Bibhu Mishra of Humboldt University, Berlin elaborates on Transitioning towards sustainable economy: Role of financial institutions such as Central Banks and financial systems in The Times of India.
Transitioning towards sustainable economy: Role of Central Banks and financial systems
“For peace to reign on Earth, humans must evolve into new beings who have learned to see the whole first”, said Kant.
Climate change is real; it affects and will affect everyone. Mother Nature sends its signals regularly, and most recently through the flash floods in western Germany. These signals are an urgent reminder that we need to take action now. The action must be collective, significant, timely, and futuristic because, in the long term, the risks outweigh the costs.
The Paris climate accord is one such step in the right direction. A holistic and stakeholder-driven approach would be required to achieve the target of maintaining temperature rise by 1.5 degrees Celsius. One of the most significant stakeholders in such efforts is the global financial system. The financial system’s role is pivotal because they provide finance and steer economic growth. Their actions have a significant impact on ESG, i.e., Environment, Society, and Governance.
There is a tremendous surge in investments which keeps ESG at the core of investment decisions. According to Bloomberg, ‘ESG assets may hit $53 trillion by 2025, a third of global AUM’. Despite a phenomenal rise in ESG assets in the past decade, the financial system still faces challenges like ‘short-termism’ and ‘greenwashing.’
Therefore, the role of Central Banks is vital. They look at the financial system of a country as a whole. Former Governor of the Bank of England, Mark Carney coined the concept ‘Tragedy of the Horizon’ to explain this. He argued, “the catastrophic impacts of climate change will be felt beyond the traditional horizons of most banks, investors and financial policymakers, imposing costs on future generations that the current one has no direct incentives to fix.” It is a tricky paradox where the current system has little or no benefits but to save the planet in its current state or better for the coming generations.
Realizing the importance of its role, eight central banks and supervisors created (In December 2017) a ‘Network of Central Banks and Supervisors for Greening the Financial System (NGFS).’The NGFS is aimed to make coordinated efforts to combat climate change. As of June 30, 2021, the NGFS has grown to a network of 95 members and 15 observers. The Network’s purpose, in their own words; “to help strengthen the global response required to meet the Paris agreement’s goals and enhance the role of the financial system to manage risks and mobilize capital for green and low-carbon investments in the broader context of environmentally sustainable development.”
The NGFS is a significant step towards bringing central banks of different countries together and ensuring that central banks take the leadership role in fighting against the climate crisis. In its first comprehensive report (Pub 2019), It came up with the following six suggestions and floated the idea of global collective leadership.
Integrating climate-related risks into financial stability monitoring and micro-supervision
Integrating sustainability factors into own-portfolio management
Bridging the data gaps
Building awareness and intellectual capacity and encouraging technical assistance and knowledge sharing
Achieving robust and internationally consistent climate and environment-related disclosure
Supporting the development of a taxonomy of economic activities
Additionally, the steps taken by the Central Banks of England (Bank of England) and France (Banque de France) are noteworthy and worth a mention.
Recently, the [Central] Bank of England launched a stress test for banks and insurers to understand the ability of the UK Financial system to cope with climate change. The test is aimed to examine the resilience of the UK’s 19 biggest banks and insurers. The stress test can also be looked at as an acknowledgement that Climate Change poses significant financial risks to the existing financial system. Therefore, early planning of a transition is necessary.
Moreover, ‘Banque de France,’ the central bank of France, took several initiatives to transition the financial industry into zero carbon. In June 2021, the French ACPR (Autorité de contrôle prudential et de résolution, English translation: French Prudential Supervision and Resolution Authority) published the first climate pilot exercise report an overall ‘moderate’ exposure to climate risks.
Let’s understand the risk through an example. Investing in fossil fuels may generate returns in the short term,’ but it will accelerate climate change and, hence, negatively impact the ESG. The negative impact on climate could cause erratic rains or severe drought, leading to an adverse effect on investments made in agriculture and allied sectors. One sector’s gain can be the loss of another sector, posing a significant risk before the overall financial system.
To ensure a smooth transition of the financial system towards sustainability and make it resilient from other systemic risks, early and coordinated action is needed. Central Banks and financial systems have a significant role to play in our journey towards sustainability.
Bibhu Mishra is a German Chancellor Fellow at Alexander von Humboldt Foundation and a researcher with Institute of Asian and African Studies, Humboldt University, Berlin.
Emerging Economies Must Leapfrog to Renewables – and They Already Are per Roya Sabri in this TRIPLEPUNDIT’s article.
Emerging Economies Must Leapfrog to Renewables – and They Already Are
20 July 2021
Renewables like solar and wind are quickly becoming more affordable and accessible. The International Renewable Energy Agency (IRENA) reports that the cost of electricity coming from utility-scale solar power fell 82 percent between 2010 and 2019, and clean power technologies such as solar and wind are undercutting even the cheapest coal-fired power plants. Further, a 2020 analysis from BloombergNEF found that wind and solar have overtaken fossil fuels as the most cost-effective form of new sources of electricity in most of the world.
This trend has made “energy leapfrogging” – i.e., the ability to reap a nation’s power needs from renewables such as solar, wind and geothermal at a rapid pace, bypassing heavy investments in fossil fuels and the infrastructure needed for them – ever more possible in emerging markets.
Economies, including several examples in Africa and Latin America, have been transitioning straight from what for many of their communities had been traditional sources of energy like wood, charcoal, agricultural waste and animal dung; these countries are also able to shift rapidly toward renewables as they have not invested in massive infrastructure that supports a national power grid, as was the case with what more industrialized nations in Europe and North America had done during the 20th century.
The result is that more communities within these emerging markets are forgoing conventional energy sources like fossil fuels; the same goes for other forms of energy like nuclear, biofuels and even natural gas.
A recent report from the think tank Carbon Tracker and India’s Council on Energy, Environment and Water (CEEW) highlights progress emerging nations are making in embracing renewables. The report also comes with a warning: If more nations do not leapfrog to these cleaner sources of energy, a worldwide low-carbon economy will not occur.
As the demand for energy grows, leapfrogging to renewables becomes necessary
The International Energy Agency estimates a surge in power generation in emerging nations will boom over the next decade, accounting for the majority of electricity demand by 2030. Thus, a world aiming to reduce greenhouse gas emissions has an incentive to ensure countries like India and China continue their developing infrastructure that is more conducive for renewables.
The authors of this Carbon Tracker and CEEW study find that emerging markets are already stepping away from fossil fuels. “Given the continued rapid growth rate of solar and wind, it is highly likely that emerging markets ex-China have already plateaued or reached peak demand for fossil fuels for electricity. China is likely to peak before 2025,” they write. China may still be a major coal consumer, but its solar sector is growing fast. Countries like Morocco, Nicaragua and Kenya have already made great leaps toward increased reliance on renewables.
Some nations are already leapfrogging to renewables
The Climate Reality Project details how Morocco, Nicaragua and Kenya have been able to turn their power generation sectors into ones that are more sustainable and resilient. Morocco, for one, has set a target of 42 percent renewable energy production by 2021 and 52 percent by 2030. It has stayed on track by building up its solar and wind power infrastructure. The North Africa country, in fact, now hosts one of the largest solar farms in the world.
After experiencing rolling blackouts due to energy insecurity a decade ago, Nicaragua is now on its way to sourcing 80 percent of its electricity from sources of renewables. By late 2020, Nicaragua’s burgeoning geothermal industry had brought the nation to 72 percent reliance on renewable energy sources.
Energy accessibility has been expanding in Kenya as decentralized solar has spread across the nation. The country is also making use of its geothermal power, which may reach 50 percent of its energy mix by 2040.
Clean energy can support a more resilient and healthy economy
These cases show that a dramatic shift to renewable energy can increase energy accessibility and stability. The economic case is significant. IRENA reported in 2016 that a doubling of renewables by 2030 could mean global GDP increases by over one percent, boosts social welfare investments by almost four percent and can add more than 24 million jobs.
While some nations have proved leapfrogging possible and beneficial, the authors of the Carbon Tracker and CEEW study note that there are serious barriers to building renewable energy reliance. Such hurdles include the intermittency of renewable sources, system costs, policies and deeply vested interests — but international actors can make a difference. The report recommends that international policymakers should focus their attention on countries currently dependent on fossil fuel imports that also have governments more amenable to policy solutions.
Finally, the authors contend that such nations are more receptive to a transition than countries that are more politically fragile. They are also in a stronger position than countries with economies largely driven by coal and gas exports. The result is that these countries that have found success with energy leapfrogging can become examples for their neighbors and help to bring more emerging nations closer toward a clean energy future.
science alert‘s article by Eva Hamrud asked a good question, that if there were 100% Renewable Energy Feasible For Entire Countries? The answer is literally in the question and is elaborated on.
The picture above is for illustration and is of pv magazine
Is 100% Renewable Energy Feasible For Entire Countries? Why, Yes Actually
In order to mitigate the global impacts of climate change, we need to dramatically reduce our carbon emissions, or even better – stop emitting completely. Many countries have recognized the need to switch from fossil fuels to renewable or ‘green’ energy in order to do this.
Whilst most of us are in homes that are powered from a mixture of sources from coal to wind, is it feasible that one day everything will be solely from renewable energy sources?
We asked 22 experts in renewable energy, engineering, and energy systems ‘Is having 100 percent renewable energy for a country feasible?’. Fifteen answered likely, here is what we found out.
What is renewable energy?
Renewable energy is energy that can be quickly replenished. Oil and coal take millions of years to be made, so aren’t renewable. Nuclear power uses uranium, also non-renewable. But anything sourced by shorter-term forces in nature like the sun, moon or rain are renewable.
Geothermal, solar, hydro, wind, tidal and biomass are all forms of renewable energy as they will not run out in the near future. The capacity for renewable energy is enormous:
“The Earth receives 23000 TW of solar energy, while the global energy consumption is 16 TW. Therefore, [100 percent renewable energy] could be possible even if we capture only 0.07 percent of the solar energy” says Professor Xiao Yu Wu, an energy expert from MIT.
Technically, is 100 percent renewable energy feasible?
Iceland power near 100 percent of its electricity from renewable energy, using their abundant geothermal and hydro supplies. Renewable energy can also dominate electricity needs for more populous countries too.
About 80 percent of Brazil’s electricity needs for its 209million people come from renewable sources, biomass and hydro mostly. On average, however, renewables power ~29 percent of electricity around the world. So can renewables reach 100 percent for populous countries?
In 2017, Professor Mark Jacobson and colleagues from Stanford University published a scientific paper outlining a roadmap for 139 countries to transition to 100 percent renewable energy.
Prof Jacobson, an expert in renewable energy and climatology, describes how this paper, along with many other studies, make up a “body of work, carried out by over 85 authors and 35 peer-reviewers, [which] is further supported by an additional 30 peer-reviewed studies that find it is possible to match demand with supply with 100 percent or near-100 percent renewable energy systems.”
Such studies are based on models which predict future scenarios and test different power systems to see if they are able satisfy energy demands. As with any kind of modelling, it can be challenging to estimate all of the parameters correctly.
Dr Mark Delucchi, an expert in energy systems and economics from California University, highlights some of these complexities, “the question of feasibility boils down to a few basic kinds of issues: how we model demand-side behavior in the face of radically different energy systems; how we quantify the costs and performance of existing or near-future energy technologies; and how we handle impacts that are not easily quantified in dollars (e.g., risks of nuclear power)”.
Other experts disagree with the idea that renewables could reach 100 percent for most countries. Benjamin Heard, from the University of Adelaide, with colleagues published a paper reviewing the feasibility of 100 percent renewable electricity systems.
He argues that there is a heavy reliance on hydro and biomass sources – while most countries don’t have access to these, so would be reliant on sources like solar, wind, and storage. In those circumstances, it’s highly unlikely for renewables to power 100 percent of the electricity supply he says.
What are the challenges with 100 percent renewable energy?
Some experts highlighted concerns about reliability.
“Every once in a while, you see energy shortages in renewables production. This is because the wind and solar just have low production days in energy…If you miss a day of production in renewables you have to fire up the gas generators to fill in the demand” says Dr Eugene Preston, an expert in renewable energy from the Institute of Electrical and Electronics Engineers in the USA.
Battery and energy storage solutions are one option to help with this in the future.
Yet it seems the barriers to moving towards 100 percent renewable energy are more economic and political some experts say.
“Feasible in terms of what? If it’s feasibility in terms of technology, it seems likely… If it’s feasibility in terms of the necessary policy, financing, and institutional drivers, it is less likely, unless current political, economic, and institutional/governance systems are adequately perturbed” says Professor Laurence Delina, an expert in renewable energy from Boston University.
Despite some debate, most experts agreed that 100 percent renewable energy was feasible. Is it economically or politically feasible – that’s a very different question.
Laura Paddison in The Guardian. Oman plans to build the world’s largest green hydrogen plant that Renewable power is slowly replacing fossil fuel usage at all levels as a world trend shows the way. This article reporting such a piece of news that is as unnecessary as unproductive because solar, wind power is the future, and fossil fuels usage would be binned forever within the near future for good.
Oman plans to build world’s largest green hydrogen plant
Oil-producing nation aims plant powered by wind and solar energy to be at full capacity by 2038
Oman is planning to build one of the largest green hydrogen plants in the world in a move to make the oil-producing nation a leader in renewable energy technology.
Construction is scheduled to start in 2028 in Al Wusta governorate on the Arabian Sea. It will be built in stages, with the aim to be at full capacity by 2038, powered by 25 gigawatts of wind and solar energy.
The consortium of companies behind the $30bn (£21bn) project includes the state-owned oil and gas company OQ, the Hong Kong-based renewable hydrogen developer InterContinental Energy and the Kuwait-based energy investor Enertech.
Once online, the plant will use renewable energy to split water in an electrolyser to produce green hydrogen, which is able to replace fossil fuels without producing carbon emissions. Most will be exported to Europe and Asia, said Alicia Eastman, the co-founder and president of InterContinental Energy, either as hydrogen or converted into green ammonia, which is easier to ship and store. The facility aims to produce 1.8m tonnes of green hydrogen and up to 10m tonnes of green ammonia a year.
Oman currently relies heavily on fossil fuels, generating up to 85% of its GDP from oil and gas, but its fossil fuel reserves are dwindling and becoming increasingly costly to extract. In December 2020, the country published its Oman Vision 2040 strategy, a plan to diversify the economy away from fossil fuels and increase investment in renewables.Advertisement
Green hydrogen could play an important role, said Eastman, thanks to the Oman’s combination of plentiful daytime sun and strong winds at night. “Oman is one of the places in the world that I’ve called the ‘future renewable superpowers’,” said Michael Liebreich, the founder of BloombergNEF, “because what you really want [to produce green hydrogen] is very cheap solar and very cheap wind.”
While electrification is the most efficient way of decarbonising most sectors, it’s limited when it comes to energy-intensive industries such as steel, chemicals, aviation and shipping. Green hydrogen will be vital to help fill these gaps, said the International Energy Agency in its report published this week, which called for an end to fossil fuel investments if governments are serious about climate commitments.
A wave of net zero-emissions pledges has already led to a slew of hydrogen strategies, including from the European Commission in 2020, which predicted the share of hydrogen in the EU’s energy mix would rise from 2% to 14% by 2050.
Yet green hydrogen currently makes up less than 1% of global hydrogen production. The majority is still produced using fossil fuels such as gas and coal, in a process that emits about 830m tonnes of carbon annually, equivalent to the emissions of the UK and Indonesia combined. “Blue hydrogen” is a cleaner version, as emissions are captured and stored, but it is still produced using gas – and is seen by some oil companies as a way to keep using fossil fuels.
One of the stumbling blocks for green hydrogen has been cost, partly because of the huge amounts of energy required. But as renewables and electrolysers become cheaper, and fossil fuel prices rise, costs could fall by up to 64% by 2030, according to research from the consultancy Wood Mackenzie.
“Most green hydrogen products will not be competitive for at least another decade,” said Falko Ueckerdt, a senior scientist at the Potsdam Institute for Climate Impact Research, who sees the Oman project as “a sign that investors anticipate large future demands for hydrogen-based fuels after 2030”.
Oman’s proposed plant is just one in a slate of green hydrogen mega projects planned globally. Eastman said InterContinental Energy has a number of other plants in the works, including a 26GW wind and solar green hydrogen plant in the Pilbara, Western Australia. If constructed, this $36bn (£25.5bn) plant would be the world’s biggest energy project. The first phase is expected to be online by 2028.
In March, the renewables company Enegix Energy announced the construction of a green hydrogen plan in Ceará state, north-eastern Brazil. Once built, which the company estimates will take about four years, the plant would produce more than 600,000 tonnes of green hydrogen per year from 3.4GW of wind and solar power.
“People are upping the gigawatts, and they should,” said Eastman, “there’s so much room in the market.”
Solar Panels are an effective and low-maintenance way to generate your own renewable energy. Here’s why you should consider installing them on your roof!
Why Should You Consider Solar Panels?
With energy prices rising to pre-pandemic levels, many of us have noticed that our energy bills have begun to rise in recent weeks. And if you’ve been with the same energy supplier for a long time, you’re likely on a standard variable tariff. Which means that if your energy costs haven’t increased in recent weeks, they’re likely to in the near future.
Now’s the perfect time to consider investing in photovoltaic (PV) solar panels. Today’s investment could result in decades of savings, add value to your home, and help you to drastically reduce your household’s carbon footprint. Solar power is on the rise in the MENA region, with investment reaching $1 trillion in the 2019-23 period in the region. Here we’ll look at some of the reasons why you should consider installing them on your roof.
Can solar panels really save me money?
Absolutely! Switch-Plan estimates that by installing solar panels, you can save anywhere from £85-£200 per year GBP with a full solar array. Depending on the size of your solar array and the daylight hours in your region, your solar array could become profitable in less than 10 years. If you’re a DIY enthusiast, you may be able to install your own solar panels, drastically reducing your costs.
As the solar market in the area grows, and becomes more competitive, households have more options than ever.
Don’t solar panels only work on sunny days?
The MENA region is known for its hot and sunny climate. But solar panels still work on cloudy, rainy and overcast days. As long as the sun shines in the sky, your PV solar panels will generate energy for your home.
Want to generate energy through the night as well? Solar arrays can be combined with domestic wind turbines to create hybrid systems that generate energy through the day and night.
Would you like your energy company to pay you?
Around 50% of the energy generated by your solar panels throughout the day is fed back into the grid. The good news is that your energy companies can pay you for this via Feed in Tariffs. These pay a flat rate per kWh of energy generated which can further offset the cost of the grid energy you use.
You’ve paid your energy company enough over the years. Isn’t it time they started paying you?
Combine energy tariffs with Feed In Tariffs to optimise savings
It’s important to note that you don’t have to use the same company for your energy tariff and your Feed in Tariff. By comparing energy plans and FiTs from different companies, you can optimise your savings, offsetting the cost of your installation and helping it to become profitable faster. All while helping to reduce the MENA region’s reliance on fossil fuels and pave the way for a renewable future.
Originally posted on globalrhythmz: The music Aziza Brahim makes reflects both the sorrow and the hope of these people. She grew up in one of those camps in the Algerian desert, along with thousands of other Saharwai who were removed from their homes in the Western Sahara. The refugee camp was the place that formed…
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