Some economies are starting to see dividends from the hundreds of billions of dollars flowing each year into clean energy around the world – but progress is uneven, with richer countries reaping most of the benefits and poorer ones held back, the United Nations’ climate chief said on Tuesday.
Simon Stiell told investors at an event in New York that the efforts of many developing countries to adopt more renewables like solar and wind power “are hamstrung by sky-high costs of capital… or mired in spiralling debt crises”.
Because the “mega-trend” in clean energy is occurring unevenly, most investors are missing out on “gigantic, unrealised opportunities” outside of wealthy countries, he added, warning that this also poses a major threat to global action to curb climate change and avoid its worst impacts.
“I’ll be blunt: if more developing economies don’t see much more of this growing deluge of climate investment, we will quickly entrench a dangerous two-speed global transition,” Stiell said.
UN climate chief calls for “exponential changes” to boost investment in Africa
Such an imbalance is both “unacceptable” and “self-defeating” for all economies, he emphasised. It would make halving global emissions by 2030 to keep warming in check “near impossible”, he explained, as well as causing havoc in international supply chains as extreme weather bites.
The disruptions experienced by businesses during the COVID19 pandemic “will seem like a minor hiccup compared to what an unchecked climate crisis will inflict” in an interdependent world economy, Stiell warned. “If a two-speed global transition sets in, ultimately everyone loses, and loses badly,” he added.
IEA weighs in
A report issued on Tuesday by the International Energy Agency (IEA), showing how to meet the energy transition goals agreed at last year’s COP28 climate summit, noted that advanced economies and China account for more than four out of every five dollars invested in clean energy since the Paris Agreement was signed in late 2015.
The IEA called for stronger and more stable policies to attract private investment in clean energy in other regions, together with larger, better-targeted international support spurred partly by a new climate finance goal due to be agreed at COP29 this November.
The agency also pointed out that, although governments are worried about how to make the energy transition socially acceptable, globally they are still spending nine times more making fossil fuels cheaper than on subsidising clean energy for consumers.
COP29 aims to boost battery storage and grids for renewables, as pledges proliferate
The report said that the COP28 goal of tripling global renewable energy capacity by 2030 is within reach – but meeting it will not automatically mean that more renewable electricity will clean up power systems, lower costs for consumers and slash fossil fuel use.
Achieving those aims will require complementary efforts to enable clean electrification – including building and modernising 25 million kilometres of electricity grids by 2030 and adding 1,500 gigawatts (GW) of energy storage capacity by that year, largely with batteries.
Fast-tracking a green future
With businesses and financiers gathered in New York for the annual Climate Week NYC, alongside leaders attending the United Nations General Assembly (UNGA), international agencies and green groups emphasised the need for concerted action by the public and private sectors to put internationally agreed energy targets into practice.
Fatih Birol, the IEA’s executive director, said the goals set at COP28 could put the global energy sector “on a fast track towards a more secure, affordable and sustainable future”. “To ensure the world doesn’t miss this huge opportunity, the focus must shift rapidly to implementation,” he added.
Other organisations also outlined key ways to make this happen. Mission 2025 – a coalition of businesses, sub-national governments and researchers, among others – appealed to governments to set “investment-positive policies” that can provide confidence to mobilise large-scale finance for the energy transition.
Using data from the Energy Transitions Commission, an international think-tank, Mission 2025 identified three such policies that have already worked in industralised countries and some large developing economies to help boost finance for renewables and electric vehicles.
It recommended fixing gigawatt targets for renewable energy deployment at the national level as the UK and India have done for example; derisking investment in renewable energy – by offering support such as competitive long-term contracts or tax credits – as in Europe, the India, China and the United States; and setting a date of 2035 or earlier to end sales of petrol and diesel passenger vehicles, as the European Union has done.
Global push to triple renewables requires responsible mining of minerals
Mission 2025 said these policies should be extended to other places, and could roughly double today’s investment in clean power and electric vehicles to $1 trillion of the $3.5 trillion needed annually for the energy sector to play its part in limiting warming to 1.5C.
Mike Hemsley, deputy director of the Energy Transitions Commission, told Climate Home these policies are as cheap as their fossil fuel equivalents, so there is no net cost to countries from implementing them as part of the updated national climate plans governments are now preparing – including for lower-income and emerging economies.
“We hope that this can give them some confidence to say if we set ambitious policy, we can attract private investment, realise some of our own goals and not necessarily cost ourselves anything – all for the good of the climate,” he said, adding that strong policies can also help lower investment risk in developing countries.
Renewables cheaper than fossil fuels
Research released on Tuesday by the International Renewable Energy Agency (IRENA) at the Global Renewables Summit during UNGA showed that with renewable power capacity additions setting a record of 473 gigawatts in 2023, four-fifths of newly commissioned, utility-scale renewable projects had lower costs than their fossil fuel-fired alternatives.
Power from solar photovoltaic (PV) panels, it found, has seen its cost plummet to around $0.04 per kilowatt hour in just one year, making it 56% cheaper than fossil fuel and nuclear options in 2023. Overall, the renewable power deployed globally since 2000 has saved up to $409 billion in fuel costs in the power sector, IRENA added.
“Thanks to low-cost renewables in the global market, policy makers have an immediate solution at hand to reduce fossil fuels dependency, limit the economic and social damage of carbon-intensive energy use, drive economic development and harness energy security benefits,” IRENA’s Director-General Francesco La Camera said in a statement.
(Reporting by Megan Rowling, editing by Joe Lo)
The post UN climate chief warns of “two-speed” global energy transition appeared first on Climate Home News.
UN climate chief warns of “two-speed” global energy transition
Casting doubt on the determination that greenhouse gas emissions endanger public health and welfare, he said, “we’re not accepting all of the narrative of the left without any question or pushback.”
WASHINGTON—Addressing a conference of scientists and other experts skeptical of climate change, Environmental Protection Agency Administrator Lee Zeldin on Wednesday celebrated his decision to repeal what is known as the “endangerment finding,” which provided the backbone for federal regulation of greenhouse gas emissions.
Zeldin Celebrates Endangerment Finding Repeal With Climate Skeptics
With the U.S. bombing Iran and the Strait of Hormuz closed, energy experts say countries transitioning to renewables will be more resilient in the “face of the shock.”
The United States’ war on Iran could fundamentally alter how countries consume and generate energy and hamper international progress in combating climate change, a panel of energy experts said today.
The Global Energy Supply in a Decade ‘Is Not a World We’re Going to Recognize’
One month into the US and Israel’s war on Iran, at least 60 countries have taken emergency measures in response to the subsequent global energy crisis, according to analysis by Carbon Brief.
So far, these countries have announced nearly 200 policies to save fuel, support consumers and boost domestic energy supplies.
Carbon Brief has drawn on tracking by the International Energy Agency (IEA) and other sources to assess the global policy response, just as a temporary ceasefire is declared.
Since the start of the war in late February, both sides have bombed vital energy infrastructure across the region as Iran has blocked the Strait of Hormuz – a key waterway through which around a fifth of global oil and liquified natural gas (LNG) trade passes.
This has made it impossible to export the usual volumes of fossil fuels from the region and, as a result, sent prices soaring.
Around 30 nations, from Norway to Zambia, have cut fuel taxes to help people struggling with rising costs, making this by far the most common domestic policy response to the crisis.
Some countries have stressed the need to boost domestic renewable-energy construction, while others – including Japan, Italy and South Korea – have opted to lean more on coal, at least in the short term.
The most wide-ranging responses have been in Asia, where countries that rely heavily on fossil fuels from the Middle East have implemented driving bans, fuel rationing and school closures in order to reduce demand.
‘Largest disruption’
On 28 February, the US and Israel launched a surprise attack on Iran, triggering conflict across the Middle East and sending shockwaves around the world.
There have been numerous assaults on energy infrastructure, including an Iranian attack on the world’s largest LNG facility in Qatar and an Israeli bombing of Iran’s gas sites.
Iran’s blockade of the Strait of Hormuz, a chokepoint in the Persian Gulf, is causing what the IEA has called the “largest supply disruption in the history of the global oil market”.
A fifth of the world’s oil and LNG is normally shipped through this region, with 90% of those supplies going to destinations in Asia. Without these supplies, fuel prices have surged.
Governments around the world have taken emergency actions in response to this new energy crisis, shielding their citizens from price spikes, conserving energy where possible and considering longer-term energy policies.
Even with a two-week ceasefire announced, the energy crisis is expected to continue, given the extensive damage to infrastructure and continuing uncertainties.
Asian crunch
Carbon Brief has used tracking by the IEA, news reports, government announcements and internal monitoring by the thinktank E3G to assess the range of national responses to the energy crisis roughly one month into the Iran war.
In total, Carbon Brief has identified 185 relevant policies, announcements and campaigns from 60 national governments.
As the map below shows, these measures are concentrated in east and south Asia. These regions are facing the most extreme disruption, largely due to their reliance on oil and gas supplies from the Middle East.
Nations including Indonesia, Japan, South Korea and India are already spending billions of dollars on fuel subsidies to protect people from rising costs.
At least 16 Asian countries are also taking drastic measures to reduce fuel consumption. For example, the Philippines has declared a “state of national emergency”, which includes limiting air conditioning in public buildings and subsidising public transport.
Other examples from the region include the government in Bangladesh asking the public and businesses to avoid unnecessary lighting, Pakistan reducing the speed limit on highways and Laos encouraging people to work from home.
Europe – which was hit hard by the 2022 energy crisis due to its reliance on Russian gas – is less immediately exposed to the current crisis than Asia. However, many nations are still heavily reliant on gas, including supplies from Qatar.
The continent is already feeling the effects of higher global energy prices as countries compete for more limited resources.
At least 18 European nations have introduced measures to help people with rising costs. Spain, which is relatively insulated from the crisis due to the high share of renewables in its electricity supply, nevertheless announced a €5bn aid package, with at least six measures to support consumers.
Many African countries, while also less reliant on direct fossil-fuel supplies via the Strait of Hormuz than Asia, are still facing the strain of higher import bills. Some, including Ethiopia, Kenya and Zambia, are also facing severe fuel shortages.
There have been fewer new policies across the Americas, which have been comparatively insulated from the energy crisis so far. One outlier is Chile, which is among the region’s biggest fuel importers and is, therefore, more exposed to global price increases.
Tax cuts
The most common types of policy response to the energy crisis so far have been efforts to protect people and businesses from the surge in fuel prices.
At least 28 nations, including Italy, Brazil and Australia, have introduced a total of 31 measures to cut taxes – and, therefore, prices – on fuel.
Even across Africa, where state revenues are already stretched, some nations – including Namibia and South Africa – are cutting fuel levies in a bid to stabilise prices.
Another 17 countries, including Mexico and Poland, have directly capped the price of fuel. Others, such as France and the UK, have opted for more targeted fuel subsidies, designed to support specific vulnerable groups and industries.
These measures are all shown in the dark blue “consumer support” bars in the chart below.
Such measures can directly help consumers, but some leaders, NGOs and financial experts have noted that there is also the risk of them driving inflation and reinforcing reliance on the existing fossil fuel-based system.
Christine Lagarde, president of the European Central Bank, spoke in favour of short-term measures to “smooth the shock”, but noted that “broad-based and open-ended measures may add excessively to demand”.
Measures to conserve energy, of the type that many developing countries in Asia have implemented extensively, have been described by the IEA as “more effective and fiscally sustainable than broad-based subsidies”.
So far, there have been at least 23 such measures introduced to limit the use of transport, particularly private cars.
These include Lithuania cutting train fares, two Australian states making public transport free and Myanmar and South Korea asking people to only drive their cars on certain days.
Clean vs coal
At least eight countries have announced plans to either increase their use of coal or review existing plans to transition away from coal, according to Carbon Brief’s analysis. These include Japan, South Korea, Bangladesh, the Philippines, Thailand, Pakistan, Germany and Italy.
These measures broadly involve delaying coal-plant closure, as in Italy, or allowing older sites to operate at higher rates, as in Japan – rather than building more coal plants.
There has been extensive coverage of how the energy crisis is “driving Asia back to coal”. However, as Bloomberg columnist David Fickling has noted, this shift is relatively small and likely to be offset by a move to cheap solar power in the longer term.
Indeed, some countries have begun to consider changes to the way they use energy going forward, amid a crisis driven by the spiralling costs of fossil-fuel imports.
Leaders in India, Barbados and the UK have explicitly stressed the importance of a structural shift to using clean power. Governments in France and the Philippines are among those linking new renewable-energy announcements with the unfolding crisis.
New renewable-energy capacity will take time to come online, albeit substantially less time than developing new fossil-fuel generation. In the meantime, some nations are also taking short-term measures to make their road transport less reliant on fossil fuels.
For example, the Chilean government has enabled taxi drivers to access preferential credit for purchasing electric vehicles (EVs). Cambodia has cut import taxes on EVs and Laos has lowered excise taxes on them.
Finally, there have been some signs that countries are reconsidering their future exposure to imported fossil fuels, given the current economics of oil and gas.
The New Zealand government has indicated that a plan to build a new LNG terminal by 2027 now faces uncertainty. Reuters reported that Vietnamese conglomerate Vingroup has told the government it wanted to abandon a plan to build a new LNG-fired power plant in Vietnam, in favour of renewables.
The post Iran war analysis: How 60 nations have responded to the global energy crisis appeared first on Carbon Brief.
Iran war analysis: How 60 nations have responded to the global energy crisis
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