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IRENA: Tripling renewables investment ‘to reach climate goal’

960 640 Stuart O'Brien

Global renewable energy investment increased between 2013 and 2018, reaching its peak at $351 billion in 2017, according to a new report by the International Renewable Energy Agency (IRENA) and Climate Policy Initiative (CPI).

The 2020 edition of Global Landscape of Renewable Energy Finance highlights however, that while a cumulative $1.8 trillion were invested during the five-year period, the amount falls short to achieve the global climate commitments.

Renewable energy investment slightly declined in 2018, with modest growth through 2019. Although this was largely due to the decreasing costs of renewables, the total installed capacity continued to grow. The current level of investment is still insufficient however to keep the rise in global temperatures within the 1.5°C objective by mid-century. To achieve this climate goal, investment in diverse renewables technologies must almost triple annually to $800 billion by 2050. 

Ambitious commitments from governments are needed, backed by supporting measures such as moving subsidies away from fossil fuels. The report says further investments are also needed in system integration and enabling technologies that increase system flexibility such as batteries and energy storage. To that end, policies that enable the integration of new renewables capacity additions into the energy systems are needed, leading to their decarbonisation and bringing wide socio-economic benefits.

“The investment trend in renewable energy before COVID-19 was a positive one,” said Francesco La Camera, IRENA’s Director-General. “But COVID-19 has shown us that much more effort is urgently needed to put us on a climate compatible pathway and help us recover better with a sustainable, resilient economy. Decision makers must design systemic approaches to policies that encourage and speed up the flow of investment into renewables, and away from fossil fuels, and doing so enable economic growth, social resilience and welfare.” 

IRENA’s post-COVID agenda showed that average annual investments of $2 trillion in renewables and other energy transition-related technologies in the 2021-2023-recovery phase could create 5.5 million additional jobs in the sector. An additional 19 million energy transition-related jobs would be created by 2030, following average annual investments of $4.5 trillion up to 2030. 

The majority of these investments could come from private sources, if government funds are used strategically to nudge investment decisions and financing in the right direction. The capital is available, with a push from the governments to mobilise it.  Public funds are able to leverage private investments by a factor of 3 to 4 if used strategically to steer investments toward clean energy solutions and away from fossil fuels.

Greater participation of institutional investors – which hold about $87 trillion in assets – will help to reach the scale of global investment needed. To this end, it is key to promote the use of capital market solutions, such as green bonds, that address the needs of these investors. The potential role of institutional investors for the global energy transition is further explored in IRENA’s report, Mobilising Institutional Capital for Renewable Energy, published this month.

“There is a very clear need for a rapid increase of investment in renewable energy coupled with a significant reduction and redirection of investment away from fossil fuel energy,” said Dr Barbara Buchner, CPI’s Global Managing Director. “We call for more effort and coordination among policy makers, public and private finance institutions, energy and non-energy producing corporations, and institutional investors to speed up the global energy transition. This action is fundamental to a more sustainable and resilient future.“ 

This year’s joint report analyses for the first time financial commitments to off-grid renewables technologies in developing markets, as they can bring the world closer to achieving Sustainable Development Goal 7 on universal access to affordable, reliable, sustainable and modern energy by 2030. Providing cost-effective energy solutions, off-grid renewables are essential in a time when energy access is crucial to power healthcare facilities, save lives and create jobs. While investments in off-grid renewables solutions kept growing, reaching an all-time-high USD 460 million in 2019, additional capital must be unlocked especially for income-generating activities and productive uses to improve the livelihoods and resilience of billions of women and men globally and to promote socio-economic benefits. 

Looking ahead, IRENA says policy makers need to signal long-term political commitment and enhance partnerships with the private sector to boost investors confidence and attract additional private capital in the sector. To that effect, the report laid out five specific recommendations that policy makers should implement to engage private sector actors, including institutional investors, capital market players and non-energy producing companies, in the collective path to green recovery and climate objectives.

IRENA:Renewable energy can support coronavirus recovery

960 640 Stuart O'Brien

Advancing the renewables-based energy transformation is an opportunity to meet international climate goals while boosting economic growth, creating millions of jobs and improving human welfare by 2050.

That’s according to the first Global Renewables Outlook from the International Renewable Energy Agency (IRENA), which concludes that while a pathway to deeper decarbonisation requires total energy investment up to $130 trillion, the socio-economic gains of such an investment would be ‘massive’.

The report asserts that transforming the energy system could boost cumulative global GDP gains above business-as-usual by $98 trillion between now and 2050. It would nearly quadruple renewable energy jobs to 42 million, expand employment in energy efficiency to 21 million and add 15 million in system flexibility. 

IRENA’s Director-General Francesco La Camera said: “Governments are facing a difficult task of bringing the health emergency under control while introducing major stimulus and recovery measures. The crisis has exposed deeply embedded vulnerabilities of the current system. IRENA’s Outlook shows the ways to build more sustainable, equitable and resilient economies by aligning short-term recovery efforts with the medium-and long-term objectives of the Paris Agreement and the UN Sustainable Development Agenda.” 

“By accelerating renewables and making the energy transition an integral part of the wider recovery, governments can achieve multiple economic and social objectives in the pursuit of a resilient future that leaves nobody behind.”

The Global Renewables Outlook examines building blocks of an energy system along with investment strategies and policy frameworks needed to manage the transition. It explores ways to cut global CO2 emissions by at least 70 per cent by 2050. Furthermore, a new perspective on deeper decarbonisation shows a path towards net-zero and zero emissions. Building on five technology pillars, particularly green hydrogen and extended end-use electrification could help replace fossil-fuels and slash emissions in heavy industry and hard-to-decarbonise sectors. 

Low-carbon investment would significantly pay off, the Outlook shows, with savings eight times more than costs when accounting for reduced health and environmental externalities. A climate-safe path would require cumulative energy investments of $110 trillion by 2050, but achieving full carbon neutrality would add another $20 trillion. 

The Outlook also looked at energy and socio-economic transition paths in 10 regions worldwide. Despite varied paths, all regions are expected to see higher shares of renewable energy use, with Southeast Asia, Latin America, the European Union and Sub-Saharan Africa poised to reach 70-80 per cent shares in their total energy mixes by 2050. Similarly, electrification of end uses like heat and transport would rise everywhere, exceeding 50 per cent in East Asia, North America and much of Europe. All regions would also significantly increase their welfare and witness net job gains in the energy sector despite losses in fossil fuels.

However, economy-wide, regional job gains are distributed unevenly. While regional GDP growth would show considerable variation, most regions could expect gains. 

Raising regional and country-level ambitions will be crucial to meet interlinked energy and climate objectives and harvest socio-economic welfare. Stronger coordination on international, regional and domestic levels will be equally important, the Outlook concludes, with financial support being directed where needed including to the most vulnerable countries and communities. As partner of the Climate Investment Platform, launched to drive clean energy uptake and mobilise clean investment, IRENA will advance collaborative action targeted to help countries create enabling conditions and unlock renewable investment. 

Read the full “Global Renewables Outlook” and key findings here.

Renewable energy now employs 11m people globally

960 640 Stuart O'Brien

Eleven million people were employed in renewable energy in 2018, compared with 10.3 million in 2017, according the International Renewable Energy Agency (IRENA).

The organisation says that until now, renewable energy industries have remained relatively concentrated in a handful of major markets, such as China, the United States and the European Union.

However, East and Southeast Asian countries have emerged alongside China as key exporters of solar photovoltaic (PV) panels. Countries including Malaysia, Thailand and Viet Nam were responsible for a greater share of growth in renewables jobs last year, which allowed Asia to maintain a 60 per cent share of renewable energy jobs worldwide.

“Beyond climate goals, governments are prioritising renewables as a driver of low-carbon economic growth in recognition of the numerous employment opportunities created by the transition to renewables,” said Francesco La Camera, Director-General of IRENA. 

“Renewables deliver on all main pillars of sustainable development – environmental, economic and social. As the global energy transformation gains momentum, this employment dimension reinforces the social aspect of sustainable development and provides yet another reason for countries to commit to renewables.”

Solar photovoltaic (PV) and wind remain the most dynamic of all renewable energy industries. Accounting for one-third of the total renewable energy workflow, solar PV retains the top spot in 2018, ahead of liquid biofuels, hydropower, and wind power.

Geographically, Asia hosts over three million PV jobs, nearly nine-tenths of the global total.

Most of the wind industry’s activity still occurs on land and is responsible for the bulk of the sector’s 1.2 million jobs. China alone accounts for 44 per cent of global wind employment, followed by Germany and the United States. Offshore wind could be an especially attractive option for leveraging domestic capacity and exploiting synergies with the oil and gas industry.

The solar PV industry retains the top spot, with a third of the total renewable energy workforce. In 2018, PV employment expanded in India, Southeast Asia and Brazil, while China, the United States, Japan and the European Union lost jobs.

Rising output pushed biofuel jobs up 6% to 2.1 million. Brazil, Colombia, and Southeast Asia have labour-intensive supply chains where informal work is prominent, whereas operations in the United States and the European Union are far more mechanised.

Employment in wind power supports 1.2 million jobs. Onshore projects predominate, but the offshore segment is gaining traction and could build on expertise and infrastructure in the offshore oil and gas sector.

Hydropowerhas the largest installed capacity of all renewables but is now expanding slowly. The sector employs 2.1 million people directly, three quarters of whom are in operations and maintenance.

IRENA’s Renewable Energy and Jobs Annual Review can be downloaded here:  

https://www.irena.org/publications/2019/Jun/Renewable-Energy-and-Jobs-Annual-Review-2019

Image by Oimheidi from Pixabay

Falling cost of renewables ‘boosts climate ambitions’

960 640 Stuart O'Brien

Renewable power is the cheapest source of electricity in many parts of the world already today.

That’s according to the latest report from the International Renewable Energy Agency (IRENA).

The report contributes to the international discussion on raising climate action worldwide, ahead of Abu Dhabi’s global preparatory meeting for the United Nations Climate Action Summit in September.

With prices set to fall, the cost advantage of renewables will extend further, Renewable Power Generation Costs in 2018 says. This, says IRENA, will strengthen the business case and solidify the role of renewables as the engine of the global energy transformation. 

“Renewable power is the backbone of any development that aims to be sustainable”, said IRENA’s Director-General Francesco La Camera. “We must do everything we can to accelerate renewables if we are to meet the climate objectives of the Paris Agreement. Today’s report sends a clear signal to the international community: Renewable energy provides countries with a low-cost climate solution that allows for scaling up action. To fully harness the economic opportunity of renewables, IRENA will work closely with our members and partners to facilitate on-the-ground solutions and concerted action that will result in renewable energy projects.”

The costs for renewable energy technologies decreased to a record low last year. The global weighted-average cost of electricity from concentrating solar power (CSP) declined by 26%, bioenergy by 14%, solar photovoltaics (PV) and onshore wind by 13%, hydropower by 12% and geothermal and offshore wind by 1%, respectively. 

Cost reductions, particularly for solar and wind power technologies, are set to continue into the next decade, the report finds. According to IRENA’s global database, over three-quarters of the onshore wind and four-fifths of the solar PV capacity that is due to be commissioned next year will produce power at lower prices than the cheapest new coal, oil or natural gas options. Crucially, they are set to do so without financial assistance.

IRENA says onshore wind and solar PV costs between three and four US cents per kilowatt hour are already possible in areas with good resources and enabling regulatory and institutional frameworks.

For example, record-low auction prices for solar PV in Chile, Mexico, Peru, Saudi Arabia, and the United Arab Emirates have seen a levelised cost of electricity as low as three US cents per kilowatt hour (USD 0.03/kWh).

Read IRENA’s report “Renewable Power Generation Costs in 2018” 

Read IRENA’s report “Global Energy Transformation: A Roadmap to 2050