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ADB, APPC Sign Loan for Gas-Fired Power Plant to Enhance Afghanistan’s Energy Security

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The Asian Development Bank (ADB) and the Afghan Power Plant Company Limited (APPC) today signed a $10 million loan as part of a financing package for the Mazar gas-fired power plant, supporting Afghanistan’s efforts to achieve long-term energy security through affordable domestic power sources. The project is the first private sector gas-fired plant in Afghanistan to be funded by development finance institutions.

The agreement was signed by Director of Infrastructure Finance, South Asia, Central Asia, and West Asia at ADB’s Private Sector Operations Department Shantanu Chakraborty, and APPC Chairman Ismail Ghazanfar. ADB will also administer a $10 million loan for the project provided by the Leading Asia’s Private Infrastructure Fund (LEAP). The project is cofinanced by International Finance Corporation and DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH.

The loan provides long-term financing to build and operate a 58.56-megawatt gas-fired power plant located near Mazar-i-Sharif in northern Afghanistan. The project cost a total $89 million, will use indigenous gas and is expected to generate 404 gigawatt-hours of power annually.  It represents a significant engagement by ADB to support essential infrastructure through the private sector in a fragile and conflict-affected situation, in line with ADB’s long-term corporate strategy, Strategy 2030.

“This project is definitive proof that indigenous gas-based power generation is capable of displacing electricity imports in Afghanistan and helping to deliver energy security,” said Mr. Chakraborty. “Its success will send an important signal to the market that Afghanistan’s power industry is now ready to attract more private sector investment and financing.”

“Ghazanfar Group is honored to have the support of international development banks including ADB for this first-of-its-kind project in Afghanistan,” said Mr. Ghazanfar. “This is a first step in Ghazanfar Group’s vision of helping to develop 5,000 megawatts of energy generation facilities in Afghanistan through partnerships with international development banks, local and international companies, and the Government of Afghanistan.”

APPC is a special purpose vehicle owned by Ghazanfar Group, one of Afghanistan’s largest conglomerates, and Egyptian construction company Hassan Allam Holdings, one of the largest privately-owned corporations in the Middle East. Ghazanfar Group, established in 1910, operates in Afghanistan, Central Asia and the Middle East in a variety of sectors including upstream, midstream and downstream oil and gas, banking, construction, logistics, and power.

Afghanistan has the world’s lowest electricity penetration rate, with only 34% of the population connected to the grid as of 2019. Since 2005, energy demand has grown at nearly twice the economic growth rate. The country imports at least 75% of its energy needs.

LEAP was established in 2016 with a $1.5 billion capital commitment from the Japan International Cooperation Agency. It is focused on delivering high quality and sustainable private sector infrastructure projects that reduce carbon emissions, improve energy efficiency, and offer accessible and affordable health care, education, and communication services to ADB’s developing member countries.

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IRENA’s World Energy Transition Day Kick-Starts Crucial Assembly Meeting

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The International Renewable Energy Agency’s (IRENA) Eleventh Assembly started today (Monday) and takes place virtually setting the course for a critical year of global commitments to low-carbon development. With the postponed COP26 set to take place later this year, 2021 is seen as an important moment for countries to raise climate mitigation ambition including renewable energy deployment, to align economic recovery efforts with the goals of the Paris Agreement.

“The COVID-19 pandemic defined 2020,” said Francesco La Camera, IRENA Director-General. “However, as countries look to recover from the devastating impacts of the pandemic and build back in a way that is more resilient, just and sustainable, we can define this year as the moment we placed the energy transition at the heart of global policy and investment decision making.”

The opening day of the Assembly, marked as World Energy Transition Day, sets the direction for four days of high-level discussions on net-zero policies, national energy planning, renewable energy investment and the energy-healthcare nexus, from January 18-21. Close to 2000 high level attendees including Heads of State, Ministers, energy decision makers, multilateral organisations, international stakeholders, and private sector actors will engage in Assembly meetings under the overarching theme of ‘COVID19 – Energy Transition’.

United Nations Secretary General, António Guterres, told Ministers and global leaders at the Assembly: “The trillions of dollars needed for recovery from the pandemic must be simultaneously used to move our economies towards net-zero emissions. We must build a global coalition to achieve carbon neutrality by 2050. Renewable technologies are the first choice for decarbonization strategies.”

Teresa Ribera, Deputy Prime Minister of the Government of Spain and Minister of Ecological Transition and Demographic Challenge, is the President of the Assembly.

“We are all well aware of the pressing need to change gears towards a sustainable energy future: with over 70% of GHG emissions coming from this sector, the energy transition plays a key role in managing the global climate emergency,” said H.E. Teresa Ribera. “Developing countries, economies in transition and highly industrialised countries all have huge opportunities in the decarbonisation of their development pathways: energy access and security, sound economic growth, industry modernisation, job creation.

“To us all, IRENA has become a lighthouse in the energy revolution we need,” she added. “Promoting innovation and widespread adoption of renewables and energy efficiency technologies and encouraging Governments to accelerate the transition. Spain is proud to align with IRENA’s endeavours and I will be honoured to take the lead of its 11th Assembly in 2021.”

Assembly sessions on the 18th, 19th and 20th include a high-level panel on energy transformation for a sustainable post-COVID recovery, followed by four ministerial discussions covering the topics of national energy planning and implementation, scaling up of renewable energy financing, the pathway to carbon neutrality and the role of the energy transition in energising healthcare.

Additionally, conclusions from preliminary stakeholder meetings that took place on the 13th and 14th of January, including IRENA’s Legislators Forum, Public-Private Dialogue and the IRENA Youth Forum, will be reported back to the Assembly. The Assembly, which takes place at the start of Abu Dhabi Sustainability Week (ADSW), is being live-streamed on the IRENA website.

“IRENA’s global mandate offers us a unique opportunity to convene global leaders, promote knowledge sharing and create the partnerships needed to advance low-carbon development and realise the immediate and long-term benefits of the transition,” continued La Camera. “The Assembly is at the heart of these efforts.”

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UN chief calls for ‘urgent transition’ from fossil fuels to renewable energy

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Building a global coalition for carbon neutrality by mid-century will be the UN’s “central objective”, the world body’s top official told a conference on climate action on Monday. 

“All countries need credible mid-term goals and plans that are aligned with this objective”, Secretary-General António Guterres said, addressing the virtual COP26 Roundtable on Clean Power Transition. “To achieve net zero emissions by 2050, we need an urgent transition from fossil fuels to renewable energy”. 

Energy for Africa 

Painting a picture of some 789 million people across the developing world without access to electricity – three-quarters of whom live in sub-Saharan Africa – the top UN official called it “both an injustice and an impediment to sustainable development”. 

He signaled “inclusivity and sustainability” as key to support African countries, while underscoring that all nations need to be able to provide access to clean and renewable energy that prevents “the dangerous heating of our planet”. 

Mr. Guterres asked for a “strong commitment from all governments” to end fossil fuel subsidies, put a price on carbon, shift taxation from people to pollution, and end the construction of coal-fired power plants. 

“And we need to see adequate international support so African economies and other developing countries’ economies can leapfrog polluting development and transition to a clean, sustainable energy pathway”, he added. 

Adaptation ‘ a moral imperative’ 

Against this backdrop, Mr. Guterres repeated his appeal to developed nations to fulfill their annual pledge for $100 billion dollars to support mitigation and adaptation in developing countries. 

Pointing to vulnerabilities faced by Africa – from prolonged droughts in the Sahel and Horn of Africa to devastating floods in the continent’s south – he underscored “the vital importance of adaptation” as “a moral imperative”. 

The UN chief said that while only 20 per cent of climate finance is earmarked for it, adaptation requires “equal attention and investment”. 

“The forthcoming climate adaptation summit on 25 January is an opportunity to generate momentum in this much neglected area”, he added. 

Reversing a dangerous trend 

Despite huge amounts of money that have been reserved for COVID-19 recovery and stimulus measures, the Secretary-General noted that “sustainable investments are still not being prioritized”. 

He outlined the need for an annual six per cent decrease in energy production from fossil fuels through renewables, transition programmes, economic diversification plans, green bonds and other instruments to advance sustainability. 

He reiterated the need to limit the global temperature rise to 1.5 degrees Celsius above pre-industrial levels, stating emissions needed to fall by 7.6 per cent every year between now and 2030. 

However, he noted that “some countries are still going in the opposite direction. “We need to reverse this trend”, he said. 

Aligning with Paris 

He said all public and private financing should support the Paris Agreement and the 2030 Agenda for Sustainable Development with training, reskilling and providing new opportunities that  are “just and inclusive”. 

He noted that a sustainable economy means better infrastructure, a resilient future and millions of new jobs – especially for women and young people, maintaining that “we have the opportunity to transform our world”. 

“But to achieve this we need global solidarity, just as we need it for a successful recovery from COVID-19”, the Secretary-General said, reminding everyone that “in a global crisis we protect ourselves best when we protect all”. 

“We have the tools. Let us unlock them with political will”, concluded the UN chief.

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‘Growing momentum’ to make 2021 the global action year for sustainable energy

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In a bid of optimism for the new year, the UN Development Programme (UNDP) expressed confidence that clean energy would grow in 2021. 

Despite that the world is not on track to meet climate objectives and achieve Sustainable Development Goal 7 (SDG7) for universal access to clean, affordable and reliable energy, Marcel Alers, UNDP Head of Energy, said that “clean energy solutions exist that can get us there”. 

“There is growing momentum to make them political and investment priorities”, he added. 

Smart investment 

Fossil fuels used to be less expensive than clean energy but that is changing, according to Mr. Alers. 

Renewables are becoming more affordable every year, and “some options are now cheaper than fossil fuels”, he said, pointing out that since 2010, the price of solar had decreased by 89 per cent.  

“It is now cheaper to go solar than to build new coal power plants in most countries, and solar is now the cheapest electricity in history”, the UNDP official said.  

Moreover, amidst an exceptionally challenging year, and despite suffering setbacks, the renewables sector has shown resilience. 

“This fall in price, coupled with technological progress and the introduction of innovative business models, means we are now at a tipping point”, he said, urging for a large-scale clean energy investments from the public and private sectors. 

Translating pledges to action 

Throughout 2020, countries have pledged to build back better, greener and fairer.  

“With support from UNDP’s Climate Promise, 115 countries committed to submitting enhanced Nationally Determined Contributions”, Mr. Alers said. 

Among other things, he noted that high-emitting economies, such as China, Japan, South Korea, the United Kingdom and the European Union, had made net-zero commitments and that United States President-elect Joe Biden had vowed to rejoin the Paris Agreement.  

“These pledges now need to be translated into action”, said the UNDP official. “Ambitious commitments are a strong signal and a necessary first step towards reaching net-zero emissions. We now need to build on them”. 

Green recovery 

Clean energy is also a win-win solution to recover from COVID-19 as it can improve healthcare for the world’s poorest while providing a reliable electricity supply – imperative for health centres to function.  

“As COVID-19 vaccines – some needing to be stored at -70°C – get rolled out, powering a sustainable and reliable cold chain will be critical”, Mr. Alers reminded. 

Furthermore, investing in renewables could create nearly three times as many jobs as investing in fossil fuels. 

“As the world is rapidly urbanizing, energy efficiency in buildings, sustainable cooling and heating, smart urban planning and sustainable transport options…are key for the future of cities”, he maintained. 

Looking to September 

In September, for the first time in 40 years, the UN will host a High Level Dialogue on Energy for countries, businesses, civil society and international institutions to step up action on sustainable energy.  

UN-Energy and UNDP Administrator Achim Steiner recently called for a reinforcement of global energy governance, saying “we know clean energy can both deliver universal energy access and contribute to tackling the climate crisis”. 

Although phasing out fossil fuels and transitioning to green economies is a monumental task, Mr. Alers assured that “we are ready to rise to the challenge”.  

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