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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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Canada’s bold policies can underpin a successful energy transition

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Canada has embarked on an ambitious transformation of its energy system, and clear policy signals will be important to expand energy sector investments in clean and sustainable energy sources, according to a policy review by the International Energy Agency.

Since the IEA’s last in-depth review in 2015, Canada has made a series of international and domestic climate change commitments, notably setting a target to cut greenhouse gas emissions by 40-45% from 2005 levels by 2030 and a commitment to reach net zero emissions by 2050.

To support those climate and energy targets, governments in Canada have in recent years worked on a number of policy measures, including an ambitious carbon-pricing system, a clean fuels standard, a commitment to phase out unabated coal-fired electricity by 2030, nuclear plant extensions, methane regulations in the oil and gas sector, energy efficiency programmes and measures to decarbonise the transport sector.

“Canada has shown impressive leadership, both at home and abroad, on clean and equitable energy transitions,” said IEA Executive Director Fatih Birol, who is launching the report today with Jonathan Wilkinson, Canada’s Minister of Natural Resources. “Canada’s wealth of clean electricity and its innovative spirit can help drive a secure and affordable transformation of its energy system and help realise its ambitious goals. Equally important, Canada’s efforts to reduce emissions – of both carbon dioxide and methane – from its oil and gas production can help ensure its continued place as a reliable supplier of energy to the world.”

Canada’s profile as a major producer, consumer and exporter of energy presents both challenges and opportunities for reaching the country’s enhanced targets. Energy makes up 10% of gross domestic product and is a major source of capital investment, export revenue and jobs. Moreover, Canada’s highly decentralised system of government means that close coordination between federal, provincial and territorial governments is essential for a successful energy transition.

“This report acknowledges Canada’s ambitious efforts and historic investments to develop pathways to achieve net-zero emissions by 2050 and ensure a transition that aligns with our shared objective of limiting global warming to 1.5 degrees Celsius, “ said Minister Wilkinson. “These are pathways that make the most sense for our people, our economy and our country and will also yield technology, products and know-how that can be exported and applied around the world.”                              

The IEA finds that emissions intensity from Canada’s oil and gas production has declined in recent years, but the sector remains a major source of greenhouse gases, accounting for about a quarter of the country’s GHG emissions. Along with strong action to curb methane emissions, improving the rate of energy technology innovation will be essential for the deep decarbonisation that is needed in oil and gas production, as well as in the transport and industry sectors. Canada is actively advancing innovation in a number of key fields, including carbon capture, utilisation and storage; clean hydrogen; and small modular nuclear reactors, with a view to serving as a supplier of energy and climate solutions to the world. The IEA notes that further federal support for research, development and demonstration would help accelerate progress towards these goals.

The IEA is also recommending that Canada’s federal government promote a comprehensive energy efficiency strategy in consultation with provinces and territories that sets clear targets for energy efficiency in the buildings, industry and transport sectors

The IEA report highlights that Canada’s electricity supply is among the cleanest in the world, with over 80% of supply coming from non-emitting sources, thanks to the dominance of hydro and the important role of nuclear. To further support the expansion of clean power and electrification, the report encourages increased interconnections among provinces and territories to ensure balanced decarbonisation progress across the country.

The IEA commends Canada on its efforts to advance a people-centred approach to its clean energy transition, including initiatives to promote diversity and inclusion in clean energy sectors; programmes to increase access to clean energy in northern, remote and Indigenous communities; and actions to enable just transitions for coal workers and their communities.

“Canada has laid out a comprehensive set of policy measures and investments across sectors to meet its climate targets, including a strong clean energy component to its Covid-19 economic recovery efforts,” said Dr Birol. “I hope this report will help Canada navigate its path toward economy-wide emissions reductions and a net zero future.” 

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Iran to add 10GW to renewable energy capacity

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Iranian Energy Ministry and some of the country’s private contractors signed memorandums of understanding (MOU) on Sunday for cooperation in the construction of renewable power plants to generate 10,000 megawatts (10 gigawatts) of electricity across the country.

The signing ceremony was attended by senior energy officials including Energy Minister Ali-Akbar Mehrabian and Head of Renewable Energy and Energy Efficiency Organization (SATBA) Mahmoud Kamani, IRIB reported.

The MOUs were signed following the Energy Ministry’s public call for the contribution of private companies in a project for developing renewable power plants in the country.

According to SATBA, after the ministry’s public call, so far 153 requests for the generation of 90,000 megawatts (MW) have been submitted to the ministry by private companies.

Speaking in the signing ceremony, Energy Minister Ali-Akbar Mehrabian said: “When the private sector invests in this industry [the renewables], the government is obliged to return the equivalent of the investment plus its interests to the investor.”

Mehrabian noted that the government has allocated over 30 trillion rials (about $101 million) for the development of renewables in the budget bill for the next Iranian calendar year (begins on March 21), saying that it is an unprecedented budget in this area.

Further in the ceremony, SATBA Head Kamani mentioned some of the Energy Ministry’s plans for the development of the country’s renewable energy industry, saying: “Export of renewable energy is a goal that has been targeted by the government.”

“Constructing renewable power plants for the cryptocurrency miners is also being seriously considered,” he added.

Back in December 2021, Kamani had announced plans to create 10,000 MW capacity of new renewable power plants across the country within the next four years.

He had put the current capacity of the country’s renewable power plants at 905 MW, saying that such power plants account only for one percent of the country’s total power generation capacity.

“Currently, 30 percent of the world’s electricity needs are provided by renewable energy sources, and some countries have even declared 2030 as the final year of using fossil fuels,” he said.

“We are far behind the global standards in the development of renewable energy,” he regretted.

Referring to another program for the development of renewable energies in the domestic sector, Kamani noted that to encourage households for constructing such power plants the Energy Ministry has announced that it will buy their surplus generated electricity at a guaranteed price.

He further pointed to the indigenization of the knowledge for the construction of the equipment used in renewable power plants as another priority of the Energy Ministry and SATBA, saying: “Currently, the construction of solar panels and wind power plants is completely indigenized, and we must strengthen our producers to finally become able to build all the required equipment from start to finish, in this regard, of course, some enterprises have announced their readiness.”

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Tajikistan’s Energy Sector to Benefit from World Bank Support

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The World Bank’s Board of Executive Directors approved today additional grant financing of $65 million in support of the Second Phase of the Nurek Hydropower Rehabilitation Project, which will contribute towards more reliable electricity supply and expansion of renewable energy exports in Tajikistan.

“The World Bank is committed to supporting Tajikistan’s energy sector, given the country’s considerable potential in hydropower generation and export of clean, renewable energy resources,” said Ozan Sevimli, World Bank Country Manager in Tajikistan. “Investments in the Nurek hydropower plant – the mainstay of the country’s energy system – are essential in ensuring stable and reliable electricity supply for households and businesses domestically, as well as increased revenues from export at the regional market.”

The first phase of the Nurek Hydropower Rehabilitation Project, financed by the World Bank with $225.7 million; the Asian Infrastructure Investment Bank (AIIB) with $60 million; and the Eurasian Development Bank (EaDB) with $40 million, was launched in March 2019. It supports the rehabilitation of three of the nine generating units and the key infrastructural components of the power plant, replacement of six autotransformers that are used to evacuate the generated electricity, enhancement of dam safety to protect the facility from seismic hazards and floods and technical assistance to strengthen operational, technical, and financial management capacity of the utility company Barqi Tojik. The project’s second phase, financed by the World Bank ($50 million approved in June 2020), supports the rehabilitation of the remaining six generating units, the Nurek bridge, the powerhouse, and other key buildings, while also strengthening the capacity of the hydropower plant (HPP) to effectively operate and maintain the plant’s operations.

The additional financing of $65 million approved today is intended to reduce the current financing gap of $164 million for the second phase of the project. The remaining gap is expected be covered by other potential co-financiers, including reallocation of savings from the EaDB and AIIB resources allocated for the first phase of the project. The total World Bank investments for this strategically important project amounts to $341 million.

The Nurek HPP generates about 50 percent of total annual energy demand in Tajikistan and supplies most of the energy for exports. Due to technical problems, the power plant’s initial installed capacity of 3000 megawatts has reduced to 2,320 megawatts over the past four decades. The facility is currently undergoing its first major rehabilitation since its commissioning in 1972-1979. Once completed, the rehabilitation will allow to increase the HPP capacity to 3,214 megawatts that will ensure improved electricity supply during the cold winter months and bringing much-needed revenues from expanded electricity exports during the summer months.

The rehabilitation will also ensure dam safety improvement measures, which will help lower operational and maintenance costs. Lastly, the project will generate global environmental and climate mitigation benefits in the form of net reduction of CO2 emissions, leading to 69 million tCO2e net reduction in emissions versus the baseline during the project’s economic life.

The World Bank Group’s active portfolio in Tajikistan includes 23 projects, totaling $1.2 billion that aim at helping Tajikistan to take advantage of emerging regional opportunities, transform its economy, and improve the livelihoods of its citizens. Since 1996, the World Bank has provided over $2 billion in grants, highly concessional IDA credits, and trust fund resources to the country.

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