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Reaching energy and climate goals requires a sharp acceleration in clean energy innovation

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Without a major acceleration in clean energy innovation, countries and companies around the world will be unable to fulfil their pledges to bring their carbon emissions down to net-zero in the coming decades, according to a special report released today by the International Energy Agency.

The report assesses the ways in which clean energy innovation can be significantly accelerated to achieve net-zero emissions while enhancing energy security in a timeframe compatible with international climate and sustainable energy goals. The Special Report on Clean Energy Innovation is the first publication in the IEA’s revamped Energy Technology Perspectives (ETP) series and includes a comprehensive new tool analysing the market readiness of more than 400 clean energy technologies.

“There is a stark disconnect today between the climate goals that governments and companies have set for themselves and the current state of affordable and reliable energy technologies that can realise these goals,” said Dr Fatih Birol, the IEA Executive Director. “This report examines how quickly energy innovation would have to move forward to bring all parts of the economy – including challenging sectors like long-distance transport and heavy industry – to net-zero emissions by 2050 without drastic changes to how we go about our lives. This analysis shows that getting there would hinge on technologies that have not yet even reached the market today. The message is very clear: in the absence of much faster clean energy innovation, achieving net-zero goals in 2050 will be all but impossible.”

A significant part of the challenge comes from major sectors where there are currently few technologies available for reducing emissions to zero, such as shipping, trucking, aviation and heavy industries like steel, cement and chemicals. Decarbonising these sectors will largely require the development of new technologies that are not currently in commercial use. However, the innovation process that takes a product from the research lab to the mass market can be long, and success is not guaranteed. It took decades for solar panels and batteries to reach the stage they are at now. Time is in even shorter supply now.

Notably, the report highlights the importance of making sure crucial clean energy solutions are ready in time for the start of multi-decade investment cycles in key industries. Doing so could create huge markets for new technologies and avoid locking in vast amounts of emissions for decades to come. If key technologies become available by 2030 to take advantage of the next round of plant refurbishments in heavy industry, nearly 60 gigatonnes of carbon emissions could be avoided.

Another issue is that many of the clean energy technologies that are available today – such as offshore wind turbines, electric vehicles and certain applications of carbon capture, utilisation and storage – need a continued push on innovation to bring down costs and accelerate deployment.

Around three-quarters of the cumulative reductions in carbon emissions that would be needed to move the world onto a sustainable path would come from technologies that have not yet reached full maturity, according to the IEA report. For example, it would require rapid progress in new battery designs that are still at the prototype stage now to shift long-distance transport from fossil fuels to electricity.

But the public and private sectors are currently falling short of delivering the innovation efforts to back up their net-zero ambitions – and the Covid-19 crisis is threatening to further undermine projects around the world focused on developing vital new energy technologies.

“A recent IEA survey revealed that companies that are developing net-zero emissions technologies consider it likely that their research and development budgets will be reduced, a clear sign of the damage that the Covid-19 crisis could do to clean energy innovation,” Dr Birol said. “Now is not the time to weaken support for this essential work. If anything, it is time to strengthen it.”

To help guide policy makers at this challenging time, the IEA report offers five key innovation principles for governments that aim to deliver net-zero emissions while enhancing energy security:

  1. Prioritise, track and adjust. Review the processes for selecting technology portfolios for public support to ensure that they are rigorous, collective, flexible and aligned with local advantages.
  2. Raise public R&D and market-led private innovation. Use a range of tools – from public research and development to market incentives – to expand funding according to the different technologies.
  3. Address all links in the value chain. Look at the bigger picture to ensure that all components of key value chains are advancing evenly towards the next market application and exploiting spillovers.
  4. Build enabling infrastructure. Mobilise private finance to help bridge the “valley of death” by sharing the investment risks of network enhancements and commercial-scale demonstrators.
  5. Work globally for regional success. Co-operate to share best practices, experiences and resources to tackle urgent and global technology challenges, including via existing multilateral platforms. 

In particular, the report highlights issues requiring immediate attention in the context of the Covid-19 crisis, such as the importance of governments maintaining research and development funding at planned levels through 2025 and considering raising it in strategic areas. It stresses that market-based policies and funding can help scale up value chains for small, modular technologies with overlapping innovation needs like new types of batteries and electrolysers, significantly advancing their progress.

“Together with the Sustainable Recovery Plan that the IEA presented last month, this innovation report will provide the foundation for the IEA Clean Energy Transitions Summit on 9 July,” Dr Birol said. “The Summit will be the most important global event on energy and climate issues of 2020, bringing together more than 40 government ministers, industry CEOs and other energy leaders from countries representing 80% of global energy use and emissions. The aim is to build a grand coalition to help drive economic development and job creation by accelerating transitions towards clean, resilient and inclusive energy systems.”

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Fewer women than men will regain work during COVID-19 recovery

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Generations of progress stands to be lost on women and girls' empowerment during the COVID-19 pandemic. Photo: ILO

Fewer women will regain jobs lost to the COVID-19 pandemic during the recovery period, than men, according to a new study released on Monday by the UN’s labour agency.  

In Building Forward Fairer: Women’s rights to work and at work at the core of the COVID-19 recovery, the International Labour Organization (ILO) highlights that between 2019 and 2020, women’s employment declined by 4.2 per cent globally, representing 54 million jobs, while men suffered a three per cent decline, or 60 million jobs. 

This means that there will be 13 million fewer women in employment this year compared to 2019, but the number of men in work will likely recover to levels seen two years ago. 

This means that only 43 per cent of the world’s working-age women will be employed in 2021, compared to 69 per cent of their male counterparts. 

The ILO paper suggests that women have seen disproportionate job and income losses because they are over-represented in the sectors hit hardest by lockdowns, such as accommodation, food services and manufacturing. 

Regional differences 

Not all regions have been affected in the same way. For example, the study revealed that women’s employment was hit hardest in the Americas, falling by more than nine per cent.  

This was followed by the Arab States at just over four per cent, then Asia-Pacific at 3.8 per cent, Europe at 2.5 per cent and Central Asia at 1.9 per cent. 

In Africa, men’s employment dropped by just 0.1 per cent between 2019 and 2020, while women’s employment decreased by 1.9 per cent. 

Mitigation efforts 

Throughout the pandemic, women faired considerably better in countries that took measures to prevent them from losing their jobs and allowed them to get back into the workforce as early as possible. 

In Chile and Colombia, for example, wage subsidies were applied to new hires, with higher subsidy rates for women.  

And Colombia and Senegal were among those nations which created or strengthened support for women entrepreneurs.  

Meanwhile, in Mexico and Kenya quotas were established to guarantee that women benefited from public employment programmes. 

Building forward 

To address these imbalances, gender-responsive strategies must be at the core of recovery efforts, says the agency. 

It is essential to invest in the care economy because the health, social work and education sectors are important job generators, especially for women, according to ILO. 

Moreover, care leave policies and flexible working arrangements can also encourage a more even division of work at home between women and men. 

The current gender gap can also be tackled by working towards universal access to comprehensive, adequate and sustainable social protection. 

Promoting equal pay for work of equal value is also a potentially decisive and important step. 

Domestic violence and work-related gender-based violence and harassment has worsened during the pandemic – further undermining women’s ability to be in the workforce – and the report highlights the need to eliminate the scourge immediately. 

Promoting women’s participation in decision-making bodies, and more effective social dialogue, would also make a major difference, said ILO. 

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Global electricity demand is growing faster than renewables

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Renewables are expanding quickly but not enough to satisfy a strong rebound in global electricity demand this year, resulting in a sharp rise in the use of coal power that risks pushing carbon dioxide emissions from the electricity sector to record levels next year, says a new report from the International Energy Agency.

After falling by about 1% in 2020 due to the impacts of the Covid-19 pandemic, global electricity demand is set to grow by close to 5% in 2021 and 4% in 2022 – driven by the global economic recovery – according to the latest edition of the IEA’s semi-annual Electricity Market Report released today. The majority of the increase in electricity demand is expected to come from the Asia Pacific region, primarily China and India.

Based on current policy settings and economic trends, electricity generation from renewables – including hydropower, wind and solar PV – is on track to grow strongly around the world over the next two years – by 8% in 2021 and by more than 6% in 2022. But even with this strong growth, renewables will only be able to meet around half the projected increase in global electricity demand over those two years, according to the new IEA report.

Fossil fuel-based electricity generation is set to cover 45% of additional demand in 2021 and 40% in 2022, with nuclear power accounting for the rest. As a result, carbon emissions from the electricity sector – which fell in both 2019 and 2020 – are forecast to increase by 3.5% in 2021 and by 2.5% in 2022, which would take them to an all-time high.

Renewable growth has exceeded demand growth in only two years: 2019 and 2020. But in those cases, it was largely due to exceptionally slow or declining demand, suggesting that renewables outpacing the rest of the electricity sector is not yet the new normal.

“Renewable power is growing impressively in many parts of the world, but it still isn’t where it needs to be to put us on a path to reaching net-zero emissions by mid-century,” said Keisuke Sadamori, the IEA Director of Energy Markets and Security. “As economies rebound, we’ve seen a surge in electricity generation from fossil fuels. To shift to a sustainable trajectory, we need to massively step up investment in clean energy technologies – especially renewables and energy efficiency.” 

In the pathway set out in IEA’s recent Roadmap to Net Zero by 2050, nearly three-quarters of global emissions reductions between 2020 and 2025 take place in the electricity sector. To achieve this decline, the pathway calls for coal-fired electricity generation to fall by more than 6% a year.

However, coal-fired electricity generation is set to increase by almost 5% this year and by a further 3% in 2022, potentially reaching an all-time high, according to the Electricity Market Report. Gas-fired generation, which declined 2% in 2020, is expected to increase by 1% in 2021 and by nearly 2% in 2022. The growth of gas lags that of coal because it plays a smaller role in the fast-growing economies in the Asia Pacific region and it faces competition from renewables in Europe and North America.

Since the IEA’s last Electricity Market Report in December 2020, extreme cold, heat and drought have caused serious strains and disruptions to electricity systems across the globe – in countries ranging from the United States and Mexico to China and Iraq. In response, the IEA is establishing an Electricity Security Event Scale to track and classify major power outages, based on the duration of the disruption and the number of affected customers. The Texas power crisis in February, where millions of customers were without power for up to four days because of icy weather, was assigned the most severe rating on this scale.

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COVID-19 Crisis Lowers Thailand’s Growth, Continued Support for the Poor Needed

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Thailand’s economy continues to take a heavy toll due to the COVID-19 pandemic and is projected to expand modestly at 2.2 percent in 2021, revised down from the 3.4 percent growth projected in March, according to the World Bank’s latest Thailand Economic Monitor “The Road to Recovery” published today. Continued assistance to the poor and vulnerable, including informal workers, will be necessary as COVID-19 continues to impact Thailand’s economy.

The weaker outlook reflects the impact of the ongoing third wave of the virus on private consumption, and the likelihood that international tourist arrivals will remain very low through the end of 2021. Thailand recorded 40 million tourist arrivals in 2019, but the expected number of tourist arrivals in 2021 has been revised sharply downward from a previous forecast of 4-5 million to just 0.6 million.

“The economic shock associated with COVID-19 has adversely affected employment, incomes, and poverty, but the government’s comprehensive social protection response has been impressive in mitigating its impact,” said Birgit Hansl, World Bank Country Manager for Thailand. “Thailand’s fiscal space is still sufficient to allow supporting measures to protect the poor and most in need in the months to come.”

Thailand has performed relatively well in terms of the scale and speed of its fiscal response. The government expanded what was previously a relatively modest set of cash transfer programs to implement one of the largest such responses to COVID-19 in the world. Preliminary simulations suggest that more than 780,000 additional people could have fallen into poverty in 2020 if the government had not scaled up social assistance.

“The crisis in 2020 demonstrated Thailand’s ability to leverage its robust and universal digital ID, sophisticated and interoperable digital platform, and a number of administrative databases to filter eligibility for new cash transfer programs. Going forward Thailand would need to consolidate these efforts and be better prepared to respond to crisis through setting up a social registry.” said Francesca Lamanna, Senior Economist at the World Bank.

Economic activity is not expected to return to its pre-pandemic levels until 2022, with the GDP growth rate projected to rise to 5.1 percent. However, the pace of recovery will depend on Thailand’s vaccination progress, the effectiveness of fiscal support, and the extent to which international tourism resumes. Exports of goods are expected to support the Thai economy in 2021, due to recovering global demand for automotive parts, electronics, machinery, and agricultural products. Risks are further tilted to the downside as the COVID-19 recovery might be delayed due to new COVID-19 variants becoming resistant to treatments or vaccines.

“Adequate testing-tracing-isolation and further progress on vaccinations will be necessary to avoid the need for lockdowns, spur a sustained increase in domestic mobility and consumption, and allow the country to reopen to foreign tourists,” according to Kiatipong Ariyapruchya, World Bank Senior Economist for Thailand. “In the long-term, reforms that lower trade costs and barriers could help maximize the benefits of the ongoing recovery of global economic activity.”

The report also recommends that the government will need to invest in strengthening Thailand’s social protection system. In the years to come it should be a priority to provide adequate support to vulnerable people, while ensuring that this support is targeted effectively to limit the overall fiscal burden. The crisis also further underscores the need to ensure that the social protection system covers the large informal sector at all times, not only during crises.

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