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The EU has opportunity to accelerate shift to cleaner and more resilient energy future

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The European Union is strengthening its efforts to make its energy systems cleaner and more resilient, reinforcing its global leadership in reducing greenhouse gas emissions, according to a new energy policy review by the International Energy Agency.

EU greenhouse gas emissions in 2019 were 23% lower than in 1990, meaning the bloc had already met its target of a 20% decline by 2020, according to the new IEA report. Cleaner electricity was the main driver behind the reduction, with the carbon intensity of European power generation now well below most other parts of the world. The EU is a leader in renewable energy technologies, notably offshore wind, and many of its Member States have policies in placed to phase out coal. However, greenhouse gas emissions in the EU transport sector are still rising, and the use of energy in buildings remains fossil-fuel intensive.

The new IEA report sets out recommendations to help the EU meet its 2030 targets for greenhouse gas emissions, renewables and energy efficiency as well as its longer-term decarbonisation goals. It finds that stronger policies than those currently in place will be needed to deliver on these ambitions and that the energy sector needs to be at the heart of those efforts, as it accounts for 75% of EU greenhouse gas emissions.

In December, the new European Commission led by President Ursula von der Leyen launched the European Green Deal in a bid to make the EU climate neutral by 2050. This plan quickly faced the added challenge of Covid-19, which has pushed the world into a sharp economic downturn. This crisis is a test of energy sector resilience and policy makers’ commitment to clean energy transitions. The EU energy sector has so far stood up well to the pressures it has been under, but the economic downturn continues to weigh on company and government balance sheets. Last month, the European Commission presented a massive recovery plan to counter the economic damage from Covid-19. The plan aims to achieve a resilient, inclusive and green recovery in Europe while laying the foundations for a low-carbon future.

“With its recovery plans, the EU has a real opportunity to boost economic activity, create jobs and support the long-term transformation of its energy sector,” said Dr Fatih Birol, IEA Executive Director, as he launched the new report with Kadri Simson, the European Commissioner for Energy. “The Sustainable Recovery Plan described in the IEA’s recent World Energy Outlook Special Report shows how to achieve these three objectives simultaneously. The IEA is working with the European Commission and EU Member States to design policies to repair the economic damage of the crisis while making their energy systems cleaner and more resilient.”  

“The IEA’s review of EU energy policy comes at a crucial moment, as we debate the investment priorities for our economic recovery and the future EU budget,” said Commissioner Simson. “The review supports the Commission’s firm commitment to a green recovery, which is at the heart of our proposal for a €750 billion recovery plan. We will continue to work closely with the IEA as we design European policies to transform our energy sector and at the same time provide jobs, growth and better quality of life.”

As EU Member States have different energy policies and approaches to decarbonisation, the IEA report concludes that strong cooperation will be needed under the framework of the National Energy and Climate Plans. It also recommends that the EU build on the bloc’s integrated energy market and cross-border trade and develop stronger carbon price signals.

“The European Green Deal represents an opportunity to strengthen economies across the continent by pooling investments in energy technologies that are likely to play a crucial role in the future,” Dr Birol said. “Hydrogen electrolysers and lithium-ion batteries could potentially be game-changers both for the EU and globally. I welcome the efforts by the European Commission to accelerate innovation and commercialisation in these key areas. ”

The IEA report also underscores that maintaining EU energy security remains critical, as the energy sector is vital for the health of citizens and economies. In particular, EU electricity systems and markets will need to accommodate growing shares of variable renewable energy. At the same time, risks such as extreme weather and cybersecurity threats are intensifying the challenges for designing and operating electricity systems.

The EU is facing the retirement of half its nuclear power generation capacity over the next five years unless decisions are taken to extend the lifetimes of the plants, which currently provide a major part of the continent’s low-carbon electricity. To support the phase-out of coal, natural gas is becoming essential to ensure the flexibility of electricity systems in Europe, but the region’s supply of gas will be largely dependent on imports. In this context, the IEA report finds that the EU cannot afford to reduce its energy diversity and needs to invest in electricity sector resilience.

The IEA report also points out that as the EU accounts for a relatively small share of global greenhouse gas emissions (8%), global climate action and global partnerships will be essential to amplify its climate ambitions. The IEA stands ready to continue to support EU efforts to strengthen clean energy transitions worldwide by sharing lessons and insights from European experiences across the globe.

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Deloitte: Energy Management – Paused by Pandemic, but Poised to Prevail

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Since Deloitte began conducting its annual survey tracking clean energy attitudes and actions a decade ago, the percentage of residential consumers concerned about climate change and personal carbon footprints has risen steadily from about half to a consistent 68%, putting increasing pressure on businesses to do more. The year 2020 appeared to be the tipping point, but when COVID-19 hit, many questioned whether the momentum had been derailed as companies focused on survival.

Deloitte’s 2020 Resources Study, “Energy Management: Paused by Pandemic, but Poised to Prevail,” found that despite the pandemic — and maybe in part because of it — progress in efforts to manage energy use, reduce carbon emissions and address climate change will likely continue and even potentially accelerate in the longer term. The study is based on survey data collected from 1,531 residential consumers and 602 business decision-makers.

Consumer concern about climate change is rising, but looking to others to solve
Consumer sentiment about climate change has steadily increased over the past decade. Sixty-eight percent of residential consumers surveyed said they were “extremely or very concerned” about climate change and their personal carbon footprint and 65% said they saw greater renewable energy development as boosting the national economy, the highest level since 2014. While the benefits of clean energy are clear, most consumers (80%) surveyed expect others, such as the government and corporations, to address climate change issues. And about a third of respondents expect action from their employers.

Millennials are a driving force for corporate sustainability
Further emphasizing the corporate role, more than a third of respondents who identified as full- or part-time employees, students and/or job seekers said it’s extremely or very important to work for a company with sustainability and/or climate-risk goals, and this sentiment rose to nearly 50% among millennials. “Employee motivations” has consistently been one of the top three drivers of corporate energy management programs, selected by at least a quarter of business respondents each year. But in 2020, that rose to a third, the highest level ever in our surveys. Employees are becoming more vocal about climate change, and this may be due to the growing influence of millennials in the workplace.

Businesses are feeling increasing stakeholder pressure to address climate risk
In line with rising consumer sentiment, nearly 60% of businesses surveyed feel increased pressure from stakeholders to develop and disclose plans to demonstrate how they’re addressing climate risk. The stakeholders seen as most active are employees (49%), followed by board members (42%), customers (41%) and shareholders (37%). Of those businesses feeling increased pressure, nearly 90% have reviewed or changed their climate-risk disclosure procedures and developed plans to address climate-related risks.

Importantly, although businesses are feeling pressure, they also increasingly see procuring clean energy as doing the “right thing.” In fact, 75% of those surveyed said recent global climate change reports have caused them to focus more on energy management. And almost 90% of respondents now see energy procurement as “not simply a cost to the company, but an opportunity to reduce risk, improve resilience, and create new value.”

Convergence of cost and clean means more green
Over the past 10 years, the “cost” versus “clean” motivations for utilizing cleaner energy resources have been steadily converging as renewable energy costs have declined. This greater affordability is allowing businesses and residential consumers to prioritize clean energy without making bottom-line sacrifices.

Businesses are procuring more renewables through more channels:

  • Sixty-three percent of businesses surveyed have increased emission reduction goals.
  • Three-quarters of business respondents said customers are asking them to procure renewable energy.
  • More than half (51%) of businesses said they’re working to procure more electricity from renewables.
  • Of the 60% of businesses citing having onsite generation, the highest share of electricity supply was generated with cogeneration (15%) and renewables (13%).
  • Microgrids also appear to be growing in popularity with 44% of business respondents saying they’ve considered a microgrid, a spike of 9 points over 2019.

Residential consumers still cost-conscious but putting environment first:

  • For the first time in five years, “utilizing clean energy sources to be better stewards of the environment” was cited ahead of “keeping my total energy bills affordable” as one of the top three most important energy issues to residential consumers.
  • More than half (53%) of respondents said it’s “extremely” or “very” important that part of their electricity supply comes from renewable energy.
  • Thirty-two percent of respondents said they were “very” or “extremely” interested in installing solar panels and 51% of those who don’t already have them on their primary residence, expressed interest if combined with battery storage.
  • Among respondents who had already installed rooftop solar, “clean” beat out saving money for the first time as the primary motivator.
  • Renewables are gaining ground as a reason for respondents to switch providers versus lower electricity costs as renewables rose 3 points in 2020 to take second place from “better service,” while “lower electricity costs” stayed steady in first place.

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ADB, IEA Renew Agreement to Collaborate on Energy Sector Sustainability and Resilience

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The Asian Development Bank (ADB) has renewed a memorandum of understanding (MOU) with the International Energy Agency (IEA) to scale up collaboration and advance progress on sustainability with increased focus on energy sector resilience in Asia and the Pacific.

“The energy sector is a key driver of growth and human development, especially during recovery from the impacts of the coronavirus disease (COVID-19) pandemic,” said ADB President Masatsugu Asakawa. “We are pleased to renew our agreement with IEA, which builds on our successful collaboration to date, and we look forward to advancing our shared objective of achieving a more sustainable and resilient energy future in Asia and the Pacific.”

Under the 3-year agreement, the two organizations will share knowledge and best practice in energy sector data and analysis, on-the-ground engagement, capacity building, technology, and innovation, among other areas. This will help to overcome critical knowledge and experience gaps blocking the development of sustainable energy systems in ADB’s developing member countries and enhance IEA’s data collection and capacity building efforts in Asia and the Pacific.

ADB first signed a 3-year MOU with IEA in March 2017 to facilitate knowledge and analytical work to advance clean energy development in ADB’s developing member countries. As part of this, ADB worked with IEA to study power system flexibility in India to integrate more solar and wind energy in the grids.

The renewal agreement was signed on the occasion of IEA’s Clean Energy Transitions Summit, where Mr. Asakawa gave a speech at the plenary session to an audience of over 50 energy ministers and energy sector leaders. Last month, IEA Executive Director Fatih Birol delivered the keynote address at ADB’s 15th Asia Clean Energy Forum 2020. IEA is a knowledge partner of ADB’s leading annual energy forum.

ADB invested more than $23 billion in clean energy, including both sovereign and nonsovereign initiatives from 2008 to 2019. Last year, ADB’s climate financing reached a record $6.56 billion, meeting its target of doubling its annual climate investments from 2014 one year ahead of schedule.

Under Strategy 2030, ADB is targeting $80 billion in cumulative climate financing from its own resources by 2030 and for at least 75% of its country operations to feature climate adaptation and mitigation initiatives.

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40 Ministers from around the world gather to address the world’s energy and climate challenges

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Ministers from dozens of countries accounting for over 80% of the world economy today took part in the International Energy Agency’s first Clean Energy Transitions Summit, discussing how to bring about a sustainable and resilient recovery from the Covid-19 crisis and achieve a definitive peak in global carbon emissions.

Ministers participating in the Summit included those from the world’s largest energy consumers: Minister Zhang Jinhua of China, Secretary Dan Brouillette of the United States, Commissioner Kadri Simson of the European Union, Minister R.K. Singh of India, Minister Kajiyama Hiroshi of Japan, Minister Kwasi Kwarteng of the United Kingdom, Minister Bento Albuquerque of Brazil, Minister Seamus O’Regan of Canada, Minister Sergio Costa of Italy, Minister Gwede Mantashe of South Africa, Secretary Rocío Nahle of Mexico, Minister Arifin Tasrif of Indonesia, and Deputy Prime Minister Ribera of Spain.

Speakers also included United Nations Secretary-General Antonio Guterres, CEOs from across the energy sector, top investors, heads of regional development banks and other key international organisations, past and present COP Presidents – including Secretary of State Alok Sharma of the United Kingdom – and leaders from civil society. The full list of participants is available below.

Participants highlighted the impacts of the Covid-19 pandemic on their energy systems, underscoring the importance of finding ways to support clean energy transitions despite the current challenges. Key themes includes the need for greater innovation in areas such as hydrogen, the importance of inclusive and equitable recoveries, and how to make the electricity sector more resilient and sustainable.

“This Summit proves that international dialogue and collaboration can bring great value. It was an opportunity to inform, support and inspire each other. Now, it is time for all of us to get to work – building back our economies, bringing our citizens back to work, ensuring that 2019 was the definitive peak in emissions and building towards the resilient and sustainable energy systems of the future,” said Dr Fatih Birol, the IEA’s Executive Director who chaired the Summit. “What I see clearly is momentum – momentum behind sustainable recovery and momentum behind clean energy transitions.”

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