We are a part of this planet history, being the existence of most of us a tiny fraction in its timeline. René Magritte, the surrealist Belgian painter, illustrated so quite well in its “Human condition” paintings, one of which pictured above.
This realistic vision is also myopic to the extent that most cannot see the collective impact of individual similar actions. Those squandering behaviours continue as more of the old or similar products are available at the distance of a shop or a click & collect. Ecstatic by the new items or services purchased consumers may perceive a life in heaven when in fact are continuing the curse on the Planet. René Magritte’s La Malédiction, (The Curse) from 1963 and pictured below, illustrates it quite well.
We do have a chance to switch the surreal curse into a real paradise! Switching from the unsustainable linear production and consumption model to the circular model is a way to achieve so.
Achieving sustainable circular economy models stimulates creativity and innovation in the quest of giving goods a longer life, increasing thus its usage not only in one product but also in subsequent manufacturing processes.
Reducing the national depletion rate gap which spans from January to December is thus a must. The later in the year the better. And the soon we can change those habits, the better. The big depletion rate comes mainly from the 1% who in their culture of wealth demonstrations drive the Planet to a continuous global warming. How about following Bill Gates in donating fortunes to well managed institutions to tackle global causes instead of continuously seeking to being featured in the Year’s wealthiest person. He is donating his to the Gates foundation. Well done Mr Bill Gates.
Human capital has increased globally yet there are nations that prevent it from being used, either fully or partially. This is a waste of resources that should be reduced too as in so doing and well oriented may lead to Natural Capital improvements.
René Magritte gives us a perspective of our existence. We have a chance to act with overlasting impact, too. Would be good that by 2030 the depletion trend we have seen in the last four decades as illustrated in the graphic below is reduced and by 2050 is reverted. Yes, we can! Obama said so and made history! Collectively, Humanity can achieve what is needed. It does request a mindset shift too.
In the long-awaited COP26, 197 parties have agreed to voluntarily comply with Paris Agreement’s articles in a global and shared effort to mitigate the negative impacts of Climate Change, now common and more robust knowledge. Notwithstanding, some nations prefer to ride freely, preventing the Planet to further progress on its population’s wellbeing. Some of its population oppose this attitude but the adopted strategy shows they are a minority. From Glasgow, where parties stretched extra-hours to get an agreement on art.6, my key take-aways are:
Sustainability leaders are making further global commitments to quickly limit global warming by signing the Methane pledge. 103 countries representing 40% of global methane and 60% of global GDP have signed so but not the top 3 polluters, India, China, and Russia, as per UNFCCC. The pledge is a quick win on the global GHG emissions race as methane has been contributing to 30% of them. In so doing, global warming is expected to be limited by approximately 0.2ºC in 2050 and air quality improved, with subsequent health benefits such as less air related diseases or deaths. The light blue scenario in the WMO’s graphic below is more likely with the announced pledge. Cutting methane emissions demands further change on fossil fuels operations (the largest activity contributor) and society’s consumerism behaviour, pressuring especially on the diet as methane stems also from agricultural activity.
The NDCs published aren’t enough. India, the third polluter as shown in the Statista graphic below with Statista data, hasn’t communicated to the UNFCCC its targets announced during COP26. Their intention of delaying to strongly commit for a greener and more sustainable economy and Planet is clear.
Developing countries are consciously polluting deteriorating global society’s welfare while enriching themselves, at the expense of all citizens’ health. The last-minute change from the expected agreement on “phasing out unabated coal” to “phasing down unabated coal”, seems a concession on the developing countries’ argument that they still need to grow their economies and hence, need to burn fossil fuels and increase atmospheric GHG, albeit is now common knowledge that practice has high negative externalities. The two Asian giants claim to have inferior capacities than developed countries, yet in July 2020 India banned power equipment imports from China, on which had been relying to expand its renewable generation capacity. According to Fitch, India imports 80% of the power equipment from China. At the existent internal production capacity Fitch’s estimates that India cannot deliver Net-Zero by 2050, as needed to limit global warming to less than 2ºC. The claim and the announced commitment don’t make sense. Playing with the existing rules and applying a pure money driven short-term resolution turned out to be a nasty step for the Planet and the most vulnerable. India is exclusively looking at its own belly button not playing together for our planet, a shared effort and goal. How will the world be if led by such careless and disrespectful nations? The low tactic played is environmentally unsustainable.
“You’re supposed to be phasing out coal over the next 20 years, you just signed an agreement with us,”
John Kerry, U. S. Special Presidential Envoy for Climate to Xie Zhenhua, China’s Special Envoy for Climate at COP26
We said phase down.”
Xie Zhenhua responds to John Kerry through his translator, Reuters 14th November 2021
If we hadn’t done that we wouldn’t have an agreement,”
John Kerry to Reuters’ reports, Reuters 14th November 2021
I am a big supporter of globalisation and see both positive and negative aspects of the equation. Continuing with globalisation, enables best-practices to be shared more openly and the world can progress in scientific, business, educational and lifestyle sustainable practices. Not allowing so isn’t learning from history. We’re living in a different era with a global problem not faced previously with current intensity. If globalisation hadn’t happened, we wouldn’t have the current common knowledge on climate change causes and impact.
Sustainable Development Goal 16 aims to promote a sustainable society by promoting just, peaceful and inclusive societies. We’re still living in a backdrop where “conflict, insecurity, weak institutions and limited access to justice remain a great threat to sustainable development”.
The UNHCR claimed to have registered in 2018 the highest number in the last 7 decades, about 70 million refugees. Unjust sentences have been made; Amal and George Clooney have launched their foundation to make justice more just, The Clooney foundation for justice. Health treatments have been unequal; the Gates foundation helps to improve access to medicines in less fortunate places and medical research to eradicate specific diseases in those places. Misconduct has been widespread, from schools’ playgrounds to workplaces. If these were SDG indicators the SDG 16 evolution would be different than what is shown on the graphic below, extracted from the Sustainable Development Report 2021. Society won’t evolve if leadership doesn’t change.
Many agree that business should be a force for good, myself included. Milton Friedman argues, in his zero-sum perspective on sustainability, what is good for one is evil for another. Some interpret sustainability likewise, the Milton Friedman’s followers, some of them unconsciously. Although Friedman supported ESG practice, it was only on a low sphere of influence. On his perspective it was laudable if a small owner did so with his/her resources but not so much for the corporate executive.
“The situation of the individual proprietor is somewhat different. If he acts to reduce the returns of his enterprise in order to exercise his “social responsibility,” he is spending his own money, not someone else’s. If he wishes to spend his money on such purposes, that is his right, and I cannot see that there is any objection to his doing so. In the process, he, too, may impose costs on employees and customers. However, because he is far less likely than a large corporation or union to have monopolistic power, any such side effects will tend to be minor.”
Milton Friedman, New York Times, 1970
Others follow Alex Edmans’ perspective of growing the pie, some also unconsciously. Notwithstanding, sceptical and opposers have been shrinking and a community of the civil society, businesses and governments supporting sustainable initiatives, business models and lifestyles has been growing as more evidence sheds light into the benefits of doing so.
Sceptical and opposers should use their capabilities to do good instead of harming. It will make them more sustainable. Sustainability is the ability to manage the scarce and non-renewable resources so they last throughout generations, ensuring future generations’ wellbeing is at least as good as the current ones. Waste has thus to be reduced to zero. In not doing so, and not having leadership that enables so, a sustainable future isn’t foreseen. Good governance is one of the three pillars on which sustainability relies. Environmental and Social being the other two. Sustainable leaders should decide with an holistic perspective, embracing the three pillars.
Being humble, a leadership characteristic often taught and less frequently used, should also be dust free. What’s the credibility of an organisation that claims one value but practices another? Back in October 2019 the FT called business schools to be more sustainable and practice what they preach, recommending to follow the UN principles for responsible management education, two of them being sustainable purpose and values. Yet, being a PRME signatory doesn’t guarantee its compliance. Empirical evidence has shown big deviations regarding the first three principles, by professionals in top leadership positions, former students of signatory institutions.
Lack of credibility leads to unstable environments with implications at macro and micro level. What stability does a person (legal or physical) face in a place where regulation and policies have been set but misused in your face, with abuse of power, supporting out of scope events in detriment of events that fall within the public committed regulation, whose compliance would ensure a safe environment? Why aren’t its regulators independent? Why is history repeating itself in a different dimension? Thinking at macro level examples it comes to my mind when the Spanish government was sued by renewable energy investors after the committed subsidies were withdrawn. The same happened with the Argentinian government when unilaterally ended payments to its creditors. At microlevel, the situation also occurs. Some people have been harassed because (i) public transport and cycling were used to commute over private car; (ii) when the obvious was spoken, proven scientifically and empirically; (iii) gender and nationality. Albeit a complaint was made, existing rules were manipulated and harassment continued. What is sustainable about this? Nothing, in a common-sense world! Unfortunately, when faced with this type of situations some minds argue that as they aren’t in the human rights business, they shouldn’t be compliant with human rights. They can only be spaced out.
When individuals or organisations are harassed due to the sustainable options they have chosen or unchangeable natural factors, development isn’t sustainable. Myopic vision only sees short distance and the force for good gets forgotten to preserve unsustainable values. It’s like the Evil Queen silencing the Snow White with poisoned food, in her jealousy, instead of using her force for good.
How can organisations preach and ask to be followed on sustainability when they don’t comply with it and aren’t the preached humble leaders?
A survey conducted by Vault Platform in the UK (56%) and USA (41%) with 2,000 office workers suggests that, in both geographies, about 75% have suffered or witnessed misconduct in their working life. Bullying in the workplace is the most common misconduct experienced by over 50%, followed by harassment by 50% in both geographies. This seems a playground practice transposed to the workplace. UN Women informs that boys and girls experience bullying in their teenage years. Whilst boys most likely experience physical bullying, girls experience its psychological version. This evidence suggests that early education is paramount in stopping later misconduct while great governance could ensure its reduction in the contemporary workplace.
School-related gender-based violence is a major obstacle to universal schooling and the right to education for girls. Globally, one in three students, aged 11–15, have been bullied by their peers at school at least once in the past month, with girls and boys equally likely to experience bullying. While boys are more likely to experience physical bullying than girls, girls are more likely to experience psychological bullying, and they report being made fun of because of how their face or body looks more frequently than boys.”
Misconduct is a significant bad practice, very far from sustainable and ethical. The lack of psychological safety makes their net so strong that victims are unable to gather the sufficient support, making them feeling even more powerless, deepening so when rules are applied unequally. For example, to people of the same gender but different backgrounds. Events are manipulated. One falling within the policy scope is dismissed but another falling outside that same policy is protected with the strong consequences for the second aggressor. Although some organisations have processes in place, its misuse causes more harm than good. Isn’t the house upside down?
The Trust Gap Report also shows that misconduct at workplace has negative socio-economic implications. Yet, as the research shows professionals still misbehave, possibly when feeling threatened by ethic potential competitors to eliminate them. Using so has been destroying value for the organisations they belong to. GRI and UN Global Compact standards have indicators that help in tackling this big problem in the workplace, workplace violence and harassment, for those entities that want to change.
Now that COP26 is about to close, we’ve many alliances have been announced throughout these two weeks. It’s great to hear these public commitments to decarbonise themselves, and to influence other in doing so. Although this is a good step to improve the Planet wellbeing, Sustainability goes beyond SDG 13, Climate Action. Leaders have to build strong institutions to be followed. Complying with SDG16, Peace, Justice and Strong Institutions is thus another step to sustainable leadership. Wouldn’t institutions be showing authentic leadership if they cleaned their house first, ensuring good governance is carried out? Real apologies for the unsustainable practices some of their members have carried out against some stakeholders, events they were aware of let the unsustainable course of action run, would increase their credibility. Ignoring or pretending do not solve problems properly. Is time for organisations to remove the speck of their eye. Then leadership will be credible. Money is indeed needed to change the world and make it a just and stronger one, not a corrupt one.
The interdependence amongst governments, independent regulators, businesses and society exists to ensure good practices are kept amongst themselves, albeit not always functions well. Fortunately, the world and the Planet have come a long way and greenwashing is increasingly unacceptable. But more actions are needed as the end of COP26 shows. It seems also that we are moving from Milton Friedman’s zero sum to Alex Edmans’ growing the pie perspective.
The Emissions Gap Report, published this week by UNEP, supports IPCC AR6 and the UNFCCC’s NDC Synthesis Report with regard to the urgency needed to mitigate and adapt to Climate Change.
The efforts some countries expect to make, recently communicated through the updated NDCs are welcome. The World has become #onestepgreener. Yet, much more is needed as map 1 created by EGR team illustrates. Its efforts combined with corporate pledges only reduce greenhouse gases emissions by 7.5% (EGR, 2021).
To limit Global warming to 1.5ºC, with a 66% probability, a reduction of 55% from pre-industrial levels needs to be met by 2100, so atmospheric carbon concentration is at the 430 ppm maximum level. Different scientific sources inform the current carbon budget is over 410 ppm. Its increase rate has changed between 2.6% and 1% annually, according to World Meteorological Organisation (WMO) data. If we keep releasing at these rates, the carbon budget will be reached soon. In 2024 and 2025 respectively, as my calculations show in the graphic below, using WMO data. Given the current NDCs and pledges, a 66% probability of limiting global warming to 1.5ºC, by 2100 seems a too optimistic scenario. The EGR informs that with current emissions rate trend, the Planet will have warmed 2.7 ºC by the end of the century.
Emissions trading schemes, a big topic to agree on during COP26, have been contributing to limit atmospheric emissions in some sectors. As companies operating in those sectors are penalised for the GHG emissions they directly generate above the set threshold, they had to decide on its optimisation. Choosing the right scenario implies a thorough process, where sustainability needs to be at the centre of the decision making. Let me remind you that sustainability is a broad concept based on three pillars; environment, social and governance. A concept not always properly used, as greenwashing cases have shown.
We all inhabit this Planet. We all profit for the care we take of it. Like the community who takes care of its common property, the more stakeholders look after it, following the set standards, the better the outcome. When it’s a voluntary work, there will be free riders who will not contribute but will benefit from others’ collaboration. When collaboration is mandatory, the collaboration’s output will reach a higher level. Very likely welfare gains will also be higher. If this behaviour is scaled to a global level, with each neighbour being each country, mandatory global emissions trading scheme could be the most beneficial for the sustainability of our Planet.
Given that not all the parties have updated their NDCs and only 60% of G20 countries have set Net-Zero targets, how can COP26 succeed in managing the global GHG emissions effectively? Isn’t the world risking for the own backyard mindset to prevail over the protected forest one? Would setting national emissions trading schemes delay the Net-Zero goal as countries spend their resources on deploying so instead of allocating to deploy a global scheme? Getting countries to update their NDCs in a Pandemic scenario has been limited by the short-term political perspective. The EGR mentions that only 2,6% of public budget spent during the Pandemic were on activities that potentially reduce GHG emissions. This shows sustainability’s environmental pillar hasn’t been a core investment criterion. The world wasn’t prepared for the black swan and diplomacy failed to influence properly and seize the opportunity to change for good and speed up decarbonisation.
I agree with the EGR – The heat is On. Acting globally instead of individually, leads to efficiencies on capital allocation. When managing emissions with a global system, most likely corporate admin costs would be reduced. Capital savings could then be used to further decarbonise organisations’ activities. It also shows we are #togetherforourplanet.
The UNFCCC has released its full NDC synthesis report last Friday, 17th of September 2021. Whilst in the previous report only 113 parties had updated or submitted its NDCs targets, which corresponded to 49% of Global GHG emissions, the latest report shows that until 31st of July 2021, all parties had submitted their NDCs. A great progress has been done, as the call on my article from 31st of July.
Implementing those targets requires a collaborative effort, not always well received in spite of the common good all benefit from. The complexity of the system, given the underlying multiple interests and values makes the implementation an odyssey. The seas, currents and waves, through which the Sustainable transformation has been navigating, will take the Planet, Society, Businesses and Governments to lasting Prosperity, as long as compliance is a good practice. The commitments that parties have taken are summarised below in the graphical representation I’ve created.
According to the full NDC synthesis report, most of the parties expect to transit to a decarbonised economy between 2025 and 2030. But as “most” ranges between 41% and 70%, achieving Carbon Neutrality by 2030 and Net-Zero by 2050 has a high variability. To keep in the 1.5ºC global warming trajectory, a 45% reduction on global GHG emissions from 2010 levels by 2030 is requested (AR6). As such, high variability in the commitments makes me forecast dark and heavy skies ahead.
This landscape is easily seen on the below progression chart, “Projected total emissions levels in 2030 compared with historical levels and the estimated 2025 level”, was extracted from the report. Although a progress has been made in 8 percentage points, from the NDCs presented in 2016, alignment with 1.5ºC global warming pathway demands a 52.5% cut on GHG emissions from the latest NDCs. Reaching 26.02 GtCO2eq, implies a sustainable transformation in the economy, only achieved with a common effort as #weareallinthistogether. Many factors will contribute to the full economic decarbonisation. Innovation, collaboration, capital allocation to sustainable investments, policies and regulatory frameworks that enable a just transition, along with a clear strategy and roadmap will be key.
The report does call for urgent bold actions, through different strategies: (1) overperforming current NDCs, (2) update the existent commitments or (3) a mix of overperforming with new extension of NDCs. It suggests material strategies to align with 1.5ºC pathway, namely the halt of coal related investments, a phased-out usage of fossil fuels passengers ICEV; newly constructed buildings net zero energy consumption by 2020 and expanding the forest area. The latter a measure some politicians aiming to win local governments elections are currently promoting in their campaign in Portugal.
As mentioned above in this article, the decarbonisation and consequent socio-economic sustainable transformation demands a significant allocation of capital. Changing finance policy to promote sustainable initiatives is thus imperative. Many central banks have started to take bolder actions to attain a sustainable transformation pushing through its monetary policy instruments. Commercial banks have been requested to conduct stress tests assessing their resilience to climate related risks, which increase as we approach the 1.5ºC trajectory sooner than expected, as IPCCC’s AR6 has recently shown. As it becomes inevitable, what are your thoughts on how to best contribute on the economic sustainable transformation? What actions have you been taking?
For many sustainability has been only a trend and #greenwashing an acceptable practice. Considering its negative effect on the sustainable transformation, could #greenwashing be penalised as negative externality? A proxy of the #opportunitycost and the #welfare loss it generates by not fully delivering the claimed sustainable value, would be a doable penalty to be paid by the #greenwashers. It would also constitute a revenue source to the national and supra-national public finances and be used for the NDCs’ implementation. Hence, the good players would be benefiting from a good behaviour while the free riders will face a lower incentive to cheat. With time, hopefully this extraordinary revenue will diminish.
Just before we turned the calendar page to 2021 and amidst historical lockdown’s New Year celebrations across the planet, I wrote a small article titled Renewable Energy in 2020. It suggested potential New Year sustainable resolutions and wishes. The latter reflecting a NY’s tradition in both Portugal and Spain.
As we’re now in July, less than half-way through the end of 2021, it’s time to do a balance on how have we done so far with each one of our New Year sustainable resolutions. In a mid-year performance review style! Have you done yours? There’s still time for correction and stop those extra unsustainable behaviours, so you can be right back on track!
The first of my 2021 wishes, clearly didn’t materialise. Across the world many countries have been re-entering lockdowns due to new outbreaks, driven by Sars-Covid2 mutations spreading faster and with higher lethal risk as the Delta variant. Although some countries have been speeding up vaccination, increasing the immunity of its population, it hasn’t been enough. As of July 29th, the UAE is the country with highest percentage of inoculation, 79.3% with at least 1 dose and 70.8% of fully vaccinated population, according to the FT. Worldwide, the FT shows that 4.1 bn of vaccines doses have been given. Israel was the fastest country to reach 100 doses per 100 residents, doing so by mid-March. Second to Israel was the UK, achieving so by mid-June. According to Reuters, the inoculation speed prize for countries with a population over 1 million is now held by Ecuador with 1446 doses per 100k people. By October 2021 the FT estimates 5 billion doses could be administered with a likelihood just over 70%.
My second wish, has a brighter outcome. Climate Action has improved in 2020.
In terms of business and governmental actions, what has been done?
Energy transition is occurring. Worldwide renewable installed capacity has increased by 2 percentage points in the total electricity generation installed capacity. In 2020 261 GW were added, reaching 36.6%, according to IRENA. South America is leading with 67.8%, Europe follows with 49.8% and Oceania with 46%. The latter is the continent with fastest growth, 4 p.p. from previous year. In terms of demand, IEA shows that renewable energy grew by 3% in 2020 reverting the overall contraction on electricity demand, that was induced by Covid-19 pandemic’s output restrictions.
The USA is committed again with the Paris Agreement, officially back in 2021.
NDCs have been partially delivered. 2020 was the deadline for the Paris Agreement signatories to submit or update its Climate-Action plans, 40% of the parties representing 30% of global GHG emissions have done so with the majority expecting to do so throughout 2021. The new commitments have increased coverage of the parties’ GHG emissions to 99.2%. Some have already started implementing their action plans, others set 2021 as the kick off year. The UNFCCC estimates that the current plans are insufficient to meet the Paris agreement goal of limiting global warming to 1.5ºC by 2030. GHG emissions are expected to reduce by 0.7% in 2030 in comparison to 2010, yet 45% reduction is needed. The remaining 60% needs to present and implement its Climate-Action plan urgently.
Corporate Sustainability reporting has increased, but not all show the joint commitments requested to limit global warming to 1.5 ºC – 2ºC by 2030. More companies have signed pledges to do so and made public commitments to decarbonise its activities. Zero taskforces have been set up, to push industries to take bolder actions to decarbonise its sector. It’s a good step, we all would be much better if more embrace so and more material commitments are made, too.
Climate risk is increasingly part of central banks stress testing. Sustainability compliance is becoming now a criterion to be financed across the whole finance value chain.
With COP26 expected to be held in Glasgow in November, what is being done? Some examples:
Alok Sharma, COP26 president has been pushing for bolder commitments across the globe.
The EU has approved its Climate Act and among other measures banned the Top 10 single-use plastic goods of Ocean leakage – cutlery, plates, cups and lids, straws, bottles and caps, food and beverage containers, lightweight plastic bags, cotton bud, tampons applicators, pads, balloons plus its sticks and fishing gear containing plastic. As of July 3rd, they no longer can be transacted. The expected impact of this ban is a 50% reduction on Ocean’s leakage, avoided annual emissions of 3.4 million CO2, and savings of Euros 6.5 billion of consumers’ annual budget. Hopefully the existent stock won’t end up in the Ocean.
Sectoral Engagement is being carried out by the UNFCCC. Lookout for yours, engage and influence others to do so, too.
Myself? I certainly became more sustainable in my practices. I have been supplied by 100% sustainable energy sources for the longest time in my life. I have reduced my food intake to healthier portions, adding my sand grain to mitigate soil exhaustion and LULCF. I also managed to influence some people to recycle and reuse, extending certain products’ life cycle and participating even further in the circular economy. I’ve recently calculated my carbon footprint, too. It’s 53% below the UK average.
The Northern Hemisphere summer holidays season has started. It’s a good time to do your balance and, if needed, reconduct your sustainable behaviour. Happy Sustainable holidays!
Have you realised that without energy we would be living in Wilma Flintstones’ world? From the mattress where you sleep, the pillow you rest your head, the sofa possibly overused in the past 14 months to the shoes you ware or the vaccination booking, all goods and services need energy to be used.
Energy is a basic good and its distribution, a basic need. Although great progress has been made since energy access data started to be collected in 1990 by the World Bank, as shown in the graphic below, not all have access to it yet. The last decade of the XX century experienced a rampant improvement in the energy access. Overall, energy access improved over 35 p.p. between 1990 and 2000. It occurred mainly in Latin America, Caribe, Sub-Saharan Africa and South Asia. World leaders ensured the World started the XXI century with more comfort than it began. But unfortunately, that comfort has been accompanied by extra GHG emissions as the chosen energy systems were not the most environmentally friendly. Progress came at a cost.
As we progress in the XXI century a new system is emerging. The dialog amongst civil society, businesses and governments is becoming more inclusive in solving global problems such as mitigating climate change negative impact. The transformation many sectors need to pursue is being pulled by the strength of those three actors and the urgency to act deeply to decarbonize and limit global warming to 1.5ºC or 2ºC. Although The Economist informed this week that an yearly volume of 5.5GtCO2 emissions haven’t been taken into consideration by countries, just same volume as the second most pollutant country, due to the varied reporting standards adopted by different countries. With this new data, our Carbon Budget for our Planet’s average temperature not to be risen above the limits agreed with the Paris Agreement, is most certainly smaller than has been announced.
In the previous century, a country’s typical energy mix was comprised of natural gas, oil, coal, hydro, nuclear and a insignificant presence of renewables. As technologies developed, global warming became more evident, pollution levels rose along with respiratory diseases, action to tackle this societal problem emerged stronger. Consequently, renewable investments have been increasing as shown in my post Energy Transition investments.
It’s great to see this increasing portion of renewable energy being generated and consumed. Yet, this increasing rate causes extra pressure in the national energy system operators. The uncertain nature of the renewable energy generation, that not always generates what is expected due to weather changes and the need to meet the electricity demand makes the grid balance to ensure the system’s reliability, more challenging. For each one of us to switch on the power anywhere and anytime, without disruption, system operators need to ensure electricity is generated, transmitted and distributed in the correct amount and at the right tension.
Integrating the new distributed systems in the traditional model is a challenge that will be overcome, in many parts of the world, with a collaborative action from civil society, businesses and governments.
P.S. The previous graphic wasn’t showing the % of population with energy access. The current one is the correct. Yet, this does not change the fact that population has had a more comfortable life with an increase of energy access. The number of countries with energy access has been growing for the past 3 decades, and although the last quinquennium of XX century more population were deprived of energy access, that trend started to revert as the new century and millennium began.
Closing the Loop, an award winner Circular Economy documentary by Wayne Visser. SustainAbility in Habit founder, Filipa Ferreira will screen Freely this Sunday via Zoom at 15h00 GMT/16h00 CET. It will be followed by a short chat with participants to share thoughts and quick reflections. Documentary lasts 1h30 and chat 30 minutes of discussion.
Global investments in energy transition increased by 9%, reaching over $500 billion in 2020. Although investments in Renewable energy grew by 2% from 2019 levels, the surge stemmed from investments that will enable Electric vehicles to be used in the near future. A record year for EV investments with an 28% surge, as BNEF points out in its Energy Transition Investments Report.
Renewable investments continue to be made in the infinite natural resources of solar irradiation and wind. Investments in Biomass have decreased, showing a better alignment with the Paris Agreement goals and the need to invest in assets that limit global warming to 1.5ºC by 2030.
On the corporate sector, organisations have been also actively taking part in the energy transition, as illustrated in the graphic below, collected by Statista from BNEF data. As it can be observed, signing Paris Agreement has been key in this transition. In 2017 corporate PPA investments surged by 44%, in 2018 by 119% and 2019 by 43%. Geographically, the USA has been leading on corporate PPA’s investments.
Despite all clean energy investments made so far, more are still needed to ensure demand is met by cleaner sources. In 2020, OECD still generated 54.7% of electricity from fossil fuels, data from IEA shows. Renewable generation only grew by 4%. Only OECD data is revealed as at the moment, data from the rest of the world isn’t available.
Economic activity can take its normal course uninterruptedly, if the energy network that sustains it is reliable. Currently, reliability to ensure that security of supply is still an issue, as neither sun nor wind are continuously available or when consumers mostly need it. For example, electricity storage investments in 2020 remained unchanged from 2019, as per BNEF’s report. If there’s capacity to produce but no capacity to store when its cost is lower, an opportunity may be wasted.
To reduce that waste and help balancing the electricity system, options are available. At industrial level, demand response is widely available and G2V-V2G is emerging along with renewable energy installations for self-consumption, as the above graphic shows. On the domestic side, consumers are increasingly installing energy-efficient appliances. BNEF indicates a 12% increase in 2020. Prosumers are also on the rise. But to optimise energy assets, either big or small, professionals will be needed.