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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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Iraq: The Slippery Road to Economic Recovery

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Iraq’s economic outlook has improved on the back of the recovery of global oil markets, with its GDP projected to grow from 2.6% in 2021 to over 6% in 2022–23. Nevertheless, without accelerated economic reform, unforeseen domestic and fiscal risks could cause reverses.

The World Bank’s new Iraq Economic Monitor titled “The Slippery Road to Economic Recovery” finds the country’s economic rebound partly aided by government moves to act on previously recommended reforms. Public transfers, as well as schemes aimed at increasing credit to businesses, had a small stimulus effect, leading to GDP growth of 0.9% in the first half of 2021, in contrast to a 16% contraction a year earlier. 

Higher oil prices turned a fiscal balance of 2.2% in GDP surplus, boosting central bank reserves to almost US$55 billion (15 months of imports) in the first half of 2021. Recovery was to some extent curtailed by severe water shortages and widespread electricity cuts following historically low rainfall, impacting the agricultural and industrial sectors. Healthcare services also deteriorated amid a growing number of cases of COVID-19’s Delta variant.

GDP from oil, still the main driver of medium-term growth in Iraq, is expected to rise in step with the gradual phase-out of OPEC+ production quotas, while non-oil GDP growth is forecast to remain under 3% in 2021–2023. Upstream risks could include oil shocks, droughts, and new COVID-19 variants. Potential problems could arise from fiscal and other risks, such as growing budget rigidities, the low clearance of arrears and the large exposure of state-owned banks and the central bank to sovereign debt, and the effect of public investment management constraints on public services. Progress on regional economic integration and security, however, could provide new momentum for growth and diversification. 

Of key importance to Iraq is dealing with water scarcity and the degradation of water quality in its rivers and groundwater. The new Economic Monitor’s special focus titled “Overcoming Water Scarcity and Climate Change Impacts,” calls for dramatic sector reforms to capture opportunities and manage risks. A fall of 20% in Iraq’s water supply and the related declining crop yields that could accompany climate change, could reduce real GDP in Iraq by up to 4%, or US$6.6 billion.

Investing in climate smart water management practices provides a concrete opportunity to spur inclusive and green economic growth and development,” said Saroj Kumar Jha, World Bank Mashreq Regional Director. “Without action, water constraints will lead to large losses across multiple sectors of the economy and come to affect more and more vulnerable people.

Iraq’s water sector relies on highly centralized institutional architecture that creates coordination issues in resource management and service delivery. The sector suffers from a lack of financing (given existing constraints) as well as weak private sector participation and limited revenues from users. The Monitor identifies areas where reforms could improve Iraq’s resilience to water scarcity and climate change—efficiency, productivity, and demand management policies; institutional solutions; and regional solutions.

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Smart, sustainable maritime transport critical to global recovery

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Although the COVID-19 pandemic’s impact on maritime trade last year was less severe than expected, the knock-on effects will be far reaching and could transform the sector, the UN trade and development body, UNCTAD, said in its latest report, published on Thursday. 

Maritime trade contracted by 3.8 per cent in 2020, but later rebounded, and is estimated to increase by 4.3 per cent this year, according to the report. 

UNCTAD’s Review of Maritime Transport 2021 reveals the outlook for the medium term remains positive but subject to “mounting risks and uncertainties”, such as unprecedented pressures on global supply chains, dramatic spikes in freight rates, and price increases affecting both consumers and importers. 

Vaccine roll-out critical 

The agency said global socioeconomic recovery will depend on smart, resilient and sustainable maritime transport, and a worldwide COVID-19 vaccination effort that sees developing countries having fairer access to doses. 

“A lasting recovery will depend on the path of the pandemic and largely hinges on being able to mitigate the headwinds and on a worldwide vaccine roll-out,” said Rebeca Grynspan, the UNCTAD Secretary-General . 

“The impacts of the COVID-19 crisis will hit small island developing States (SIDS) and least developed countries (LDCs) the hardest,” she added. 

As UN chief António Guterres has repeatedly pointed out, COVID-19 has laid bare numerous social inequalities.   

Existing challenges exposed 

UNCTAD said the pandemic has also exposed and magnified existing challenges in the maritime transport industry, particularly labour shortages and infrastructure needs. 

The agency has called for urgent action to resolve the plight of hundreds of thousands of seafarers who remain stranded at sea due to the pandemic, as lockdowns, border closures and a lack of international flights have affected crew replacements and repatriations. 

The report said industry, Governments and international organizations must ensure seafarers are designated as key workers and vaccinated as a matter of priority. 

The report examines factors that are driving consumer prices higher. 

Logistical challenges, soaring rates 

The rebound in maritime trade has been marked by “pandemic-induced logistical challenges”, such as shortages of equipment and containers, less reliable services, and congested ports.  The resulting supply chain bottlenecks have hindered economic recovery. 

Challenges also exist on the supply side. Although orders for new container ships dropped by 16 per cent last year, continuing a previous downward trend, shipping companies have increased orders for new vessels this year amid the current capacity limitations. 

Shipping lines have benefitted from soaring freight rates, the report said. 

Surcharges, fees and rates temporarily rose even higher following the grounding of the Ever Given, the huge container ship that blocked the Suez Canal this past March, disrupting global trade. 

UNCTAD warned that import and consumer prices will “significantly increase” if the surge in container freight rates continues.  

Monitor market behaviour  

Its analysis showed that global import price levels will increase on average by 11 per cent, and up to 24 per cent for SIDS, which primarily depend on maritime transport for imports. 

If the situation continues, consumer prices could be 1.5 per cent higher in 2023.  The rise is expected to be 7.5 per cent in SIDS, and 2.2 per cent in LDCs. 

UNCTAD highlighted the need to monitor market behaviour and ensure transparency when it comes to setting rates, fees and surcharges. 

The report also examines how the pandemic has accelerated “megatrends” that could transform maritime transport, such as digitalization and automation, which should lead to efficiency and cost savings. 

Build climate resilience 

The shipping industry is also coming to grips with climate adaptation and resilience, though the urgent need to decarbonize and find alternative fuels to reduce emissions will come at a cost. 

“By exposing the vulnerabilities of existing supply chains, the COVID-19 disruption has sharpened the need to build resilience and revived the debate over globalization and the supply chains of the future,” said Shamika N. Sirimanne, UNCTAD’s director of technology and logistics. 

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Speeding, Driving Under the Influence of Alcohol Common Among Drivers in Vientiane

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Almost three-quarters of drivers in Vientiane routinely break speed limits and nearly a third of evening motorists have been drinking alcohol, new research on the country’s growing road crash problem shows.

Motorcycle helmet use is limited, while risk-taking behavior among drivers is prevalent, according to surveys conducted by the Department of Transport and the Traffic Police Department, with technical and financial support from the World Bank. The research, which is supplemented by testimonies from road accident survivors, comes amid rising accidents and fatalities. The work is expected to help implementation of the government’s Road Safety Action Plan, which has recently been drafted and is now being reviewed.

Road safety is a major public health issue, just like the eradication of dengue or malaria,” saidAlex Kremer, World Bank Country Manager for Lao PDR. “The hard data on driver behavior and accidents unfortunately confirm the tragic personal experiences of thousands of Lao people, and obviously it will take leadership, commitment, time, and sustained effort to make our roads safe.

Over a thousand people are killed on the roads in Laos each year, with many more suffering physical injuries and trauma after crashes. The number and severity of crashes has been increasing: total annual crashes rose by 35% between 2010 and 2020, while the number of fatalities increased by 67%. Road accidents and deaths have continued to increase in recent months despite many provinces being under lockdown due to COVID-19, according to the Traffic Police Department.

The accounts of crash survivors collected by the Department of Transport and a World Bank team are testimony to the severe impact of accidents on personal health and family finances. Survivors express a desire for greater focus on road safety, and enforcement of traffic rules such as control of speeding, drunk-driving, and helmet use.

Roadside surveys found that 73% of vehicles at selected intersections in Vientiane Capital were travelling over the speed limit, with younger drivers most likely to be speeding. Approximately one in three drivers tested positive for alcohol, and most of these were more than double the legal alcohol driving limit. Over a six-hour survey period, almost 600 motorbike riders and 500 car drivers were over the alcohol limit. By comparison, only 1,564 drunk-driving offenses were registered by the traffic police nationwide in 2020.

The surveys further documented that only 64% of motorcycle riders were wearing helmets, with females more likely than men to be wearing one. Alarmingly, only 10% of child passengers wore helmets. The surveys also found a significant decline in helmet use over the course of each day, with fewer motorcyclists properly equipped in the evening. In addition, turning without indicating was common, as was running through red traffic lights, especially at night.

The research, carried out with funding support from UK Aid through the World Bank’s Global Road Safety Facility, forms part of the Bank’s commitment to helping Laos improve road safety. Other initiatives supported by the Bank are road safety campaigns for students and communities living along project roads, support for the police on road-safety law enforcement, capacity building on road safety audits, road safety infrastructure assessments, and development of an online database to record crashes nationwide.

Improving road safety is critical to the World Bank’s twin goals of eradicating extreme poverty and increasing shared prosperity. Globally, low- and middle-income countries suffer 90% of road crash deaths and up to 50 million injuries annually. These deaths and injuries frequently lead to economic hardship, and in many cases poverty. Crash deaths and injuries drain human capital and limit economic growth. In Laos, road crashes are the number one cause of death for 5-14-year-olds, the number two cause of death for 15-49-year-olds, and the number one cause of disability for the entire population.

Through the National Road Safety Strategy 2030, the Government of Lao PDR is expressing a commitment to address road safety issues, and its vision is to eliminate fatalities and serious injuries on the roads. A 2030 target of a 50% reduction in fatalities and serious injuries has been set.

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