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.
Renewable energy access key to climate adaptation in Africa
Support for climate adaptation in Africa is crucial, UN Secretary-General António Guterres said on Tuesday in appealing for greater action to provide renewable energy to hundreds of millions who still lack access to reliable and affordable electricity.
“As the continent that has contributed least to the climate crisis, Africa deserves the strongest possible support and solidarity”, he told an online dialogue for leaders convened by the African Development Bank.
Mr. Guterres warned that “adaptation must not be the neglected half of the climate equation”.
Old models failing
Although Africa has abundant and untapped renewable resources, it has received just two per cent of global investment in renewable energy over the past decade, he reported.
Old models of development and energy use have failed to provide Africans with universal energy access, he said, meaning hundreds of millions of people still lack reliable and affordable electricity or are cooking with polluting and harmful fuels.
“We can provide universal access to energy in Africa primarily through renewable energy. I call for a comprehensive package of support to meet this objective ahead of COP26,” Mr. Guterres said, referring to the UN climate change conference in November.
“It is achievable. It is necessary. It is overdue. And it is smart: climate action is a $3 trillion investment opportunity in Africa by 2030,” he added.
‘Major finance gap’
However, the Secretary-General pointed to “the major finance” gap blocking progress towards this goal. He urged developed countries to deliver on their $100 billion climate commitment made over a decade ago.
“Developed countries and main financers must ensure a swift shift of the billions to support African green investments, to increase resilience and to create the conditions for scaled-up private finance”, he said.
“And the private sector must step up and get organized to provide immediate, concrete solutions to governments. Local authorities can work with unions and community leaders on reskilling and social security nets.”
Commitment and fiscal autonomy
While African Governments also can lead the way by committing to ambitious adaptation and mitigation plans, they first need to regain their fiscal autonomy, he said.
The Secretary-General stressed the need to extend the debt moratorium for developing countries, made last year in response to the COVID-19 pandemic, and even cancelling debts where appropriate.
Furthermore, Special Drawing Rights, a type of supplementary foreign reserve maintained by the International Monetary Fund (IMF), must also be made available to support Africa’s recovery.
How Renewables Offer New Solutions for District Heating and Cooling
Heating is the largest end user of energy, accounting for over 50% of global final energy consumption worldwide. At present, much of this demand is met by burning fossil fuels, making the sector a significant contributor to greenhouse gas emissions and air pollution. Renewables can play a significant role in decarbonising the way we heat homes and businesses.
Traditionally, biofuels have been the main alternative to fossil fuels in district heating and cooling. However recent improvements in building insulation and digitalisation have opened district energy to widely accessible, low-temperature renewables such as low-temperature geothermal, solar thermal and waste heat sources.
These sources are widely available in many regions. Yet, they remain largely untapped because they are not immediately compatible with current district energy infrastructure and existing building stock according to IRENA’s “Integrating Low-Temperature Renewables in District Energy Systems” published in collaboration with Aalborg university, Denmark.
Speaking during a recent workshop to launch the report, Miklos Antics, the President of the European Geothermal Energy Council, said more than 25% of the EU population lives in areas directly suitable for geothermal district heating.
The workshop was held under the framework of the Energy Solutions for Cities of the Future and under the umbrella of the Global Geothermal Alliance, with a focus on China with the support of the Chinese Renewable Energy Engineering Institute (CREEI). “District heating is of utmost importance to achieve decarbonised energy systems in China by 2060,” said Professor Brian Vad Mathiesen from Aalborg University.
For his part, Haukur Hardarsson, Chairman and Founder of Arctic Green Energy, highlighted the fact that Sinopec Green Energy connected about 60 million square meters of floor area to geothermal district heating systems, saving the country and the world close to 13 million tons of CO2 over the last decade – showing the environmental value of geothermal energy for heating and cooling.
IRENA’s analysis shares good practices from mature district heating and cooling markets with emerging markets and shows that a lack of data and a disconnect with building renovation strategies at the municipality level is holding back further integration of low-temperature renewables.
To overcome the challenges associated with the integration of low-temperature renewables into district heating and cooling, the report offers the following key recommendations:
- Develop strategic heating and cooling plans based on clear political drivers and identify relevant stakeholders;
- Elaborate technical scenarios based on heating and/or cooling demand and mapping of resources;
- Integrate change of supply, modernization of the network and building renovations;
- Promote the utilisation of locally available renewables for heating and cooling;
- Establish enabling regulatory conditions, supportive financing options and business models
- According to the report, heating and cooling challenges, such as issues with current energy supply, should be addressed in a co-ordinated and informed manner and with a long-term perspective.
- “Development of district heating and cooling systems, particularly those that are compatible with low-temperature renewable energy resources, is one way to integrate more renewables in the heating and cooling sector. However, this requires a collaborative effort from all relevant stakeholders, to address the inherent challenges,” said IRENA’s Director of Country Engagement and Partnerships Gurbuz Gonul during the workshop.
- “If action is taken, renewables can constitute up to 77% of the energy supplied to district heating energy systems by 2050, up from only 8% in 2017,” he added.
- The high upfront capital costs associated with the construction and refurbishment of the building stock as well as of the district heating and cooling network are substantial and it can take a decade or longer before any profits are realised, according to the report. This makes these projects a good match for investors seeking long-term revenue streams rather than quick returns.
- The report also highlights the role of national and local authorities in strategic planning for heating and cooling and supporting district energy operators by de-risking investments and facilitating access to direct funding from the public sector. Project developers can also benefit from technical assistance programmes that assess the viability of projects, support the development of district energy infrastructure in new markets, and evaluate renewable energy supply options.
To read the full report, click here.
Fast-Track Energy Transitions to Win the Race to Zero
Proven technologies for a net-zero energy system already largely exist today, finds the preview of World Energy Transitions Outlook by the International Renewable Energy Agency (IRENA). Renewable power, green hydrogen and modern bioenergy will dominate the world of energy of the future.
Previewed at the Berlin Energy Transition Dialogue today, IRENA’s Outlook proposes energy transition solutions for the narrow pathway available to contain the rise of temperature to 1.5°C and halt irreversible global warming. 90% of all decarbonisation solutions in 2050 will involve renewable energy through direct supply of low-cost power, efficiency, renewable-powered electrification in end-use as well as green hydrogen. Carbon capture and removal technologies in combination with bioenergy will deliver the ‘last mile’ CO2 reductions towards a net-zero energy system.
With 2030 deadlines around the corner, this Outlook comes at a critical time when acting fast and bold on global climate pledges is crucial in the decisive year of UN High-Level Dialogue on Energy and Glasgow Climate Conference COP26.
Francesco La Camera, Director-General of IRENA said: “The window of opportunity to achieve the 1.5°C Paris Agreement goal is closing fast. The recent trends show that the gap between where we are and where we should be is not decreasing but widening. We are heading in the wrong direction. The World Energy Transitions Outlook considers options of the narrow pathway we have to be in line with the 1.5°C goal. We need a drastic acceleration of energy transitions to make a meaningful turnaround. Time will be the most important variable to measure our efforts.”
“While the pathway is daunting, several favourable elements can make it achievable,” La Camera added. “Major economies accounting for over half of global CO2 emissions are turning carbon neutral. Global capital is moving too. We see financial markets and investors shifting capital into sustainable assets. Covid-19 has highlighted the cost of tying economies to fossil fuels and confirmed the resilience of renewable energy. As governments pump huge sums in bailouts and recovery, investment must support energy transition. It is time to act and countries can lead the way with policies for a climate-safe, prosperous and just energy system fit for the 21st century.”
IRENA’s “1.5°C pathway” sees a trebling of global power dominated by renewables in 2050. It also sees a decline in fossil fuel use by more than 75% over the same time, with oil and coal consumption shrinking fastest. Natural gas should peak around 2025, becoming the largest remaining fossil fuel by 2050.
Financial markets reflect this shift by allocating capital away from fossil fuels and into sustainable assets like renewables. The downgrading of fossil fuels continues, with shares of fossil‑fuel-heavy energy sector in S&P index falling from 13% a decade ago to below 3% today. In contrast, investors are flooding money into renewable energy stock with S&P clean energy up by 138% in 2020.
However, significant investment will have to be redirected, IRENA’s Outlook shows. Major economies have announced economic stimulus packages that will pump approximately USD 4.6 trillion directly into carbon-relevant sectors such as agriculture, industry, waste, energy and transport, but less than USD 1.8 trillion is green.
By contrast, energy transition investment will have to increase by 30% over planned investment to a total of USD 131 trillion between now and 2050, corresponding to USD 4.4 trillion on average every year. Socioeconomic benefits will be massive, investing in transition will create close to three times more jobs than fossil fuels, for each million dollars of spending. To address concerns about a fair and just transition, IRENA’s Outlook calls for a holistic and consistent overall policy framework.
IRENA’s “1.5°C pathway” sees electricity becoming the main energy carrier in 2050 with renewable power capacity expanding more than ten-fold over the same period. Transport will see the highest growth of electrification with a 30-fold increase. Almost 70% of carbon emission reductions in transport will come from direct and indirect electrification.
Green hydrogen will emerge as one of the major demand for electricity, representing 30% of total consumption in 2050. Bioenergy combined with carbon removal technologies (BECCS) will increasingly be important for industry to bring “negative emissions” in face of a limited carbon budget for 1.5C.
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