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Strong Cooperation and Enabling Policies can Lead Energy Transformation in Southeast Asia

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image: IRENA

Meeting future energy demand in the Association of Southeast Asian Nations (ASEAN) is a high priority in the region. With current indigenous fossil fuel resources incompatible with climate and sustainable development goals, and the COVID-19 pandemic causing fuel price volatility and economic uncertainty, the region can now seize the moment to put renewable energy sources at the forefront of its energy planning and growth agenda.

That was the focus of a joint-webinar hosted by the International Renewable Energy Agency (IRENA) and the ASEAN Centre for Energy (ACE). With IRENA’s recent Global Renewables Outlook (GRO) report and Power Generation Cost 2019 report framing the discussion, the virtual event entitied ‘Accelerating the Southeast Asian Energy Transformation’ brought together more than 160 participants from across the ASEAN region and further afield, to identify ways to catalyse the energy transition in Southeast Asia.

Under IRENA’s GRO, Southeast Asia’s economy could by grow an additional 2.9 per cent above current plans and policies by 2050. The Agency’s ‘Transforming Energy Scenario’ is a model that aligns the global energy system with the goals of the Paris Agreement. GRO 2020 shows that Southeast Asia could meet about 41% of all of its energy needs from renewable energy by 2030 and create an additional 6.7 million green jobs by 2050. Participants learned that as a result of dramatic cost reductions, replacing the world’s costliest 500 gigawatts of coal fired power in favour of renewables next year would yield annual savings of up to USD 23 billion per year.

In opening remarks, Gauri Singh, Deputy Director-General of IRENA emphasised that the region stands at a crossroads in terms of its energy future, highlighting that sustainable and affordable energy can be the cornerstone of growth and the pursuit of climate and sustainable development goals for ASEAN countries. Ms Singh pointed to the importance of renewed political will and the adoption of strong policy frameworks to drive the region’s sustainable energy progress.

Dr. Nuki Agya Utama, Executive Director of ACE stressed the region’s commitment to fulfing the Paris Agreement as well as achieving regional goals, including the ASEAN Plan for Action and associated regional energy cooperation frameworks. “We are progressing towards our 23 per cent aspirations renewables target,” he said, adding: “but our current path will leave us 5 per cent short by 2025. With renewables’ costs falling, they can greatly support our economic, climate and sustainable development goals.”

Building new solar is cheaper than building new coal in all countries of the region, noted Ken O’Flaherty, UK COP 26 Regional Ambassador for Asia Pacific and South Asia, highlighting that new coal plants make bad business sense, risk stranded assets, and are incompatible with the Paris agreement. Acknolwedging the need for parties to convene and strengthen cooperation, he said: “Together we can ensure that every country across Southeast Asia has the ability to unlock their renewable energy potential, and pursue clean alternatives to coal power. Under the UK’s Presidency of COP26, in partnership with Italy, our energy transition campaign aims to accelerate the global transition from coal to clean energy. We are working closely with countries, development banks, investors and civil society. We look forward to working closely on COP26 and our energy transition campaign with our key regional partners, including ASEAN institutions, ACE, IRENA, IEA, NDC Partnership and ADB.”

With a view to establishing outcomes, participants heard interventions from high level participants of Indonesia, Viet Nam, Singapore, the Asian Photovoltaic Industry Association and ACE, as well as from UNESCAP, with whom IRENA recently signed a Memorandum of Understanding, and the Global Wind Energy Council, which is a member of IRENA’s Coalition for Action.

Liming Qiao, Asia Director of the Global Wind Energy Council, finds the region’s wind energy potential to be promising, with the market growing at a compound annual growth rate (CAGR) of 40.6% in the last decade —largely driven by the cost reductions and government policies. Sharing other speakers’ view on the importance of policy certainty, she said: “While many countries can have ambitious long-term renewables targets, the right policy frameworks and clarity of those are still missing which hinders the industry progress for the lack of stability. This is a critical roadblock that needs to be resolved for more and larger-scale renewables development in ASEAN.”

In closing, Dr Nuki Aguya Utama, said that growth based on clean sources is one of the region’s highest priorities, and that cooperation is the key. “Regional energy cooperation is crucial to accelerating renewables deployment, with an uneven endowment of renewables potentials across the region. ASEAN will play a role in implementing mitigation measures.”

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Hydrogen in North-Western Europe: A vision towards 2030

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North-West Europe has a well-developed hydrogen industry that could be at the edge of an unprecedented transformation should governments keep raising their ambitions for reducing greenhouse gas emissions, according to a new joint report by the International Energy Agency (IEA) and the Clingendael International Energy Programme (CIEP). 

The report, Hydrogen in North-Western Europe: A vision towards 2030, explores hydrogen developments, policies and potential for collaboration in the region. It was commissioned to inform discussions among governments from North-West Europe about the potential development of a regional hydrogen market. This intergovernmental dialogue was established at the Clean Energy Ministerial Hydrogen Initiative in 2020.

The report finds that the current policy landscape provides some momentum for the transformation of the hydrogen industry in North-West Europe towards 2030, but that it is insufficient to fully tap into the region’s potential to develop a large-scale low-carbon hydrogen value chain. More ambitious policies in line with the targets defined by the EU Green Deal or the UK Climate Change Act would drive a faster transformation.

If such a supportive policy framework were to be adopted, hydrogen demand in the region could grow by a third and low-carbon hydrogen could meet more than half of dedicated production, up from about 10% today, according to the report.

North-West European countries have already made significant progress developing their vision for the role hydrogen should play in their long-term energy strategies. These countries now face the challenge of moving beyond national discussions to establish a regional dialogue, an indispensable condition to develop the fully integrated hydrogen market the region needs. 

With the aim of informing this dialogue, the report identifies four priorities that should be addressed:

  • Build on the large unused potential to co-operate on hydrogen in the north-western European region.
  • Identify what is needed to develop an integrated regional market.
  • Develop supporting schemes with a holistic view of the hydrogen value chain.
  • Identify the best opportunities to simultaneously decarbonise current hydrogen production and deploy additional low-carbon supply.

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Seven Countries Account for Two-Thirds of Global Gas Flaring

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In an unprecedented year for the oil and gas industry, oil production declined by 8% in 2020, while global gas flaring reduced by 5%, according to satellite data compiled by the World Bank’s Global Gas Flaring Reduction Partnership (GGFR). Oil production dropped from 82 million barrels per day (b/d) in 2019 to 76 million b/d in 2020, as global gas flaring reduced from 150 billion cubic meters (bcm) in 2019 to 142 bcm in 2020. Nonetheless, the world still flared enough gas to power sub-Saharan Africa. The United States accounted for 70% of the global decline, with gas flaring falling by 32% from 2019 to 2020, due to an 8% drop in oil production, combined with new infrastructure to use gas that would otherwise be flared.

Gas flaring satellite data from 2020 reveals that Russia, Iraq, Iran, the United States, Algeria, Venezuela and Nigeria remain the top seven gas flaring countries for nine years running, since the first satellite was launched in 2012. These seven countries produce 40% of the world’s oil each year, but account for roughly two-thirds (65%) of global gas flaring. This trend is indicative of ongoing, though differing, challenges facing these countries. For example, the United States has thousands of individual flare sites, difficult to connect to a market, while a few high flaring oil fields in East Siberia in the Russian Federation are extremely remote, lacking the infrastructure to capture and transport the associated gas.

Gas flaring, the burning of natural gas associated with oil extraction, takes place due to a range of issues, from market and economic constraints, to a lack of appropriate regulation and political will. The practice results in a range of pollutants released into the atmosphere, including carbon dioxide, methane and black carbon (soot). The methane emissions from gas flaring contribute significantly to global warming in the short to medium term, because methane is over 80 times more powerful than carbon dioxide on a 20-year basis.

“In the wake of the COVID-19 pandemic, oil-dependent developing countries are feeling the pinch, with constrained revenues and budgets. But with gas flaring still releasing over 400 million tons of carbon dioxide equivalent emissions each year, now is the time for action. We must forge ahead with plans to dramatically reduce the direct emissions of the oil and gas sector, including from gas flaring,” said Demetrios Papathanasiou, Global Director for the Energy and Extractives Global Practice at the World Bank.

The World Bank’s GGFR is a trust fund and partnership of governments, oil companies, and multilateral organizations working to end routine gas flaring at oil production sites around the world. GGFR, in partnership with the U.S. National Oceanic and Atmospheric Administration (NOAA) and the Colorado School of Mines, has developed global gas flaring estimates based upon observations from two satellites, launched in 2012 and 2017. The advanced sensors of these satellites detect the heat emitted by gas flares as infrared emissions at global upstream oil and gas facilities.

“Awareness of gas flaring as a critical climate and resource management issue is greater than ever before. Almost 80 governments and oil companies have committed to Zero Routine Flaring within the next decade and some are also joining our global partnership, which is a very positive development. Gas flaring reduction projects require significant investment and take several years to produce results. In the lead-up to the next UN Climate Change conference in Glasgow, we continue to call upon oil-producing country governments and companies to place gas flaring reduction at the center of their climate action plans. To save the world from millions of tons of emissions a year, this 160-year-old industry practice must now come to an end.” said Zubin Bamji, Program Manager of the World Bank’s GGFR Partnership Trust Fund.

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IEA supports Indonesia’s plans for deploying renewable energy

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The IEA is carrying out a large work programme on power system enhancement with the Government of Indonesia to help it modernise the country’s electricity sector, including support for overcoming challenges inherent in integrating variable renewables like wind and solar PV.

As part of the work programme, the IEA hosted a series of webinars in early 2021 where Indonesia’s Ministry of Energy and Mineral Resources and national power utility PLN could learn from other countries’ experiences of integrating and setting targets for variable renewable energy.

An introductory session on the principles of integrating renewable energy was held ahead of the country specific sessions. In this session, the IEA presented its framework for renewable integration phases to the Ministry and PLN, highlighting the different challenges often faced during renewable integration as well as what flexibility options can be deployed to tackle these challenges.

In the first country session, IEA presented the main findings of the Thailand flexibility study that the Agency carried out in cooperation with EGAT, the Thai electricity utility. The study shows that Thailand has the technical capability to integrate larger shares of variable renewables, but that the lack of commercial flexibility is a major barrier for operating the power system in a more flexible way and thus is the main obstacle for integrating large amounts of renewables.

In the second country session, the Danish Energy Agency presented its work programme with the Government of Viet Nam. The sessions focused on important aspects for integration of renewables, such as the assessing the needs and implications of reserves and forecasting. The session also included a discussion on the main learning points from the boom in rooftop solar that Viet Nam has experienced in 2020. 

The third and last country session was on India. The IEA presented both national as well as state-level modelling in order to show some of the contextual differences between national models and models that focus on specific geographical regions. In India, the spot market accounts for only 10% of electricity generation, which shows that India, like Thailand, has some issues with commercial flexibility. The discussion also covered India’s level of dependency on physical power purchase agreements and its impacts on the flexibility of the power system.

All sessions were held behind closed doors to allow for an open discussion between the participating organisations on the issues of renewable integration and possible ways of addressing barriers. The IEA will continue the work with the Indonesian Ministry and PLN on this topic in order to facilitate a path towards a clean, affordable, secure and modern power sector in Indonesia.

This work in Indonesia is undertaken within the Clean Energy Transitions in Emerging Economies programme.

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