New IRENA report on costs for renewable power reaffirms renewables as low-cost solution to boost global climate action

Renewable power is the cheapest source of electricity in many parts of the world already today, the latest report from the International Renewable Energy Agency (IRENA) shows. 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, based on a comprehensive review of data from projects around the world. This will strengthen the business case and solidify the role of renewables as the engine of the global energy transformation.

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 new report finds. According to IRENA’s global database, over three-quarters of the onshore wind and four-fifths of the solar PV projects that are 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.

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).

Electrification on the basis of cost-competitive renewables is the backbone of the energy transformation and a key low-cost decarbonization solution in support of the climate goals set out in the Paris Agreement.

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

 

EU ETS Report – May 2019

European carbon prices ended the month on a weak note, closing down 5.1% at €24.46 on May 31. After the annual compliance cycle closed at the end of April, volatility and trading volume ebbed away amid the Easter break and other public holidays.

May’s high-low range was €2.93, the smallest since June 2018 and considerably narrower than April’s €6.85 range, reflecting a drop in compliance demand and a more-or-less stable merit order. Gas remained firmly in the money at the front end of the curve, though coal has begun to display a better margin in the calendar 2020 contract.

The weather has begun to shift towards summer season, bringing with it an improvement in solar and wind generation which has trimmed the demand for fossil generation. The result was that carbon became a “passenger”, driven by moves in gas prices and not showing much direction of its own.

Prompt TTF gas prices are at nearly three-year lows; the year-ahead contract rallied nearly €2/MWh in the first week of the month but gave up most of the gains over the rest of May. Calendar 2020 API2 coal continued its steady decline and reached a two-year low of $64/tonne by the end of the month.

There were attempts to move the market in either direction by short-term traders, but opportunistic buying by compliance entities and profit-taking by speculators kept the market rangebound.

Technical signals increasingly reflected a lacklustre market mood; the relative strength index steadily declined towards a neutral readout, while the Bollinger bands shrank to their narrowest since last August. Normally a narrowing of Bollinger bands presages a price breakout, but this did not take place in May.

The announcement by UK prime minister Theresa May on May 24 that she will resign in early June boosted expectations of a hard Brexit. Candidates to replace May are seen as more open to a no-deal Brexit in the event that the EU does not agree to renegotiate the withdrawal agreement.

While this development might be expected to increase the chances of a rapid sell-off of surplus UK allowances, analysts say that UK-based companies have had more time to make arrangements to “park” their EUAs in continental accounts, and therefore there is less chance of a rapid liquidation of the surplus.

The outlook for June is flat to bearish, according to market participants. A lack of hedging activity from the power sector is likely to cap demand, while buyers will be watching for price dips before entering the market.

The historical performance of prices in May, June and July is evenly split between increases and decreases, so much will depend on the actions of speculative traders. The selection process for a new Conservative leader in the UK will also add a note of uncertainty to the market.

86% of S&P 500 Index® Companies Publish Sustainability / Responsibility Reports in 2018

The Governance & Accountability Institute (G&A) research team determined that eighty-six percent (86%) of the companies in the S&P 500 Index® published sustainability or corporate responsibility reports in the year 2018.

This research effort marks G&A Institute’s eighth annual monitoring and analysis of sustainability responsibility reporting of the large-cap companies in the S&P 500 Index® — one of the most widely recognized barometers of the US economy and conditions for public companies in the capital markets. In charting reporting performance in prior years, G&A researchers found that:

-During the year 2011, just under 20% of S&P 500 companies reported on their sustainability, corporate social responsibility, ESG performance and related topics and issues;

-In 2012, 53% of S&P 500 companies were reporting — for the first time a majority of the S&P 500 Index (benchmark);

-By 2013, 72% were reporting — that is 7-out-of-10 of all companies in the popular benchmark;

-In 2014, 75% of the S&P 500 were publishing reports;

-In 2015, 81% of the total companies were reporting;

-In 2016, 82% signaled a steady embrace by large-cap companies of sustainability reporting;

-In 2017, the total rose slightly to 85% of companies reporting on ESG performance;

And for year 2018, the total inched up to 86% of S&P 500 companies reporting.

More information here

UN agency pushes forward on shipping emissions reduction

IMO’s Marine Environment Protection Committee (MEPC) pushed forward with a number of measures aimed at supporting the achievement of the objectives set out in the initial IMO strategy on reduction of greenhouse gas (GHG) emissions from ships, in line with the Paris Agreement under UNFCCC and the United Nations 2030 Agenda for Sustainable Development.

The MEPC 74 session (13-17 May) approved amendments to strengthen existing mandatory requirements for new ships to be more energy efficient; initiated the Fourth IMO GHG Study; adopted a resolution encouraging cooperation with ports to reduce emission from shipping; approved a procedure for the impact assessment of new measures proposed; agreed to establish a multi-donor trust fund for GHG; and agreed terms of reference for the sixth and seventh intersessional working groups to be held in November 2019 and in March 2020 respectively in order to expedite the work.

Also discussed were possible candidate short-term, mid- and long-term measures aiming at reducing GHG emissions from ships, to be further considered at next sessions.

Strengthening energy efficiency rules – draft amendments approved

The MEPC approved, for adoption at the next session in April 2020, amendments to MARPOL Annex VI to significantly strengthen the Energy Efficiency Design Index (EEDI) “phase 3” requirements.

The draft amendments bring forward the entry into effect date of phase 3 to 2022, from 2025, for several ship types, including gas carriers, general cargo ships and LNG carriers. This means that new ships built from that date must be significantly more energy efficient than the baseline.

For container ships, the EEDI reduction rate is enhanced, significantly for larger ship sizes, as follows:

-For a containership of 200,000 DWT and above, the EEDI reduction rate is set at 50% from 2022

-For a containership of 120,000 DWT and above but less than 200,000 DWT, 45% from 2022

-For a containership of 80,000 DWT and above but less than 120,000 DWT, 40% from 2022

-For a containership of 40,000 DWT and above but less than 80,000 DWT, 35% from 2022

-For a containership of 15,000 DWT and above but less than 40,000 DWT, 30% from 2022

More information here

UNEP report calls for more integrated approaches to sustainable infrastructure to achieve the 2030 Agenda

The UN Environment Programme (UNEP) released a report that calls for more integrated approaches to sustainable infrastructure to achieve the 2030 Agenda for Sustainable Development. The publication aims to motivate development planners to invest in governments’ technical and institutional capacity to apply integrated approaches.

The report titled, ‘Integrated Approaches to Sustainable Infrastructure,’ underscores the linkages between infrastructure and sustainable development, observing that infrastructure affects the environment-focused SDGs and underpins the socioeconomic SDGs.

According to the report, approximately 70% of greenhouse gases are linked to the construction and operation of infrastructure, and buildings alone are estimated to account for more than 30% of global resource consumption and energy end use. As a result, the achievement of environmental SDGs such as climate action (Goal 13), life below water and life on land (Goals 14 and 15, respectively) is inextricably linked to present and future infrastructure assets.

The report recommends three key actions to promote integrated approaches to infrastructure at a system scale:

-Increasing the visibility of the central role of infrastructure in the 2030 Agenda, and making integrated approaches to infrastructure a distinct item on the global policy agenda, also mobilizing the research community to demonstrate the benefits of upstream, macro-level, integrated infrastructure planning and providing data and information to support decision making;

-Identifying and addressing gaps in tools for integrated approaches, consolidating existing tools and providing guidance on the use of tools to support integrated approaches to infrastructure in different contexts; and

-Providing development planners and government officials with specialized knowledge and technical capacity to adapt and apply available tools and approaches to sustainable infrastructure in support of the 2030 Agenda.

You can download the report here

 

Nature is declining globally at rates unprecedented in human history and the world will likely fail to meet 35 out of the 44 SDG targets

Nature is declining globally at rates unprecedented in human history — and the rate of species extinctions is accelerating, with grave impacts on people around the world now likely, warns a landmark new report from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES).

The Report finds that around 1 million animal and plant species are now threatened with extinction, many within decades, more than ever before in human history.

The average abundance of native species in most major land-based habitats has fallen by at least 20%, mostly since 1900. More than 40% of amphibian species, almost 33% of reef- forming corals and more than a third of all marine mammals are threatened. The picture is less clear for insect species, but available evidence supports a tentative estimate of 10% being threatened. At least 680 vertebrate species had been driven to extinction since the 16 th century and more than 9% of all domesticated breeds of mammals used for food and agriculture had become extinct by 2016, with at least 1,000 more breeds still threatened.

The Report notes that, since 1980, greenhouse gas emissions have doubled, raising average global temperatures by at least 0.7 degrees Celsius – with climate change already impacting nature from the level of ecosystems to that of genetics – impacts expected to increase over the coming decades, in some cases surpassing the impact of land and sea use change and other drivers.

Despite progress to conserve nature and implement policies, the Report also finds that global goals for conserving and sustainably using nature and achieving sustainability cannot be met by current trajectories, and goals for 2030 and beyond may only be achieved through transformative changes across economic, social, political and technological factors. With good progress on components of only four of the 20 Aichi Biodiversity Targets, it is likely that most will be missed by the 2020 deadline. Current negative trends in biodiversity and ecosystems will undermine progress towards 80% (35 out of 44) of the assessed targets of the Sustainable Development Goals, related to poverty, hunger, health, water, cities, climate, oceans and land (SDGs 1, 2, 3, 6, 11, 13, 14 and 15). Loss of biodiversity is therefore shown to be not only an environmental issue, but also a developmental, economic, security, social and moral issue as well.

You can access to the report here

 

Approved the article that allocates resources to combat part of the deforestation in the Colombian Amazon

The plenary of the House of Representatives of Colombia, in debate for the National Development Plan (PND) 2018-2022, approved the article that allocates resources to combat part of the deforestation in the Colombian Amazon.

The percentage currently allocated to “Colombia in Peace”, the fund that aims to serve as an instance of execution and articulation of resources for the implementation of the Final Peace Agreement, has earmarked zero percent of resources for Environment and Sustainable Development.

The paper initially proposed an additional five percent, but with the proposal of representative Juan Carlos Losada, it was possible to reach 15 percent.

Losada, the author of the initiative, said that “Article 84 of the PND will allocate 15 percent of the resources from the carbon tax for the conservation of the Amazon rainforest, that is, about 20 billion to stop deforestation in the most strategic area of our country in environmental terms”.

Following this initiative, the final article was like this:

Article 84 Conservation of forests in the Amazon region. Of the resources coming from the carbon tax, specifically from the “Colombia in Peace” category, an exclusive 15 percent will be allocated for the conservation of the forests of the Amazon region; since this region contains the largest extension of forests nationwide, constituting the territory as a center of sustainable economic and environmental development for the country, for the biodiversity it houses. With its preservation it helps in a positive way to reverse the ecological imbalance that currently exists due to the impact of human activities on the environment “.

EU ETS Monthly Report — April 2019

European carbon advanced 20% in April, with the December 2019 futures contract ending the month at €26.29 on Ice Futures. Screen-traded volume in the benchmark cotnract was up almost 10% on March, as activity built up in the run-up to the annual compliance deadline.

The main price influence during the month was the postponement of the Brexit deadline from March 29 to October 31. The eight-month delay gives the UK Parliament another opportunity to ratify the withdrawal agreement reached with the European Union last year, though this postponement won’t allow for UK installations to resume participation in the market.

The text of the relevant Commission decision reads: “From 1 January 2019, the Central Administrator shall suspend the acceptance by the EUTL of relevant processes for the United Kingdom relating to free allocation, auctioning and the exchange of international credits.

“This suspension shall cease from the day following the one on which the instruments of ratification of both Parties to the Withdrawal Agreement are deposited… and the end of the suspension shall be made public.”

To this end, the EU ETS as a whole can be considered shorter on an annual basis, since UK installations routinely emit less than the country’s allocation of EUAs. This bullish factor generated a slight relief rally, with prices rising from €21.91 on April 1 to €26.13 just ten days later. Carbon reached a new 11-year high of €27.85 on April 12.

Participants said this Brexit- and compliance-related rally also encouraged speculative investors to resume building long positions, which some had been liquidating in March in expectation of a no-deal Brexit, which might have triggered widespread selling by UK installations.

Carbon was also supported by a gradual increase in natural gas prices: the June TTF contract rallied strongly by mid-month, gaining as much as 13%, while June coal fell 3%.

With gas-fired generation estimated to be preferred to all but the most efficient coal plants, carbon tracked the fortunes of power and gas over the course of the month. The 30-day correlation at the end of April between December 2019 carbon and calendar 2020 power was 0.949, while for calendar 2020 gas it was 0.863. Meanwhile, for carbon and coal the correlation was 0.502.

As the market moves into May, the end of compliance is expected to lead to a decline in demand, yet at the same time, the massive jump in carbon prices year-on-year (a year ago, the market ended April at €13.59) means many compliance installations will be managing their exposure more carefully by buying regularly.

In addition, utilities in southern and eastern Europe do not typically sell forward power and hedge fuels and carbon, and so are expected to continue to buy regularly to cover their ongoing generation.

The market was also tightened in April by interruptions in the auction schedule over the Easter break, and this will be repeated at both the start and the end of May. EU member states will sell 46.6 million EUAs in coming month, compared to 52.8 million in April.

Mid-May will also see the European Commission publlish its calculation of the Total Number of Allowances in Circulation (TNAC) for 2018. This number will be the basis for the operation of the Market Stability Reserve over the period from September 2019 to August 2020.

At present, the European Energy Exchange auction calendar for the period from September through to December lists a total of 305 million EUAs to be sold, but this total was only ever notional, and will be adjusted once the TNAC is known.

By the same token, several countries will shortly announce additional supply for auction from June, which will offset the reductions through the MSR to some small extent.

Study: Global warming has increased economic inequality since the 1960s

A new Stanford University study shows global warming has increased economic inequality since the 1960s. Temperature changes caused by growing concentrations of greenhouse gases in Earth’s atmosphere have enriched cool countries like Norway and Sweden, while dragging down economic growth in warm countries such as India and Nigeria.

“Our results show that most of the poorest countries on Earth are considerably poorer than they would have been without global warming,” said climate scientist Noah Diffenbaugh, lead author of the study published April 22 in the peer-reviewed Proceedings of the National Academy of Sciences. “At the same time, the majority of rich countries are richer than they would have been.”

Although economic inequality between countries has decreased in recent decades, the research suggests the gap would have narrowed faster without global warming.

While the impacts of temperature may seem small from year to year, they can yield dramatic gains or losses over time. For example, after accumulating decades of small effects from warming, India’s economy is now 31 percent smaller than it would have been in the absence of global warming.

At a time when climate policy negotiations often stall over questions of how to equitably divide responsibility for curbing future warming, this analysis offers a new measure of the price many countries have already paid. “Our study makes the first accounting of exactly how much each country has been impacted economically by global warming, relative to its historical greenhouse gas contributions,” said the authors.

While the biggest emitters enjoy on average about 10 percent higher per capita GDP today than they would have in a world without warming, the lowest emitters have been dragged down by about 25 percent. The researchers emphasize the importance of increasing sustainable energy access for economic development in poorer countries.

More information about the study here

GSIA Report: Global sustainable investment assets reached $30.7 trillion in 2018, a 34% increase from 2016

The Global Sustainable Investment Alliance (GSIA) released its biennial Global Sustainable Investment Review 2018, showing that global sustainable investment assets reached $30.7 trillion at the start of 2018, a 34 percent increase from 2016.

In its fourth edition, the biennial Global Sustainable Investment Review brings together the results from regional market studies by the sustainable investment forums of Europe, the United States, Japan, Canada, and Australia and New Zealand. It also includes data on the African sustainable investing market in cooperation with the African Investing for Impact Barometer and highlights from several countries in North, Central and South America provided by the Principles for Responsible Investment.

The 2018 Global Sustainable Investment Review found that sustainable investing assets have grown in all regions since 2016. Europe accounts for the largest concentration of sustainable investment assets globally, with total assets of €12.3 trillion ($14.1 trillion). However, the share of Europe’s sustainable investing assets in the region’s overall assets under professional management declined from 53 percent to 49 percent. The slight drop may be due to a move to stricter standards and definitions of sustainable investing.

The United States is the second largest region based on its value of sustainable investing assets. Total US-domiciled assets under management using sustainable strategies grew from $8.7 trillion at the start of 2016 to $12.0 trillion at the start of 2018, an increase of 38 percent.

In Japan, sustainable investing assets quadrupled from 2016 to 2018, growing from just 3 percent of total professionally managed assets in the country to 18 percent. This growth has made Japan the third largest center for sustainable investing after Europe and the United States.

In Canada, sustainable investing assets grew by 42 percent over the two-year period and now account for over 50 percent of professionally managed assets in the country.

Australasia (Australia and New Zealand) is the region with the greatest proportion of sustainable investment assets relative to total assets under management: 63 percent.

You can download the report here