The 6th IRENA Legislators Forum took place virtually on 13th January 2021 and hosted more than 170 participants from 65 countries. Participants convened to discuss how to build back better, creating more resilient societies through the promotion of renewable energy. As Moroccan MP Ibtissame Azzaoui pointed out, recovery packages, set up to combat the COVID19-induced economic downturns, give an “unprecedented opportunity to shift investment into renewable energy to rebuild better”. The Director of IRENA’s Knowledge, Policy and Finance Centre, Rabia Ferroukhi, layed out that a just transition – besides being the economically most promising way forward – holds many social co-benefits. These include decreasing health risks due to pollution, ensuring energy access for remote communities and thus improving social services and gender equality. The sharing of good practices and lessons learned in international networks, such as the Inter-Parliamentary Union or the Global Renewables Congress (GRC), being a key factor in rapid large-scale deployment of renewables for everybody.
How is the covid-recovery affecting the energy transition?
A closer look at the stimulus packages introduced and the investment decisions taken in countries and regions around the globe shows: investments in fossil industries are increasingly phasing out. In Asia, the Philippines government issued higher taxes on coal and signed a moratorium prohibiting the construction of new coal-fired power plants, potentially cancelling 14 GW of planned coal power capacity. The government of India has set a very ambitious 450 GW renewable energy target until 2030. It is striving to get the private sector involved in investing in PM Modi’s ‘One sun, one grid, one world’ initiative, aiming to connect more than 70 countries through an intercontinental solar-powered grid. In the European Union, more than 250bn Euro – one-third of the stimulus package – is to be assigned to climate mitigation measures. In addition, the renewable energy targets will be revised due to the EU Commissions’ more ambitious 2030 emission reduction target.
What are the key drivers for the global rise in renewable energy?
Jose Donoso, the World Solar Council’s Chairman, illustrated that photovoltaic (followed by on-shore wind) is the cheapest – and in many cases – most affordable and effective way of powering communities. Adam Bruce, Global Head of Affairs at Mainstream Renewable Power, pointed to the rapidly growing awareness „of high risks of stranded assets associated with investments in coal.“ Bärbel Höhn, chair of the Global Renewables Congress, argued that the Corona pandemic pushes more and more countries to invest in renewables for they have proven to be less susceptible to supply chain disruptions. „Many governments have experienced that green energy is cheaper, more resilient and easier to implement. In addition, renewables create jobs – especially local jobs – which is of great importance to developing countries, in particular. Renewables help to overcome hunger and poverty.” IRENA’s current Global Renewables Outlook estimates that until 2050 more than 40 million jobs will be created in the renewable energy sector worldwide. Bärbel Höhn concluded by providing multiple examples that showcased renewables’ co-benefits on health, gender equality and education.
What needs to be done to accelerate the energy transition?
To set the world on a renewable trajectory that is in line with the Paris Agreements’ climate targets, around USD 1 trillion per year need to be invested into the renewable energy sector, assumes the IRENA. Luxembourg MP Sven Clement asserts that there is enough capital accessible, but investments need to shift into green energy. He advocates for raising awareness and applying public pressure on large investors, such as pension funds – holding more than USD 50 trillion – to invest the citizen’s money in green infrastructure projects. Starting by putting rooftop solar on public buildings. As of now, there has been a shortage of bankable projects due to perceived risks or lack of infrastructure. This urged the IRENA amongst other networks to focus on supporting countries to develop bankable projects and by providing a platform to connect them with potential funders.
International investment discourse, being centred around large-scale projects, often fails to address energy poverty-related issues, affecting low-income rural population living off-grid. As Zimbabwean MP Joel Gabuza asserted, the high upfront capital expenditure and the lack of access to adequate funding for RE installations is a major barrier for its deployment in those low-income areas, where access to clean energy would have the greatest impact. He, therefore, called upon the international community to link industrialised countries’ carbon emission reduction efforts to RE projects in countries that are in need of combating energy poverty. Former Special Representative of the Secretary-General for SEforAll and Sierra Leonean MP Kandeh Yumkella pointed out that the private sector needs to be involved on a local and national scale through building markets for a new generation of „energy entrepreneurs“ that will champion the energy transition. In order to be successful, administrative barriers, such as lack of market access and infrastructure, fossil fuel subsidies and rapidly changing, thus, uncertain regulatory frameworks need to be overcome. This is why the role of parliamentarians is of such importance in „setting up adequate frameworks and providing the most important ingredient for change, which is political will“, concluded Nicholas Dunlop, Secretary-General of the Climate Parliament.
Lessons learned: creating safe investment environments & enabling local transitions
„If it had not been for a small group of committed German MPs that established a safe and reliable legal framework for renewables 20 years ago, the prices of green energy would not be as cost-competitive as they are now. The guaranteed feed-in tariffs sparked investment by citizens, which in turn led to jobs in R&D and deployment of RE lowering their costs significantly“, MEP and GRC-Member Jutta Paulus related. Reliable legal frameworks and long-term regulation pathways are crucial to the success of the energy transition. In order to establish such long-term trajectories there is a „need for renewable energy studies aligned with climate pathways“, postulates Martin Chungong, Secretary-General of the IPU. Governments and parliamentarians have many ways to promote a just transition in particular by facilitating investments in green infrastructure in the stimulus packages and enabling foreign and domestic investments in RE.
According to surveys presented by the Global Solar Council and GRC-chair Bärbel Höhn, the small and medium enterprises working in the RE sector in the Global South are the ones most hardly hit by the COVID19 pandemic. This is, above all, due to delays in projects and a more risk-averse funding environment. While the decarbonisation of assets of the international finance actors has been accelerating, there is only little experience with funding small-scale and decentralised RE projects. It is particularly these projects that reach remote areas, providing energy access through off-grid or micro-grid solutions, thus, creating jobs on a local level throughout countries, GRC-chair Höhn stated. Based on this, the German development ministry – financially reinforced through German recovery measures – issued an investment initiative providing EUR 10 million to help these small entrepreneurs by microfinancing them in the COVID crisis. They are the champions of the local energy transition that are needed to shift to a more decentralised, greener and just power infrastructure.
Moving forward: the role of parliamentarians
Senator Loren B. Legarda from the Philippines stated that what we have learned from this pandemic is that „we are only as strong as the most vulnerable among us“. In order to build back better, we are in need of a holistic approach to develop systems and societies as a whole that are much more resilient to the challenges the future holds. To achieve an inclusive and just energy transition, we need the participation of everyone. As GRC-chair Höhn pointed out: „If you cannot make it on the local level, you will not make it on the national or global level. This is why MPs are so important as they are the link between the local population and national policy-making.“
The Legislators Forum – as the GRC does – provides a platform to share experiences and knowledge. Due to the limited carbon budget available, learning from the examples of others and avoiding mistakes that create unsustainable path-dependencies is pivotal. The transition has started but needs to be accelerated throughout the world in order to achieve ambitious climate targets.
The shortcomings of auctions in the RE sector or the role of renewables in COVID19 recovery programmes are two of the most recent analyses and publications of the Global Renewables Congress.