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Lithuania is well placed to lead on clean energy and energy security in the Baltic region

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Lithuania has made impressive headway in its clean energy transition in recent years but needs to take action in several key areas to accelerate progress towards its goal of climate neutrality in 2050, according to a new policy review by the International Energy Agency.

Lithuania is seeking membership of the IEA, which conducted the in-depth review of the country’s energy policies as part of the accession process. The review found that Lithuania has strengthened its energy policies over recent years. Electricity market reforms are underway and Lithuania – along with its Baltic neighbours Latvia and Estonia – is integrating its power system into Continental Europe’s.

Lithuania’s track record on its clean energy transition is impressive. The carbon intensity of electricity and heat generation has decreased over the past decade, and Lithuania is now comparable with leading IEA countries when it comes to the share of renewables in final energy consumption. The Ignalina nuclear power plant was shut down at the very end of 2009, forcing the country to boost electricity imports, but domestic clean power generation is rising fast. Biomass provides 80% of district heat, onshore wind is growing, and the country’s unique net metering system is driving fast growth in clean distributed energy. 

Despite the decoupling of emissions from economic growth, Lithuania’s total energy-related CO2 emissions have increased 9% since 2000, notably from transport, which accounts for the lion’s share of the country’s emissions. To meet its targets, Lithuania needs to reverse that trend, but even stronger efforts will be needed for it to contribute to global efforts to reach climate neutrality. According to the IEA review, these should start with tighter integration of energy and climate decision making and with the engagement of society at large to implement the government’s plans. Progress must be monitored and targets continuously updated, in line with Lithuania’s commitment to climate neutrality and EU emissions reductions targets.

“Lithuania needs to boost investments in clean energy technologies to enhance both its energy security and the competitiveness of its industries,” said Fatih Birol, the IEA Executive Director, who is launching the report today with Lithuania’s Minister of Energy Dainius Kreivys. “Hydrogen, offshore wind and batteries can be real game-changers in the context of Lithuania’s clean energy transition. I welcome the efforts by the Ministry of Energy to facilitate these innovations and look forward to the country joining the IEA as a full member.”

Energy efficiency progress has slowed down in Lithuania, as in many IEA countries. Energy consumption is rising in contrast with the government’s aim of reducing it by 60% by 2050. The IEA review finds that energy efficiency must be made a top priority. More stringent energy performance standards and energy taxation reform can slow the increase in energy consumption and reduce emissions. The recently adopted long-term renovation strategy is a welcome step forwards, as is the promotion of e-mobility, electrification, biofuels and related infrastructure under the new Alternative Fuels Law.

Lithuania targets 100% of electricity from renewables by 2050, which will require electricity systems and markets to accommodate very high shares of variable renewable energy, notably onshore and offshore wind. In the policy review, the IEA urges the government to adopt a forward-looking renewable energy strategy with a focus on flexibility and sustainability in order to help attract investment. It also needs to define the opportunities that Lithuania’s vast forest resources provide as a carbon sink and as a driver of the region’s bio-economy and biomass trade.

As the Lithuanian economy recovers from the 2020 economic crisis, a rebound in emissions is anticipated, notably in buildings, industry and transport. Policies for these sectors will play a critical role in scaling up private and public investments and allowing the private sector to eventually take over. The IEA recommends an auctioning system for clean energy technologies such as renewables, hydrogen, and energy storage.

Lithuania has consistently emphasised energy security in its energy strategy and regional engagement. Lithuania’s future accession to the IEA can further strengthen the country’s energy security, including for oil, gas and electricity. A Baltic gas market is emerging, connecting infrastructures and countries in the region. The IEA review encourages Lithuania to swiftly complete the gas interconnection to Poland to join the wider regional gas market.

In 2010, Lithuania became a net importer of electricity. By 2030, the government aims to reverse import dependency and produce 70% of its electricity needs domestically. Regional supply security has become a top priority, as the Baltic states ceased electricity imports from Belarus in 2020 and are targeting the full synchronization of their power systems with that of Continental Europe by 2025. The IEA review offers insights into how to strengthen electricity security as the system becomes more exposed to extreme weather events and cyber security threats.

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Sweden: Invest in skills and the digital economy to bolster the recovery from COVID-19

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Sweden’s economy is on the road to recovery from the shock of the COVID-19 crisis, yet risks remain. Moving ahead with a labour reform to facilitate adaptation in a fast-changing economic environment, and investing in digital skills and infrastructure, will be crucial to revive employment and build a sustainable recovery, according to the latest OECD Economic Survey of Sweden.

The pandemic triggered a severe recession in Sweden, despite mild distancing measures and swift government action to protect people and businesses. GDP fell by less than in many other European economies in 2020, thanks to reinforced short-time work, compensation to firms for lost revenue and measures to prop up the financial system, but unemployment still rose sharply. Solid public finances provided room for further stimulus in 2021 to buttress the recovery.

 The Survey recommends maintaining targeted support to people and firms until the pandemic subsides, then focusing on strengthening vocational training and skills and increasing investment in areas like high-speed internet and low-carbon transport. Addressing regional inequality, which is low but rising, should also be a priority as the recovery takes hold.

 The Survey shows that Sweden has been among the most resilient OECD countries in the face of a historic shock. Yet, like other economies, it faces challenges from demographic changes and the shift to green, digital economies. Investments in education and training, and labour reforms along the lines negotiated by the social partners, will support job creation and strengthen economic resilience. Building on Sweden’s leadership in digital innovation and diffusion will also be key for driving productivity.

 After a 3% contraction in 2020, interrupting several years of growth, the Survey projects a rebound in activity with 3.9% growth in 2021 and 3.4% in 2022 as industrial production resumes and exports recover. The recovery in world trade is bolstering the Swedish economy, however the country remains vulnerable to potential disruptions in global value chains.  

The pandemic has aggravated a mismatch in Sweden’s job market, with unfilled vacancies for highly qualified workers coinciding with high unemployment for low-skilled workers and immigrants. The public employment service needs strengthening to provide better support to jobseekers, including immigrants and women, and labour policies should strike the right balance between supporting businesses and workers and supporting transitions away from declining businesses towards growing sectors.

A rising share of youths and older people in the population, especially in remote areas, is affecting the finances of local governments, which provide the bulk of welfare services. Strengthening local government budgets and ensuring equal welfare provision across the country will require providing tax income to poorer regions more efficiently and raising the economic growth potential across regions through investments in innovation. Improving coordination between government entities and reinforcing the role of universities in local economic networks would help achieve that aim.

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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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