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Latin America: The Link Between Energy Transformation and Prosperity

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High-level energy and climate decision makers from Latin America and the Caribbean underlined the importance of low-carbon energy policy to securing stable, long-term prosperity across regional economies, during a webinar co-hosted by the International Renewable Energy Agency (IRENA) and the Latin American Energy Organization (OLADE).

The virtual meeting entitled Accelerating Latin America’s Energy Transformation: RE and Economic Recovery was built around the recent analytical work featured in the Agency’s Global Renewables Outlook report, Power Generation Cost 2019 and the Post-Covid Recovery report – all of which reinforce the centrality of energy transformation to positive long-term economic outcomes in Latin America and around the world.

The discussion sought to deepen regional decision makers’ understanding of the strengthening economic case for more purposeful energy transformation action, highlighting the socio-economic benefits of a renewables-based energy system. The virtual meeting also served as an important platform for an exchange of knowledge and experience between regional governments and development partners. Representatives from Panama, Uruguay and the Global Wind Energy Council participated alongside IRENA and OLADE and the UK’s Regional COP 26 Ambassador for Latin America and the Caribbean.

Latin America has been severely affected by the Covid-19 pandemic, with persistent oil market volatility further compounding regional economic challenges. As region decision makers look to identify a pathway to recovery, Fiona Clouder, UK COP26 Regional Ambassador for Latin America and the Caribbean said the region’s recovery had to be green and sustainable, noting that it must be underpinned by renewable energy.

“In our changing world, building a green recovery and a sustainable future is even more important,” she said in opening remarks. “With vision, ambition and natural resources, countries in Latin America are well placed to transition to low carbon economies, using renewable energy as part of that transformation. COP26 gives us an opportunity to work together to share ideas and best practice to address the challenges of climate change and build a better future.”

In his opening remarks, Mr. Alfonso Blanco, Executive Secretary of OLADE stressed the importance of cooperation and highlighted the role of international and multilateral organisations to support the development of strategies for the economic recovery of the region, with the energy sector as the main driver during this process.

“We need to increase [renewable energy] investments throughout our region to reactivate the economy,” he said. “Between OLADE and IRENA, we have to start working on the necessary strategies to reactivate the regional economies and put the energy sector as the main driver of that recovery. In our region, there is a great potential in terms of energy resources, and therefore, the post-pandemic regional economies have the potential to be reactivated through the energy sector.”

Latin America is among the most dynamic renewable energy marketplaces in the world. Close to USD 120 billion of renewable investments were made between 2010 and 2015, placing several countries in Latin America among the top 10 largest renewable energy markets globally. Today, the region boasts around 200 gigawatts (GW) of installed renewable capacity, accounting for more than half of power capacity and a quarter of total primary energy.

Yet the region’s full potential remains unexplored. IRENA estimates that over 90 per cent of the region’s potential remains untapped and investment needs in the region are estimated at USD45 billion per year between now and mid-century – an increase of more than 10 per cent over current plans and policies. A regional initiative coordinated by OLADE sets a regional goal of reaching at least 70 per cent of renewable energy in electricity in by 2030.

Gauri Singh, Deputy Director-General of IRENA, said attracting the increased investment would offer the region strong returns, both in the short and long-term. “Latin America is tackling the economic toll of the pandemic and the World Economic Forum suggests the region’s economy is poised to contract in 2020,” she said, “meaning forward thinking energy and economic policy making is critical.”

“Accelerating the renewable energy transformation in Latin America and the Caribbean would create more than 3m jobs across the region by 2050,” she continued. “IRENA’s Transforming Energy Scenario offers the region the scope to develop economic returns of between 3 and 8 dollars on every dollar invested in the transformation.”

Many countries in the region have already taken positive steps towards economic recovery built around an accelerated energy transformation and the prioritization of low-carbon technologies. Serving as a platform to build regional understanding of the measures and policies being implemented, the discussion heard representatives from Panama and Uruguay share their plans and experiences.

Ms Guadalupe González, Director of Electricity, Secretary of Energy, Panama reinforced her country’s recognition of the socio-economic benefits. She noted that Panama has developed the Energy Transition Agenda 2030, built around five important pillars for renewable energy deployment that not only discuss the implementation of low-carbon technologies but also social aspects to improve energy access, job creation, role of women in the energy sector, building capacities on renewables, and the empowerment of the energy consumers.

Mr Fitzgerald Cantero, National Energy Director, Uruguay highlighted his country is following a pathway towards the decarbonisation of the economy starting with the power sector, which reached 98 per cent of renewable energy generation in 2019.He noted that Uruguay’s variable generation, particularly from wind energy, has left the country with a power surplus that can be used to support cross-border trade of power, promote the use of e-mobility and the potential production of green hydrogen for transport, industry and international trade.

Regional energy policy measures designed to aid the economic recovery following the COVID-19 pandemic were summarized as the development of more flexible power grids, energy efficiency solutions, electric vehicle charging for electric vehicle deployment, energy storage, interconnected hydropower, green hydrogen, and other technology investments consistent with long-term energy and climate sustainability.

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World Bank Project to Boost Household Access to Affordable Energy

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Today, the World Bank Board of Directors approved $150 million in financing to improve access to modern energy for households, enterprises, and public institutions in Rwanda and to enhance the efficiency of electricity services. $75 million will be provided as grant funding, and $75 will be provided as a loan.  

Building on the achievement of previous World Bank support to the energy sector, the Rwanda Energy Access and Quality Improvement Project (EAQIP) will advance Rwanda’s progress towards achieving UN Sustainable Development Goal 7 (SDG7) to ensure access to affordable, reliable, sustainable and modern energy for all, while also contributing to the country’s aim of reducing reliance on cooking fuel by 50%.

“The proposed project is well-timed to build on the World Bank’s decade-long support to the Government’s energy sector agenda. It will contribute directly to Rwanda’s push toward universal energy access by 2024 and universal access to clean cooking by 2030”, said Rolande Pryce, World Bank Country Manager for Rwanda. “We are honored to be a long-term partner in this journey.”

Rwanda EAQIP aims to improve electricity access by providing funding for the country’s ongoing program of expanding grid connections for residential, commercial, industrial, and public sector consumers, as well as by providing grants to reduce the costs of off-grid solar home systems. The project will also enhance the availability and efficiency of low-cost renewable energy by restoring capacity at the Ntaruka Hydro-Power Project, reducing voltage fluctuations on transmission lines, and supporting the national smart meter program.

The project includes the World Bank’s largest clean cooking operation in Africa, and the first project co-financed by the recently launched Clean Cooking Fund (CCF), hosted by the World Bank’s Energy Sector Management Assistance Program (ESMAP). The CCF will provide $20 million for clean cooking, with $10 million provided as a grant and $10million extended as a loan. The project targets 2.15 million people, leveraging an additional US$30 million in public and private sector investments. By incentivizing the private sector and improving the enabling environment, the project aims to develop a sustainable market for affordable clean cooking solutions in Rwanda. 

The project is part of the Rwanda Universal Energy Access Program (RUEAP), which coordinates the efforts of development partners supporting the energy sector to contribute to the achievement of the targets set out in the National Strategy for Transformation (2017-24).

“The World Bank is proud to have led the RUEAP on behalf of the development partners, including the French Development Agency (co-financing the EAQIP). The World Bank looks forward to supporting the implementation of the ongoing program and expects to report positive outcomes in the lives of Rwandans” said Norah Kipwola, World Bank Senior Energy Specialist and the project Task Team Leader.

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Reaching energy and climate goals demands a dramatic scaling up of clean energy technologies

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A major effort to develop and deploy clean energy technologies worldwide is urgently needed to meet international energy and climate goals, particularly in order to reduce carbon emissions from areas beyond the power sector such as transport, buildings and industry, according to a new IEA report released today.

With global carbon emissions at unacceptably high levels, structural changes to the energy system are required to achieve the rapid and lasting decline in emissions called for by the world’s shared climate targets. The IEA’s Energy Technology Perspectives 2020 – the first core ETP report for three years following a revamp of the series – analyses more than 800 different technology options to assess what would need to happen to reach net-zero emissions by 2070 while ensuring a resilient and secure energy system.

It finds that transitioning just the power sector to clean energy would get the world only one-third of the way to net-zero emissions. Completing the journey will require devoting far more attention to the transport, industry and buildings sectors, which today account for about 55% of CO2 emissions from the energy system. Much greater use of electricity in these sectors – for powering electric vehicles, recycling metals, heating buildings and many other tasks – can make the single largest contribution to reaching net-zero emissions, according to the report, although many more technologies will be needed.

“Despite the difficulties caused by the Covid-19 crisis, several recent developments give us grounds for increasing optimism about the world’s ability to accelerate clean energy transitions and reach its energy and climate goals. Still, major issues remain. This new IEA report not only shows the scale of the challenge but also offers vital guidance for overcoming it,” said Dr Fatih Birol, the IEA’s Executive Director.

“Solar is leading renewables to new heights in markets across the globe, ultralow interest rates can help finance a growing number of clean energy projects, more governments and companies are throwing their weight behind these critical technologies, and all-important energy innovation may be about to take off,” Dr Birol said. “However, we need even more countries and businesses to get on board, we need to redouble efforts to bring energy access to all those who currently lack it, and we need to tackle emissions from the vast amounts of existing energy infrastructure in use worldwide that threaten to put our shared goals out of reach.”

Energy Technology Perspectives 2020 (ETP 2020) examines how to address the challenge of long-lasting energy assets already operating around the world – including inefficient coal power plants, steel mills and cement kilns, most of which were recently built in emerging Asian economies and could operate for decades to come. It finds that the power sector and heavy industry sectors together account for about 60% of emissions today from existing energy infrastructure. That share climbs to nearly 100% in 2050 if no action is taken to manage the existing assets’ emissions, underscoring the need for the rapid development of technologies such as hydrogen and carbon capture.

Ensuring that new clean energy technologies are available in time for key investment decisions will be critical. In heavy industries, for example, strategically timed investments could help avoid around 40% of cumulative emissions from existing infrastructure in these sectors. Accelerated innovation is crucial for this – and for scaling up the clean energy technologies needed across the energy system.

Hydrogen is expected to play a large and varied role in helping the world reach net-zero emissions by forming a bridge between the power sector and industries where the direct use of electricity would be challenging, such as steel and shipping. In the IEA’s Sustainable Development Scenario – a pathway for reaching international energy and climate goals – the global capacity of electrolysers, which produce hydrogen from water and electricity, expands to 3 300 gigawatts in 2070, from 0.2 gigawatts today. In 2070, these electrolysers consume twice the amount of electricity that China generates today. Carbon capture is also employed across a range of sectors in the Sustainable Development Scenario, including the production of synthetic fuels and some low-carbon hydrogen. And modern bioenergy directly replaces fossil fuels in areas like transport and offsets emissions indirectly through its combined use with carbon capture.

The blistering pace of technological transformation that would be necessary for the world to reach net-zero emissions by 2050 is explored in the report’s Faster Innovation Case. It finds that to meet the huge increase in demand for electricity, additions of renewable power capacity would need to average around four times the current annual record, which was reached in 2019.

Governments need to play an outsized role in accelerating clean energy transitions towards meeting international goals, according to ETP 2020. The report highlights core areas that policy makers need to make sure they address. And it notes that economic stimulus measures in response to the Covid-19 crisis offer a key opportunity to take urgent action that could boost the economy while supporting clean energy and climate goals.

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CSOs to ADB: End dirty energy legacy, ban coal

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Days before the Asian Development Bank’s (ADB) Annual Governors Meeting, civil society groups challenged the bank anew to jumpstart Asia’s energy transition by decarbonizing its energy investment portfolio.

The call was made in a webinar and publication launch on Friday, where the groups said “Leaving behind ADB’s Dirty Energy Legacy” must begin with a formal ban on coal investments.

“Thanks to the lenient Energy Policy it adopted in 2009, ADB is guilty of having shaped Asia’s energy sector into its carbon-intensive state today. No amount of renewable energy investments could cover up the bank’s role in advancing the myth of clean coal and the fact that half of the total installed capacity of power generation projects it funded the past decade is from fossil fuels,” said Gerry Arances, Executive Director of the Center for Energy, Ecology, and Development (CEED).

Arances said that with the worsening climate crisis, deteriorating air quality, increasing viability of renewable energy, and environmental and economic imperatives highlighted by the COVID-19 pandemic on the need for a green recovery, the imperative to decarbonize is clear.

“The critical reflections we from civil society offer today mirror what the bank’s Independent Evaluation Department reported: that ADB needs a new energy policy that accurately responds to the region’s needs. In doing so it must live up to its role in global energy transformation, which it can begin by completely leaving coal in its dirty past,” Arances said.

Prior to its release today, the publication has been used by CEED and NGO Forum on ADB, a network of over 250 civil society organisations across Asia, in engaging the bank’s energy decision-makers towards a full transition away from coal and other fossil fuels.

“The Taal volcano eruption, Australian forest fires, floods in Pakistan and Bangladesh, and the typhoons in the USA all struck within a span of 7 months amid COVID-19. If there ever was a time to be climate responsible for ADB, it is now,” said Rayyan Hassan, Executive Director of NGO Forum on ADB.

Forum representatives Vidya Dinker of Growth Watch in India, Hasan Mehedi of Coastal Livelihood and Environmental Action Network (CLEAN) in Bangladesh, and Richard Kahulugan of the Philippine Movement for Climate Justice were present in the webinar to express a unified call for an end to ADB’s advancement of dirty energy in their countries.

“The ADB IED Evaluation on ADB’s Energy Policy recommends ending coal power for Asia-Pacific. We as NGO Forum on ADB demand that the ADB Board of Directors and ADB Senior Management take heed of this recommendation and act swiftly towards an immediate end on all coal and coal-related power and forge towards a just transition to limit global temperature rise to the Paris goal of 1.5°C. ADB must end coal, and end it now. We are out of time,” said Hassan.

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