smartest, most cost-effective investments they can make in these packages.”

“If governments take advantage of the ever-falling price tag of renewables to put clean energy at the heart of COVID-19 economic recovery, they can take a big step towards a healthy natural world, which is the best insurance policy against global pandemics,” Andersen said.

Renewable energy has been eating away at fossil fuels’ dominant share of electricity generation over the last decade. Nearly 78 per cent of the net new GW of generating capacity added globally in 2019 was in wind, solar, biomass and waste, geothermal and small hydro. Investment in renewables, excluding large hydro, was more than three times that in new fossil fuel plants.

“Renewables such as wind and solar power already account for almost 80 per cent of newly built capacity for electricity generation,” said Svenja Schulze, Minister of the Environment, Nature Conservation and Nuclear Safety, Germany. “Investors and markets are convinced of their reliability and competitiveness.”

“The promotion of renewables can be a powerful engine for the recovery of the economy after the Coronavirus crisis, creating new and secure jobs,” she added. “At the same time, renewables improve air quality thus protecting public health. By promoting renewable energies within the framework of Coronavirus economic stimulus packages, we have the opportunity to invest in future prosperity, health and climate protection.”

2019 marked many other records, the report finds:

  • The highest solar power capacity additions in one year, at 118 GW.
  • The highest investment in offshore wind in one year, at USD 29.9 billion, up 19 per cent year-on-year.
  • The largest financing ever for a solar project, at USD 4.3 billion for Al Maktoum IV in the United Arab Emirates.
  • The highest volume of renewable energy corporate power purchase agreements, at 19.5GW worldwide.
  • The highest capacity awarded in renewable energy auctions, at 78.5GW worldwide.
  • The highest renewables investment ever in developing economies other than China and India, at USD 59.5 billion.
  • A broadening investment, with a record 21 countries and territories investing more than USD 2 billion in renewables.

Nils Stieglitz, President of Frankfurt School of Finance & Management, said: “We see the energy transition is in full swing, with the highest capacity of renewables financed ever. Meanwhile, the fossil fuel sector has been hit hard by the COVID-19 crisis – with demand for coal- and gas-fired electricity down in many countries, and oil prices slumping.

“The climate and COVID-19 crises – despite their different natures – are both disruptions that command attention from policy makers and managers alike. Both crises demonstrate the need to increase climate ambition and shift the world’s energy supply towards renewables.”

The 2019 investment brought the share of renewables, excluding large hydro, in global generation to 13.4 per cent, up from 12.4 per cent in 2018 and 5.9 per cent in 2009. This means that in 2019, renewable power plants prevented the emission of an estimated 2.1 gigatonnes of carbon dioxide, a substantial saving given global power sector emissions of approximately 13.5 gigatonnes in 2019.

“Clean energy finds itself at a crossroads in 2020,” said Jon Moore, Chief Executive of BloombergNEF. “The last decade produced huge progress, but official targets for 2030 are far short of what is required to address climate change. When the current crisis eases, governments will need to strengthen their ambitions not just on renewable power, but also on the decarbonization of transport, buildings and industry.

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Study of Diversity Shows Scale of Opportunity in Media and Entertainment Industries

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The World Economic Forum’s Power of Media Initiative has compiled a first-of-its-kind compilation of the state of diversity and representation in the media, entertainment and sports industries. The Power of Media initiative is a collaboration between the Platform on Shaping the Future of Media, Entertainment and Sport and the Centre for the New Economy and Society, which are committed to building prosperous, inclusive and equitable economies and societies that create opportunities for all and help to advance voices of underrepresented groups in media content.
 
Produced in collaboration with Accenture, the Reflecting Society: The State of Diverse Representation in Media and Entertainment report assesses the state of diversity across content and creative production in five key sectors: gaming, TV and film, news and publishing, advertising, and sport and sport media. It draws on research, interviews and insights from heads of content, diversity, equity and inclusion leaders, institutes and organizations.
 
Among the key insights, the report notes that:

Progress varies widely between sectors. Gaming, news and publishing lag, while advertising, TV and video have seen progress. According to one study, for example, only 3% of video games had a primary character of colour and only 23% of games allowed players to choose their character’s ethnicity.

Corporations that prioritize diversity and inclusive representation can reap financial benefits. In the film industry, for example, researchers at the University of California, Los Angeles (UCLA) have shown that movies without authentic representation underperform at the box office and large-budget movies that rank below average in inclusive representation underperform by around 20% of their budget at opening box office weekend.

Attitudes among consumers towards diversity can be shaped at an early age. Despite this, a study by the Cooperative Children’s Book Center (CCBC) at the University of Wisconsin-Madison found that fewer than 4% of books contained significant LGBTQ+ content, while only 11% had significant African or African American content or characters.

Meaningful progress requires policies that remove structural barriers and behaviours. For example, in 2020, the Academy of Motion Picture Arts and Sciences added 819 new voting members, of which 45% were women and 35% were from historically under-represented groups. This resulted in the 2021 Oscars shortlist being the most diverse ever.


While each media sector may face different contexts and challenges, the report highlights a path forward for the media, entertainment and sports industry. The Forum’s Power of Media Initiative has created a Taskforce on Diversity, Equity and Inclusion to accelerate the three priority areas that the report identifies:

Measurement – The report highlights major gaps and inconsistencies in measurement that hold back progress and data-led action. The taskforce will work to create data-driven benchmarks and metrics to formalize the measuring of progress and goal setting.

Accountability – The taskforce will strive to create greater transparency and accountability in initiatives and results.

Community and collaboration – The taskforce will enable community-building among peers across the industry and provide a safe space to explore sensitive and new topics in diversity, equity and inclusion and share best practices. “The Power of Media Taskforce on Diversity, Equity and Inclusion [DE&I] brings together leaders from across the industry, including those in creative leadership roles, independent non-profits focused on DE&I, corporate executives, and DE&I professionals, to answer this call and drive change as a community,” said Cathy Li, Head of Media, Entertainment and Sport Industries at the Forum.

“It became clear in our work with the Forum that the relationship between audience diversity and business performance is strong, that the people who work in the industry shape the stories that get told – and that more diverse stories attract more diverse creators,” said Kristen Hines, Managing Director at Accenture. “That change, however, will require transparency and honest reflection, real commitment to results and accountability of leaders to improve diversity and inclusion from top to bottom, and particularly in senior roles. We’re excited to publish this report and to actively support the Forum taskforce in driving long-term and lasting change.”

In the months ahead, the Power of Media Initiative will continue to tackle the challenge of diversity and representation in media, entertainment and sports, with the aim of leveraging the Forum’s global network of leaders to mobilize progress.

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Archipelagic Economies: Spatial Economic Development in the Pacific

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A new World Bank report on the challenges facing the Pacific region’s outer island communities identifies investment in people and livelihoods as a key for inclusive economic growth.    

Archipelagic Economies: Spatial Economic Development in the Pacific looks at the challenges Pacific governments must address to provide services and infrastructure to populations spread across hundreds of islands spanning the vast Pacific Ocean. The report puts forward a series of practical steps that countries can take to overcome these challenges in a way that supports resilient and inclusive economic growth.

“Many Pacific countries are faced with significant challenges in delivering services and connecting remote, outer island communities; with difficult decisions around resources and how to best invest often limited resources into outer island communities,” said the report’s lead author, World Bank Lead Economist for Fiscal Policy and Sustainable Growth Robert Utz.

“This report aims to provide Pacific governments, development partners and decision-makers with evidence to assess options for fostering development for the people in those outer islands, so they can make stronger contributions to the larger economic development of the whole country.”   

The report identifies six guiding economic policy principles:

1)     Policy solutions that seek to achieve equitable increases in living standards need to be grounded in an understanding of the economic implications of the Pacific region’s unique economic geography.

2)     Outer islands’ development should be assessed from a spatial perspective; one that considers interactions with the country’s main island and the region beyond.

3)     A balanced approach that combines investments in urban areas to accommodate migration from outer islands to main islands with support for outer island populations is likely to achieve better welfare and equity outcomes than an approach that neglects one side or the other.

4)     Growth-enhancing investments should be guided by clearly-identified opportunities, rather than by a desire to try to equalize economic opportunities across islands.

5)     With limited scope to close the gap in economic opportunities between outer and main islands investments to promote livelihoods and human development should be given preference.

6)     Outer islands are subject to a complex political economy of intra-island and outer island-main island relationships that need to be considered in development interventions.

“This is an important and timely study,” said Denton Rarawa, Senior Economic Advisor at the Pacific Islands Forum Secretariat. “The current COVID-19 crisis has highlighted the need to address the institutional, service delivery and capacity gaps of nations across the Pacific. As we strive for greater vaccination rates and begin to think about how we’d like to rebuild after the pandemic, I believe this report has a lot to offer the future of the Pacific, especially in our efforts to leave no one behind.”   

The Archipelagic Economies report is a companion publication to the World Bank’s Pacific Possible series, which in 2017 and 2018 looked at opportunities for economic growth in Pacific Islands Countries across key sectors including tourism, fisheries, and labour mobility. 

The World Bank works in partnership with 12 countries across the Pacific, supporting 87 projects totaling US$2.09 billion in commitments in sectors including agriculture, aviation and transport, climate resilience and adaptation, economic policy, education and employment, energy, fisheries, health, macroeconomic management, rural development, telecommunications and tourism.

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Global economic recovery continues but remains uneven

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The global economy is growing far more strongly than anticipated a year ago but the recovery remains uneven, exposing both advanced and emerging markets to a range of risks, according to the OECD’s latest Interim Economic Outlook.

The OECD says extraordinary support from governments and central banks helped avoid the worst once the COVID-19 pandemic hit. With the vaccine roll-out continuing and a gradual resumption of economic activity underway, the OECD projects strong global growth of 5.7% this year and 4.5% in 2022, little changed from its May 2021 Outlook of 5.8% and 4.4% respectively.

Countries are emerging from the crisis with different challenges, often reflecting their pre-COVID 19 strengths and weaknesses, and their policy approaches during the pandemic. Even in the countries where output or employment have recovered to their pre-pandemic levels, the recovery is incomplete, with jobs and incomes still short of the levels expected before the pandemic.

Large differences in vaccination rates between countries are adding to the unevenness of the recovery. Renewed outbreaks of the virus are forcing some countries to restrict activities, resulting in bottlenecks and adding to supply shortages.  

There is a marked variation in the outlook for inflation, which has risen sharply in the US and some emerging market economies but remains relatively low in many other advanced economies, particularly in the euro area.

A rapid increase in demand as economies reopen has pushed up prices in key commodities such as oil and metals as well as  food, which has a stronger effect on inflation in emerging markets. The disruption to supply chains caused by the pandemic has added to cost pressures. At the same time, shipping costs have increased sharply.

But the Interim Outlook says that these inflationary pressures should eventually fade. Consumer price inflation in the G20 countries is projected to peak towards the end of 2021 and slow throughout 2022. Wage growth remains broadly moderate and medium-term inflation expectations remain contained.

The report warns that to keep the recovery on track stronger international efforts are needed to provide low-income countries with the resources to vaccinate their populations, both for their own and global benefits.

Macroeconomic policy support is still needed as long as the outlook is uncertain and employment has not yet recovered fully, but clear guidance is called upon from policymakers to minimise risks looking forward. Central banks should communicate clearly about the likely sequencing of moves towards eventual policy normalisation and the extent to which any overshooting of inflation targets will be tolerated. The report says fiscal policies should remain flexible and avoid a premature withdrawal of support, operating within credible and transparent medium-term fiscal frameworks that provide space for stronger public infrastructure investment.

Presenting the Interim Economic Outlook alongside Chief Economist Laurence Boone, OECD Secretary-General Mathias Cormann said: “The world is experiencing a strong recovery thanks to decisive action taken by governments and central banks at the height of the crisis. But as we have seen with vaccine distribution, progress is uneven. Ensuring the recovery is sustained and widespread requires action on a number of fronts – from effective vaccination programmes across all countries to concerted public investment strategies to build for the future.”

Ms Boone said: “Policies have been efficient in buffering the shock and ensuring a strong recovery; planning for more efficient public finances, shifted towards investment in physical and human capital is necessary and will help monetary policy to normalise smoothly once the recovery is firmly established.”

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