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Sustainable Energy Update

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Climate and sustainable finance news: Jan 2021

Developments in the green energy sector and beyond.

Last updated: 08 Jan 2021 6 min read

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Global

Renewable electricity generation to see 7% rise

The International Energy Agency (IEA) published its first Electricity Market Report (EMR) in December, assessing the trends of 2020 and examining forecasts for 2021.

The report expects overall global demand for electricity to fall by around 2% by the end of 2020, calling this the “biggest annual decline since the mid-20th century” and blaming the Covid-19 pandemic.

The analysis added China would be the only major economy to see an increased demand, caveating that its projected growth of 2% was still below its average of 6.5%.

In contrast, by the end of 2020, renewable electricity generation was projected to grow by almost 7%, with coal-fired generation set to fall by 5% and nuclear power generation in decline by around 4%.

The EMR expects a “modest rebound” in 2021, with global electricity demand growing by around 3%.

No nation on target to meet Paris Agreement objectives

There is no country yet “on a path compatible with the Paris climate targets”, according to the Climate Change Performance Index released at the end of 2020.

The index is developed annually by environmental NGO (non-governmental organisation) Germanwatch, the New Climate Institute and the Climate Action Network, and measures nations’ performances on greenhouse gas emissions, renewable energy, energy use and climate policy.

The US came last in the study, with Sweden, Denmark, Morocco, the UK and Lithuania in the top five.

The study uses indicators such as ‘past trend’ and ‘well-below 2°C compatibility of the current level and 2030 targets’, but concludes “no country performs well enough in all index categories to achieve an overall very high rating”.

EU

EU citizens mobilised for climate change

An initiative between the European Climate Pact (part of the European Green Deal) and the global climate campaign Count Us In aims to mobilise EU citizens to reduce carbon pollution and lobby government leaders.

The collaboration seeks to empower the public to make practical changes that reduce their carbon footprint. Steps such as cycling and walking, reducing food waste or insulating homes will be counted in the Count Us In aggregator, alongside millions of others around the world.

EU countries agree 2030 climate goals

EU environment ministers have agreed their higher climate-change targets for 2030. The consensus was reached in the run-up to Christmas, following a deal between the 27 EU members after an all-night summit.

Environmental leaders set a target of cutting net greenhouse gas emissions by at least 55% from 1990 levels by 2030 – a 15% increase on the 40% goal.

Despite this, environment ministers expect a battle with lawmakers who want to go even further. The European Council has stated it wants a 60% reduction target for 2030. The council and commission will hold talks to find a consensus.

UK

Sixth Carbon Budget welcomed

Green campaigners have responded favourably to the 2020 Carbon Budget – provided the government acts quickly enough to make substantial impacts.

The budget is required under the Climate Change Act and provides ministers with “advice on the volume of greenhouse gases the UK can emit during 2033 – 2037”. It recommends a 78% reduction in annual emissions over the next 14 years, bringing forward the UK’s previous 80% target by nearly 15 years.

Emphasis is put on scaling up renewable energies, improving infrastructure, promoting electric vehicles, improving energy efficiency of buildings and restoring woodlands and peatlands.

The report warns this will mean a decade of action and ambition from the government and private, public and financial sectors.

White Paper on green energy published

The much-anticipated White Paper outlining government plans to improve the UK’s response to climate change has been published.

The first paper of its kind for over a decade, it builds on prime minister Boris Johnson’s Ten Point Plan from 2020.

The paper doubles down on the government’s intention to “transform energy” and drive a “green recovery” while supporting up to 220,000 jobs over the next decade.

The plans also aim to end the sale of new petrol and diesel cars by 2030, create support for an extra 40 gigawatts (GW) of offshore wind and provide £3bn to fund home-energy improvements.

National Infrastructure Strategy report launched

The government has set out plans to overhaul the country’s framework and transition to net zero in its long-awaited National Infrastructure Strategy.

As outlined in the autumn spending review, chancellor Rishi Sunak confirms a £12bn commitment to the net-zero transition in 2021 – 2022. Transport, industry, energy and the built environment will be altered to create an “infrastructure revolution”, addressing issues which have to date “held back” the development of infrastructure – including the “stop-start” of public investment. The government reiterates its support for the controversial £27bn roads programme and HS2 project.

Net zero “crucial” for economic success

Ahead of a full review due in the spring, the Treasury has published an interim Net Zero Review, outlining its approach to financing the decarbonisation of the UK economy.

The report states “climate change is an existential threat to humanity” and while “the UK has made significant progress in decarbonising its economy [it] needs to go much further to achieve net zero”.

The transition will “create new opportunities for economic growth and job creation” and “the demand for low-carbon goods and services will encourage new industries to emerge”.

The full report will look at how the government can “reduce policy uncertainty to encourage innovation, technological development and investment”.

Financial Conduct Authority insists on climate-related disclosures

UK premium-listed commercial companies will be required to include climate-related financial disclosures in their annual financial reports.

The FCA has published a policy statement and guidance on the issue, to ensure better disclosure around climate-related risks and opportunities and decrease the risk of consumers buying unsuitable or mis-sold products.

The rule will apply for accounting periods beginning on or after 1 January 2021, with the first annual financial reports under the new rules published in spring 2022.

UK utilities urged to publish plans for Just Transition

Big hitters in Britain’s utilities sector are being urged to publish their Just Transition strategies to demonstrate their commitment to social equality.

The Just Transition concept aims to ensure that, as the world develops into a green economy, the benefits are shared with those who are at risk of losing out economically – whether that’s countries, industries or consumers.

One such transition plan from energy firm SSE lists 20 principles that focus on moving into a net-zero world – and out of a high-carbon one. It will ensure jobs, consumer fairness, building and operating new assets, and supporting communities are all key priorities.

The pressure on companies to publish strategies comes as fears grow that the move to decarbonise the energy sector could be delayed if social mandates are not secured.

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