In an unprecedented year for the oil and gas industry, oil production declined by 8% in 2020, while global gas flaring reduced by 5%, according to satellite data compiled by the World Bank’s Global Gas Flaring Reduction Partnership (GGFR). Oil production dropped from 82 million barrels per day (b/d) in 2019 to 76 million b/d in 2020, as global gas flaring reduced from 150 billion cubic meters (bcm) in 2019 to 142 bcm in 2020. Nonetheless, the world still flared enough gas to power sub-Saharan Africa. The United States accounted for 70% of the global decline, with gas flaring falling by 32% from 2019 to 2020, due to an 8% drop in oil production, combined with new infrastructure to use gas that would otherwise be flared.
Gas flaring satellite data from 2020 reveals that Russia, Iraq, Iran, the United States, Algeria, Venezuela and Nigeria remain the top seven gas flaring countries for nine years running, since the first satellite was launched in 2012. These seven countries produce 40% of the world’s oil each year, but account for roughly two-thirds (65%) of global gas flaring. This trend is indicative of ongoing, though differing, challenges facing these countries. For example, the United States has thousands of individual flare sites, difficult to connect to a market, while a few high flaring oil fields in East Siberia in the Russian Federation are extremely remote, lacking the infrastructure to capture and transport the associated gas.
Gas flaring, the burning of natural gas associated with oil extraction, takes place due to a range of issues, from market and economic constraints, to a lack of appropriate regulation and political will. The practice results in a range of pollutants released into the atmosphere, including carbon dioxide, methane and black carbon (soot). The methane emissions from gas flaring contribute significantly to global warming in the short to medium term, because methane is over 80 times more powerful than carbon dioxide on a 20-year basis.
“In the wake of the COVID-19 pandemic, oil-dependent developing countries are feeling the pinch, with constrained revenues and budgets. But with gas flaring still releasing over 400 million tons of carbon dioxide equivalent emissions each year, now is the time for action. We must forge ahead with plans to dramatically reduce the direct emissions of the oil and gas sector, including from gas flaring,” said Demetrios Papathanasiou, Global Director for the Energy and Extractives Global Practice at the World Bank.
The World Bank’s GGFR is a trust fund and partnership of governments, oil companies, and multilateral organizations working to end routine gas flaring at oil production sites around the world. GGFR, in partnership with the U.S. National Oceanic and Atmospheric Administration (NOAA) and the Colorado School of Mines, has developed global gas flaring estimates based upon observations from two satellites, launched in 2012 and 2017. The advanced sensors of these satellites detect the heat emitted by gas flares as infrared emissions at global upstream oil and gas facilities.
“Awareness of gas flaring as a critical climate and resource management issue is greater than ever before. Almost 80 governments and oil companies have committed to Zero Routine Flaring within the next decade and some are also joining our global partnership, which is a very positive development. Gas flaring reduction projects require significant investment and take several years to produce results. In the lead-up to the next UN Climate Change conference in Glasgow, we continue to call upon oil-producing country governments and companies to place gas flaring reduction at the center of their climate action plans. To save the world from millions of tons of emissions a year, this 160-year-old industry practice must now come to an end.” said Zubin Bamji, Program Manager of the World Bank’s GGFR Partnership Trust Fund.
Korea shares experience of electric vehicles and renewable energy with Thailand
The United Nations Industrial Development Organization (UNIDO) is supporting South-East Asian countries in combatting climate change through policy consultation and capacity building in the areas of renewable energy and energy efficiency.
At an event organized in cooperation with the Korea Energy Agency (KEA) and Thailand’s Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy, Stein Hansen, UNIDO Regional Director and Representative of UNIDO Regional Office Hub in Thailand, highlighted the UNIDO project’s study on electric vehicle promotion in Thailand and the impact on the biofuel industry throughout the supply chain, and a road map to achieve 100% renewable energy use by industrial sector.
Prasert Sinsukprasert, the Director General of DEDE, spoke about Thailand’s 20-year National Strategy plan and said the DEDE is delighted to partner with the project to come up with the draft policy of electric vehicles and roadmap to 100% renewable energy in Thai industry.
In a presentation on the current status and policies of electric vehicle distribution in the Republic of Korea, Minkoo Park remarked that in Korea the authorities provide incentives in the form of discounts on highway and parking charges and financial support for people purchasing electric vehicles. Hyein Jin provided information about Korea’s 2050 Carbon Neutrality Strategy.
All speakers agreed that the eco-friendly energy is challenging both in electric vehicles and renewable energy but that it is worth it to achieve sustainable growth.
It’s time to make clean energy investment in emerging economies a top global priority
The world’s energy and climate future increasingly hinges on whether emerging and developing economies are able to successfully transition to cleaner energy systems, calling for a step change in global efforts to mobilise and channel the massive surge in investment that is required, according to a new report by the International Energy Agency.
The special report – carried out in collaboration with the World Bank and the World Economic Forum – sets out a series of actions to enable these countries to overcome the major hurdles they face in attracting the financing to build the clean, modern and resilient energy systems that can power their growing economies for decades to come.
Annual clean energy investment in emerging and developing economies needs to increase by more than seven times – from less than USD 150 billion last year to over $1 trillion by 2030 to put the world on track to reach net-zero emissions by 2050, according to the report, Financing Clean Energy Transitions in Emerging and Developing Economies. Unless much stronger action is taken, energy-related carbon dioxide emissions from these economies – which are mostly in Asia, Africa and Latin America – are set to grow by 5 billion tonnes over the next two decades.
“In many emerging and developing economies, emissions are heading upwards while clean energy investments are faltering, creating a dangerous fault line in global efforts to reach climate and sustainable energy goals,’’ said Fatih Birol, the IEA Executive Director. “Countries are not starting on this journey from the same place – many do not have access to the funds they need to rapidly transition to a healthier and more prosperous energy future – and the damaging effects of the Covid-19 crisis are lasting longer in many parts of the developing world.”
“There is no shortage of money worldwide, but it is not finding its way to the countries, sectors and projects where it is most needed,” Dr Birol said. “Governments need to give international public finance institutions a strong strategic mandate to finance clean energy transitions in the developing world.”
Recent trends in clean energy spending point to a widening gap between advanced economies and the developing world even though emissions reductions are far more cost-effective in the latter. Emerging and developing economies currently account for two-thirds of the world’s population, but only one-fifth of global investment in clean energy, and one-tenth of global financial wealth. Annual investments across all parts of the energy sector in emerging and developing markets have fallen by around 20% since 2016, and they face debt and equity costs that are up to seven times higher than in the United States or Europe.
Avoiding a tonne of CO2 emissions in emerging and developing economies costs about half as much on average as in advanced economies, according to the report. That is partly because developing economies can often jump straight to cleaner and more efficient technologies without having to phase out or refit polluting energy projects that are already underway.
But emerging market and developing economies seeking to increase clean energy investment face a range of difficulties, which can undermine risk-adjusted returns for investors and the availability of bankable projects. Challenges involve the availability of commercial arrangements that support predictable revenues for capital-intensive investments, the creditworthiness of counterparties and the availability of enabling infrastructure, among other project-level factors. Broader issues, including depleted public finances, currency instability and weaknesses in local banking and capital markets also raise challenges to attracting investment.
“A major catalyst is needed to make the 2020s the decade of transformative clean energy investment,” said Dr Birol. “The international system lacks a clear and unified focus on financing emissions reductions and clean energy – particularly in emerging and developing economies. Today’s strategies, capabilities and funding levels are well short of where they need to be. Our report is a global call to action – especially for those who have the wealth, resources and expertise to make a difference – and offers priority actions that can be taken now to move things forward fast.”
These priority actions – for governments, financial institutions, investors and companies – cover the period between now and 2030, drawing on detailed analysis of successful projects and initiatives across clean power, efficiency and electrification, as well as transitions for fuels and emissions-intensive sectors. These include almost 50 real-world case studies across different sectors in countries ranging from Brazil to Indonesia, and from Senegal to Bangladesh.
“As we expand energy access, we also need a global transition to low-carbon energy. It is critical to develop solutions that make energy systems more resilient to climate change and other crises. With the right policies and investments, countries can achieve lasting economic growth and poverty reduction without degrading the environment or aggravating inequality. The broader financial sector can and must play a key role in achieving the goals of the Paris Agreement by mobilizing capital for green and low-carbon investments, while managing climate risks. The World Bank will continue to support countries that seek assistance to transition away from fossil fuels and scale up low-carbon, renewable energy, and energy efficiency investments,” said Demetrios Papathanasiou, the World Bank Global Director for Energy and Extractives.
“The need to scale clean energy in emerging economies offers a massive investment opportunity. This report shows that current challenges to get this capital to the right places can be overcome through a combination of smart policies, financial innovation, as well as bold collective action. The World Economic Forum is committed to enabling multistakeholder cooperation to accelerate progress in this important area, said Børge Brende, President of the World Economic Forum.
The report calls for a focus on channelling and facilitating investment into sectors where clean technologies are market-ready, especially in the areas of renewables and energy efficiency, but also laying the groundwork for scaling up low-carbon fuels and industrial infrastructure needed to decarbonise rapidly growing and urbanising economies. It also calls for strengthening sustainable finance frameworks, addressing barriers on foreign investment, easing procedures for licensing and land acquisition, and rolling back policies that distort local energy markets.
The report underscores that clean energy investments and activities can bring substantial economic opportunities and jobs in industries that are expected to flourish in the coming decades as energy transitions accelerate worldwide. It calls for clean energy transitions to be people‐centred and inclusive, including actions that build equitable and sustainable models for universal access to modern energy. Spending on more efficient appliances, electric vehicles, and energy‐efficient buildings can provide further employment opportunities, and can especially support the role of women and female entrepreneurs in driving change and improved gender equality.
IEA welcomes G7 Leaders’ commitment to reach net zero by 2050
IEA Executive Director Fatih Birol congratulated the leaders of the Group of Seven (G7) nations for their landmark Summit at which they committed to reaching net-zero emissions by 2050 and made a series of other significant energy and climate pledges.
G7 leaders concluded the closely watched Summit on Sunday, issuing a communiqué in which they set out their net zero commitments and called on all countries, in particular major emitting economies, “to join us in these goals as part of a global effort.” In this context, the leaders noted the IEA’s “clear roadmap” for achieving net zero globally by 2050.
“I’m very proud to see recognition of the IEA’s comprehensive Roadmap for the global energy sector to reach this critical and formidable goal,” said Dr Birol. “The IEA looks forward to helping governments design and implement the strong policy actions that are needed to move the world onto a narrow yet achievable pathway to net zero by 2050. In the lead-up to COP26 in November, I look forward to seeing additional firm commitments to improve and increase clean energy financing for developing economies.”
The communiqué said that G7 leaders had committed to aligning official international financing with the global achievement of net zero greenhouse gas emissions no later than 2050 and for deep emissions reductions in the 2020s.
The IEA’s Roadmap to Net Zero by 2050 was released on 18 May. It is the world’s first comprehensive study of how to transition to a net zero energy system globally by 2050 while ensuring stable and affordable energy supplies, providing universal energy access, and enabling robust economic growth. In the pathway laid out in the IEA Roadmap, strong and credible policy actions by governments around the world drive a historic surge in clean energy investment and deployment, thereby reducing demand for fossil fuels, creating millions of new jobs and lifting global economic growth.
The G7 countries are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Leaders of the countries have gathered together annually since the 1970s, alongside the heads of the European Union. This year’s Summit was hosted by the United Kingdom.
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