IEA calls for economic recovery to be driven by renewables

A drop in energy-related CO2 emissions due to the coronavirus pandemic was not something to be celebrated, according to the IEA. (Reuters)
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Updated 21 May 2020

IEA calls for economic recovery to be driven by renewables

  • Coronavirus pandemic sees slowdown in number of eco-friendly power installations for the first time in two decades

PARIS: The International Energy Agency (IEA) on Wednesday called on governments to put clean energy at the heart of their coronavirus economic recovery plans, as it forecast the first slowdown in new renewable power installations worldwide in two decades.

The IEA warned that lockdown measures — which at their peak affected more than half the world’s population — would have “far-reaching” consequences, as the world grapples with a crisis that has sent energy demand plummeting and threatens a deep economic contraction.

The agency, which had expected 2020 to be a bumper year for green energy, slashed its two-year forecast for growth in renewable capacity by nearly 10 percent.

It cited supply chain disruptions, construction delays, social distancing and financing challenges.

While sectors supplying electricity — solar, wind and hydropower — would be largely resilient in the crisis, it said, the market for biofuels used mainly in transport would be “radically” altered as global travel is frozen and oil prices plummet.

Many countries have pledged to increase their use of renewables to meet tough climate targets and the IEA urged governments to redouble those efforts as they plan for post-virus economic recovery.

It cautioned that a predicted reduction in global CO2 emissions of up to 8 percent in 2020 — the largest contraction since World War II — was nothing to celebrate.

“Putting emissions into a structural decline needed renewables to grow much faster across all sectors even before the COVID-19 crisis,” the report said.

“To regain and exceed the growth rates seen in the years before the pandemic, policy makers need to put clean energy at the center of recovery efforts.”

In its updated forecast, the IEA said that overall demand for renewables was expected to increase this year, bolstered by their use in the electricity sector, where green energy has accounted for record shares of power in some countries.

This is partly down to their priority access to the grid in many markets, and declines in energy demand during lockdowns.

It has also been boosted by record increases in capacity in 2019, which saw 192 GW of new installations connected to the grid — a 7 percent increase from 2018.

Revising down a prediction made in October, the IEA now expects some 167 GW of renewable capacity to become operational this year — a decline of 13 percent from 2019 and the first downward trend since 2000.

However, this will still add 6 percent to the global renewable capacity total this year — more than the combined size of power systems in both North America and Europe — with solar and wind accounting for the vast majority.

Meanwhile, both the US and China are expected to boost their renewable capacity as firms rush to complete projects before the expiry of government incentives.

The IEA also predicted a “rebound” in 2021, nearing 2019 levels, as most of the projects delayed this year come online.

Technologies with long lead times — like hydropower and offshore wind — were not expected to see significant impacts.

But the report said the economic downturn is expected to deal a severe blow to transport biofuels, like ethanol and biodiesel, which are mostly consumed blended with gasoline and diesel.

Total transport biofuel production is expected to contract by 13 percent in 2020.

But the IEA said the crisis opens a window of opportunity in aviation if governments include environmental conditions in bailout packages, noting the 2 percent sustainable aviation fuel requirement in a rescue proposal for Air France-KLM.

Experts said the crisis could provide an opportunity for green energy to permanently take the place of highly polluting fossil fuels like coal.

“We may come out of COVID with emissions going down, since renewables have been able to take more relative space, pushing out some of the worst of fossil fuels,” Glen Peters, research director, at the Center for International Climate Research told AFP.

European bank ramps up stimulus package

Updated 05 June 2020

European bank ramps up stimulus package

FRANKFURT: The European Central Bank approved a bigger-than-expected expansion of its stimulus package on Thursday to prop up an economy plunged by the coronavirus pandemic into its worst recession since World War II.

Just months after a first raft of crisis measures, the ECB said it would raise bond purchases by €600 billion ($674 billion) to €1.35 trillion and that purchases would run at least until end-June 2021, six months longer than first planned.

It also said it would reinvest proceeds from maturing bonds in its pandemic emergency purchase scheme at least until the end of 2022.

ECB President Christine Lagarde scotched speculation that the bank could follow the US Federal Reserve in buying sub-investment grade bonds, saying that option was not discussed by policymakers.

The announcement, which comes just weeks after Germany’s Constitutional Court ruled that the ECB had already been exceeding its mandate with a longstanding asset purchase program, prompted a rally in the euro and bond markets.

“Today’s easing measures were another illustration that the ECB means business and stands ready to do whatever is necessary to help the euro area survive the corona crisis in one piece. The ECB will do its part, and it hopes the governments will do their part,” Nordea analysts said in a note.

The bank dramatically revised downward its baseline scenario for euro zone output this year to a contraction of 8.7 percent from the modest 0.8 percent rise it had forecast only in March.

“The euro area economy is experiencing an unprecedented contraction. There has been an abrupt drop in economic activity as a result of the coronavirus pandemic and the measures taken to contain it,” Lagarde said.

She said she was confident that a “good solution” could be found on the legal stand-off with Germany’s top court.