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Securing Africa’s Energy Future in the Wake of Covid-19

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African ministers from countries making up 70% of Africa’s total primary energy supply, nearly 70% of its GDP and more than half of the continent’s entire population met with global energy leaders via videoconference on 24 November 2020.

A revitalised energy sector is key to Africa’s economic transformation. Participants agreed on the urgent need to enhance actions to ensure sustainable economic recovery and significantly scale up energy investments in Africa over the next three years in the wake of Covid-19.

Discussions highlighted implementation priorities and innovations key to enabling Africa’s energy sector to power regional economic growth over the three-year period (2020-2023) that coincides with end of the first 10-year Action Plan of the AU Agenda 2063. Africa’s pace of progress towards the realisation of the transformative Agenda 2063 continental vision will be determined by the degree to which it successfully recovers from the evolving impacts of the 2020 global health and socioeconomic crisis. African countries must engage in robust, innovative actions to strengthen energy security, scale up infrastructure investment, and promote the growth of the green economy, making use of all available opportunities to continually accelerate Africa’s clean energy transitions. These interventions can be bolstered by enhanced rates of internal trade in Africa, including in the energy sector, through a speedy implementation of the African Continental Free Trade Area.

Ensuring Sustainable Recovery – Participants noted that achievement of full access to modern energy by 2030 is achievable but will require stable, consistent policies and strong political will. They stressed the need for all global stakeholders to maintain focus on collective action, and also update plans to step up the pace of universal access to electricity and modern cooking in Africa. African governments and other partners must continue to work together to ensure progress towards achievement of SDG7. It was acknowledged that the momentum behind existing policy and investment plans was insufficient to meet the modern energy needs of Africa’s population. It was noted with concern that the initial Covid-19 crisis impact in 2020 had already severely affected recent progress on universal energy access.

Financing and Investment – Participants underscored that Africa is facing major challenges in obtaining the required finance and new investments to meet its immense structural transformation needs. Challenges include reduced financing flows, a lack of fiscal space, a slowdown in new investments in the energy sector and significant increases in the cost of borrowing. Oil and gas producers in Africa have been hit very hard throughout 2020, and many new ones have seen their hope for energy sector transformation dashed by the global economic slowdown this year. Local currencies have weakened against hard currencies and this is translating to higher debt burden. The already weak financial position of many African power utilities has been worsened by declining demand due to the pandemic and a high default rate. This situation is further exacerbated by weakened currencies.

Key conclusions – Participants stressed the following top recommendations going forward:

Partnership for a green and just transition is an essential priority to boost sustainable economic recovery in Africa and ensure progress towards universal access to clean energy, whilst ensuring that no one is left behind. In that context, the need to involve more women and youth throughout the value chain of energy projects was also emphasised.

Support for energy sector institutions and particularly power utilities, which are the fulcrum of the sector, is critical against the financial shocks imposed by the Covid-19 pandemic. Predictable policy environments with innovative market regulations help to attract new investment.

An integrated approach embracing grid, mini-grid and off-grid solutions is required to sustain the momentum for increasing access. In light of the Covid-19 crisis, supportive policies to ensure the sustainability of mini-grid providers need to be replicated across the continent.

Despite the challenges imposed by Covid-19, governments must avoid the temptation to slow down the pace of energy access and provide the right incentives for the private sector to play a part in the recovery process, leveraging on the productive sector and innovative business models and digitalisation.

Enhanced multilateral, regional and international cooperation can play an important role in addressing financing and investmentchallenges in the post Covid-19 era.

Stronger regional integration of electricity markets and infrastructure is a crucial factor in achieving a just energy transition as well as building secure, flexible and reliable power supply in Africa.

The African Continental Free Trade Area (AfCFTA) opens the door to a new era of increased interconnectedness. Continental energy infrastructure programs like PIDA should play significant role to support AfCFTA.

A strong focus on improving power infrastructure, within and across borders, building up regulation and capacity to support Africa’s power pools and further enable regional electricity markets could all play an instrumental role in improving the financing and investment climate on the continent.

AUC, IEA and partners should consider forming a Taskforce on climate financing solutions for the African energy community that could present its recommendations at the COP 26 in 2021.

The outcomes of this Ministerial Forum will be shared with African Union and IEA member state leaders, as well as the leaders of international financial institutions and other global decision-makers, business leaders and key stakeholders. In addition, these outcomes will help guide future activities linked to enhancing the strong AUC-IEA partnership and inform the IEA’s continued deepening of its engagement with key decision-makers from governments, the private sector, investors and other leading regional institutions across the continent. 

As the co-chairs of this event, we would like to thank all participants for their active engagement and constructive contributions.

Signed,

  • Amani Abou-Zeid, Commissioner for Infrastructure and Energy, African Union
  • Fatih Birol, Executive Director, IEA
  • Gwede Mantashe, Minister of Mineral Resources and Energy, South Africa 

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Achieving Net Zero Electricity Sectors in G7 Members

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G7 members are well placed to fully decarbonise their electricity supply by 2035, which would accelerate the technological advances and infrastructure rollouts needed to lead global energy markets towards net zero emissions by 2050, according to a new report from the International Energy Agency. The report was requested by the United Kingdom, which holds the G7 Presidency this year.

The pathway laid out in the report – Achieving Net Zero Electricity Sectors in G7 Members – underscores how the G7 can serve as first movers, jump-starting innovation and lowering the cost of technologies for other countries while maintaining electricity security and placing people at the centre of energy transitions.

The new report builds on the IEA’s landmark Roadmap to Net Zero by 2050 to identify key milestones, challenges and opportunities for G7 members. Following on from June’s G7 Summit, it is designed to inform discussions at the COP26 Climate Change Conference in Glasgow, for which the UK also holds the Presidency. 

At the G7 Summit, the leaders of Canada Germany, France, Italy, Japan, the United Kingdom and the United States – plus the European Union – committed to reach “an overwhelmingly decarbonised” power system in the 2030s and net zero emissions across their economies no later than 2050.

The G7 now accounts for nearly 40% of the global economy, 36% of global power generation capacity, 30% of global energy demand and 25% of global energy-related carbon dioxide (CO2) emissions. Its clean energy transition is already underway, with coal making way for cleaner options. The electricity sector now accounts for one-third of the G7’s energy-related emissions, down from a peak of nearly two-fifths in 2007. In 2020, natural gas and renewables were the primary sources of electricity in the G7, each providing about 30% of the total, with nuclear power and coal close to 20% each.

Reaching net zero emissions from electricity would require completing the phase-out of unabated coal while simultaneously expanding low emissions sources of electricity, including renewables, nuclear, hydrogen and ammonia. According to the IEA’s pathway to net zero by 2050, renewables need to provide 60% of the G7’s electricity supply by 2030, whereas under current policies they are on track to reach 48%.

The G7 has an opportunity to demonstrate that electricity systems with 100% renewables during specific periods of the year and in certain locations can be secure and affordable. At the same time, increased reliance on renewables does require the G7 to lead the way in finding solutions to maintain electricity security, including seasonal storage and more flexible and robust grids.

In the IEA’s pathway to net zero by 2050, innovation delivers 30% of G7 electricity sector emissions reductions to 2050, which will require international collaboration while also creating technology leadership opportunities for G7 countries. Mature technologies like hydropower and light-water nuclear reactors contribute only about 15% of the reductions in the IEA pathway. About 55% come from deploying technologies that either still have huge scope to grow further, such as onshore wind and solar PV, or in early adoption phase, such as heat pumps and battery storage. Technologies still in development, such as floating offshore wind, carbon capture and hydrogen, would deliver another 30%.

The new report underscores that people must be placed at the centre of all clean electricity transitions. Decarbonising electricity could create as many as 2.6 million jobs in the G7 over the next decade, but as many as 300,000 jobs could be lost at fossil fuel power plants, with profound local impacts that demand strong and sustained policy attention to minimise the negative impacts on individuals and communities. Household spending on energy should decline by 2050, as rising spending on electricity is more than offset by lower expenses for coal, natural gas and oil products. Governments must foster efficiency gains and structure energy tariffs for consumers and businesses so that all households can benefit from these cost savings.

“G7 members have the financial and technological means to bring their electricity sector emissions to net zero in the 2030s, and doing so will create numerous spill-over benefits for other countries’ clean energy transitions and add momentum to global efforts to reach net zero emissions by 2050,” said Fatih Birol, the IEA Executive Director. “G7 leadership in this crucial endeavour would demonstrate that getting to electricity sectors with net zero emissions is both doable and advantageous, and would also drive new innovations that can benefit businesses and consumers.

We have decided to take the path towards climate neutrality. This can only be achieved together – with joint and decisive action,”said Peter Altmaier, Germany’s Federal Minister for Economic Affairs and Energy. “Our way towards climate neutrality is ambitious, but necessary. We need to act together with clear, joint and decisive action. The energy sector plays clearly a key role on our way to climate neutrality. Solutions are at hand, such as the exit from coal-fired power generation in Germany and other countries. The IEA report shows how the G7 can live up to its pioneering role in this regard a matter that will continue to be topical during the German G7 presidency in 2022.

In this critical year of climate action ahead of COP26, I welcome this report, which sets out a roadmap for the G7 to meet the commitment, made earlier this year, to accelerate the transition from coal to clean power,” said COP26 President-Designate Alok Sharma. “The report also highlights the huge jobs and growth opportunities that this decade could bring, from scaling-up renewables and improving energy efficiency to driving digital solutions and deploying critical technologies.

We welcome the IEA’s report on achieving net zero electricity sectors in the G7. These countries should provide leadership in the energy transition,said UN High Level Climate Action Champions Gonzalo Munoz and Nigel Topping. “Decarbonising electricity is essential to keep 1.5 degrees alive, as well as to provide the power for electrification of other sectors. Key G7 milestones in the report include phase out of unabated coal and reaching 60% renewable share of electricity by 2030 and overall net zero electricity emissions by 2035. The private sector stands ready to support this effort.

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Sustainable transport key to green energy shift

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With global transport at a crossroads, government leaders, industry experts, and civil society groups are meeting in Beijing, China, for a UN conference to chart the way forward to a more sustainable future for the sector, and greater climate action overall. 

The three-day UN Sustainable Transport Conference, which opened on Thursday, will examine how transportation can contribute to climate response, economic growth and sustainable development. 

It is taking place just weeks before the COP26 UN climate change conference in Glasgow, Scotland. 

In remarks to the opening, UN Secretary-General António Guterres underlined what is at stake. 

“The next nine years must see a global shift towards renewable energy. Sustainable transport is central to that transformation,” he said.  

The move to sustainable transport could deliver savings of $70 trillion by 2050, according to the World Bank.   

Better access to roads could help Africa to become self-sufficient in food, and create a regional food market worth $1 trillion by the end of the decade. 

Net-zero goal 

The COVID-19 pandemic has revealed how transport is “far more than a means of getting people and goods from A to B”, the UN chief said.

Rather, transport is fundamental to implementing the 2030 Agenda for Sustainable Development and the Paris Agreement on climate change, both of which were “badly off-track” even before the crisis. 

The Paris Agreement aims to limit global temperature rise to 1.5 degrees Celsius, but the door for action is closing, he warned. 

“Transport, which accounts for more than one quarter of global greenhouse gases, is key to getting on track. We must decarbonize all means of transport, in order to get to net-zero emissions by 2050 globally.” 

A role for everyone 

Decarbonizing transportation requires countries to address emissions from shipping and aviation because current commitments are not aligned with the Paris Agreement. 

Priorities here include phasing out the production of internal combustion engine vehicles by 2040, while zero emission vessels “must be the default choice” for the shipping sector. 

“All stakeholders have a role to play, from individuals changing their travel habits, to businesses transforming their carbon footprint,” the Secretary-General said. 

He urged governments to incentivize clean transport, for example through regulatory standards and taxation, and to impose stricter regulation of infrastructure and procurement. 

Safer transport for all 

The issues of safety and access must also be addressed, the Secretary-General continued. 

“This means helping more than one billion people to access paved roads, with designated space for pedestrians and bicycles, and providing convenient public transit options,” he said. 

“It means providing safe conditions for all on public transport by ending harassment and violence against women and girls, and reducing deaths and injuries from road traffic accidents.” 

Making transport resilient 

Post-pandemic recovery must also lead to resilient transport systems, with investments going towards sustainable transport, and generating decent jobs and opportunities for isolated communities. 

“Public transport should be the foundation for urban mobility,” he said. “Per dollar invested, it creates three times more jobs than building new highways.” 

With much existing transport infrastructure, such as ports, vulnerable to extreme climate events, better risk analysis and planning are needed, along with increased financing for climate adaptation, particularly in developing countries. 

Mr. Guterres stressed the need for effective partnerships, including with the private sector, so that countries can work together more coherently. 

“The transformative potential of sustainable transport can only be unleashed if improvements translate into poverty eradication, decent jobs better health and education, and increased opportunities for women and girls. Countries have much to learn from each other,” he said. 

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Decisive action by governments is critical to unlock growth for low-carbon hydrogen

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Governments need to move faster and more decisively on a wide range of policy measures to enable low-carbon hydrogen to fulfil its potential to help the world reach net zero emissions while supporting energy security, the International Energy Agency says in a new report released today.

Currently, global production of low-carbon hydrogen is minimal, its cost is not yet competitive, and its use in promising sectors such as industry and transport remains limited – but there are encouraging signs that it is on the cusp of significant cost declines and widespread global growth, according the IEA’s Global Hydrogen Review 2021.

When the IEA released its special report on The Future of Hydrogen for the G20 in 2019, only France, Japan and Korea had strategies for the use of hydrogen. Today, 17 governments have released hydrogen strategies, more than 20 others have publicly announced they are working to develop strategies, and numerous companies are seeking to tap into hydrogen business opportunities. Pilot projects are underway to produce steel and chemicals with low-carbon hydrogen, with other industrial uses under development. The cost of fuel cells that run on hydrogen continue to fall, and sales of fuel-cell vehicles are growing.

“It is important to support the development of low-carbon hydrogen if governments are going to meet their climate and energy ambitions,” said Fatih Birol, the IEA Executive Director, who is launching the report today at the Hydrogen Energy Ministerial Meeting hosted by Japan. “We have experienced false starts before with hydrogen, so we can’t take success for granted. But this time, we are seeing exciting progress in making hydrogen cleaner, more affordable and more available for use across different sectors of the economy. Governments need to take rapid actions to lower the barriers that are holding low-carbon hydrogen back from faster growth, which will be important if the world is to have a chance of reaching net zero emissions by 2050.”

Hydrogen is light, storable and energy-dense, and its use as a fuel produces no direct emissions of pollutants or greenhouse gases. The main obstacle to the extensive use of low-carbon hydrogen is the cost of producing it. This requires either large amounts of electricity to produce it from water, or the use of carbon capture technologies if the hydrogen is produced from fossil fuels. Almost all hydrogen produced today comes from fossil fuels without carbon capture, resulting in close to 900 million tonnes of CO2 emissions, equivalent to the combined CO2 emissions of the United Kingdom and Indonesia.

Investments and focused policies are needed to close the price gap between low-carbon hydrogen and emissions-intensive hydrogen produced from fossil fuels. Depending on the prices of natural gas and renewable electricity, producing hydrogen from renewables can cost between 2 and 7 times as much as producing it from natural gas without carbon capture. But with technological advances and economies of scale, the cost of making hydrogen with solar PV electricity can become competitive with hydrogen made with natural gas, as set out in the IEA’s Roadmap to Net Zero by 2050.

Global capacity of electrolysers, which produce hydrogen from water using electricity, doubled over the last five years, with about 350 projects currently under development and another 40 projects in early stages of development. Should all these projects be realised, global hydrogen supply from electrolysers – which creates zero emissions provided the electricity used is clean – would reach 8 million tonnes by 2030. This is a huge increase from today’s level of less than 50 000 tonnes – but remains well below the 80 million tonnes required in 2030 in the IEA pathway to net zero emissions by 2050.

Practically all hydrogen use in 2020 was for refining and industrial applications. Hydrogen can be used in many more applications than those common today, the report highlights. Hydrogen has important potential uses in sectors where emissions are particularly challenging to reduce, such as chemicals, steel, long-haul trucking, shipping and aviation.

The broader issue is that policy action so far focuses on the production of low-carbon hydrogen while the necessary corresponding steps that are required to build demand in new applications is limited. Enabling greater use of hydrogen in industry and transport will require much stronger policy measures to foster the construction of the necessary storage, transmission and charging facilities.

Countries with hydrogen strategies have committed at least USD 37 billion to the development and deployment of hydrogen technologies, and the private sector has announced additional investment of USD 300 billion. But putting the hydrogen sector on path consistent with global net zero emissions by 2050 requires USD 1 200 billion of investment between now and 2030, the IEA estimates.

The Global Hydrogen Review lays out a series of recommendations for near term-action beyond just mobilising investment in research, production and infrastructure. It highlights that governments could stimulate demand and reduce price differences through carbon pricing, mandates, quotas and hydrogen requirements in public procurement. In addition, international cooperation is needed to establish standards and regulations, and to create global hydrogen markets that could spur demand in countries with limited potential to produce low-carbon hydrogen and create export opportunities for countries with large renewable energy supplies or large CO2 storage potential. 

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