Global Greenhouse Gas Emissions Estimated to Fall by 8% in 2020—the Largest Recorded Drop in History

The COVID-19 pandemic represents the biggest shock to the global economy in more than seven decades, but new research says that the outbreaks are likely to result in a record-breaking 8% annual decline in carbon emissions—the largest decrease in history.

A new report released this week by the International Energy Agency (IEA) provides an almost real-time view of the COVID-19 pandemic’s extraordinary impact across all major fuels. Based on an analysis of more than 100 days of real data so far this year, the IEA’s Global Energy Review includes estimates for how energy consumption and carbon dioxide (CO2) emissions trends are likely to evolve over the rest of 2020.

“Only renewables are holding up during the previously unheard-of slump in electricity use,” said Dr. Fatih Birol, the IEA Executive Director. “It is still too early to determine the longer-term impacts, but the energy industry that emerges from this crisis will be significantly different from the one that came before.”

The Global Energy Review’s projections of energy demand and energy-related emissions for 2020 are based on assumptions that the lockdowns implemented around the world in response to the pandemic are progressively eased in most countries in the coming months, accompanied by a gradual economic recovery.

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The report projects that energy demand will fall 6% in 2020—seven times the decline after the 2008 global financial crisis. In absolute terms, the decline is unprecedented—the equivalent of losing the entire energy demand of India, the world’s third largest energy consumer.

Advanced economies are expected to see the biggest declines, with demand set to fall by 9% in the United States and by 11% in the European Union. The impact of the crisis on energy demand is heavily dependent on the duration and stringency of measures to curb the spread of the virus. For instance, the IEA found that each month of worldwide lockdown at the levels seen in early April reduces annual global energy demand by about 1.5%.

Changes to electricity use during lockdowns have resulted in significant declines in overall electricity demand, with consumption levels and patterns on weekdays looking like those of a pre-crisis Sunday. Full lockdowns have pushed down electricity demand by 20% or more, with lesser impacts from partial lockdowns. Electricity demand is set to decline by 5% in 2020, the largest drop since the Great Depression in the 1930s.

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At the same time, lockdown measures are driving a major shift towards low-carbon sources of electricity including wind, solar PV, hydropower and nuclear. After overtaking coal for the first time ever in 2019, low-carbon sources are set to extend their lead this year to reach 40% of global electricity generation—6 percentage points ahead of coal.

Electricity generation from wind and solar PV continues to increase in 2020, lifted by new projects that were completed in 2019 and early 2020. An additional report from energy research group BloombergNEF says that wind and solar power are now the cheapest sources of new energy development for two-thirds of the world’s population.

This trend is affecting demand for electricity from coal and natural gas, which are finding themselves increasingly squeezed between low overall power demand and increasing output from renewables. As a result, the combined share of gas and coal in the global power mix is set to drop by 3 percentage points in 2020 to a level not seen since 2001.

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Coal is particularly hard hit, with global demand projected to fall by 8% in 2020, the largest decline since the Second World War. Following its 2018 peak, coal-fired power generation is set to fall by more than 10% this year.

After 10 years of uninterrupted growth, natural gas demand is on track to decline 5% in 2020. This would be the largest recorded year-on-year drop in consumption since natural gas demand developed at scale during the second half of the 20th century.

Renewables are set to be the only energy source that will grow in 2020, with their share of global electricity generation projected to jump thanks to their priority access to grids and low operating costs. Despite supply chain disruptions that have paused or delayed deployment in several key regions this year, solar PV and wind are on track to help lift renewable electricity generation by 5% in 2020, aided by higher output from hydropower.

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“This crisis has underlined the deep reliance of modern societies on reliable electricity supplies for supporting healthcare systems, businesses and the basic amenities of daily life,” said Dr. Birol. “But nobody should take any of this for granted—greater investments and smarter policies are needed to keep electricity supplies secure.”

As a result of these trends—mainly the declines in coal and oil use—global energy-related CO2 emissions are set to fall by almost 8% in 2020, reaching their lowest level since 2010. This would be the largest decrease in emissions ever recorded—nearly six times larger than the previous record drop of 400 million tonnes in 2009 that resulted from the global financial crisis.

“Resulting from … economic trauma around the world, the historic decline in global emissions is absolutely nothing to cheer,” said Dr Birol. “But governments can learn from [the 2008 crisis] by putting clean energy technologies—renewables, efficiency, batteries, hydrogen and carbon capture—at the heart of their plans for economic recovery. Investing in those areas can create jobs, make economies more competitive and steer the world towards a more resilient and cleaner energy future.”

Reprinted from the International Energy Agency

This is just one of many positive stories and updates that are coming out of the COVID-19 news coverage this week. For more uplifting coverage on the outbreaks, click here.

File photo by rabiem22, CC

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Lebanon Becomes First Arab Country to Legalize Medical Marijuana

Following a parliamentary vote last Tuesday, Lebanon has become the first Arab nation to legalize cannabis for medicinal and industrial purposes—and it could bring a much-needed financial windfall to the country’s economy.

The legislation was approved nearly two years after it was recommended by New York-based firm Mckinsey and Co. through a consultation with the Lebanese government about alleviating the country’s economic crisis in 2018.

Since cannabis has long been grown illegally in the nation’s Bekaa Valley—and since Lebanon has been ranked among the top three biggest Middle Eastern cannabis cultivators by the United Nations—economists have estimated that a medical marijuana industry could bring in as much as $1 billion in annual revenue.

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Reports say that the legislation will also encourage the crop to be used for new legal industries such as producing textile fibers, developing pharmaceutical goods, and manufacturing consumer products from CBD oil.

“We have moral and social reservations, but today there is the need to help the economy by any means,” said Alain Aoun, a senior MP in the Free Patriotic Movement, as reported by The Independent.

Lebanon had already been suffering from dramatic rates of inflation, rising unemployment, and the diminishing value of local currency prior to the novel coronavirus outbreaks. Now, financial and political experts are hoping that the new birth of a booming medical marijuana industry could help resuscitate the nation’s struggling economy in the near future.

Representative photo by Visible Hands, CC

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Record-Breaking Amounts of Solar Electricity Generated in Germany After String of Sunny Days

Good News Network recently explained how traditional consumer-driven supply and demand market forces are pushing coal further and further to the edge of the bed (and economic ruin), like a sprawling spouse kicking the blankets toward the cold tile floor.

A recent string of cloudless days in Germany saw the country’s solar energy production climb above 32,000 megawatts in a single day last week—smashing the previous record set on March 23rd, according to a report from Bloomberg News.

The sunny days are slated to continue, according to the German weather service DWD.

These sunny days mean that solar power is generating around 40% of the total baseline in Germany, with all their renewables together accounted for 78%, while coal and nuclear power trailed behind with only 22%.

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By 2038, renewables are predicted by the German government to make up 80% of total grid production. And owners of coal plants understand that it could become completely unsustainable to continue financing operations many years before that milestone is achieved.

A Death Rattle for Coal

In Europe, it’s already 100% more expensive to finance, supply, staff, and operate a coal-fired power plant compared to a renewable facility, while in historically coal-glutted nations like the U.S., India, and China, it’s already 50-60% more costly.

The recent lockdown orders for COVID-19 in Germany could have had a measurable effect on the sunny days as well, as the reduction in air pollution from things like car exhaust has already been recorded as significant in countries like India, where residents have been able able to see the Himalayas on the horizon for the first time in 30 years.

File photo by Nathan Dumlao, CC

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Not only are the shutdowns rewarding the solar market with clearer skies, but the already lagging coal market is taking further body blows as demand plummets from the shutdown of stores and office buildings. In Germany, renewable sources are the first to enter grid circulation, and since the decrease in energy demand, consumers are actually using less power than is available, meaning the electricity generated from a coal plant might be not only unutilized—but unpaid for.

The services desired by consumers are simply being fulfilled by those most readily capable of fulfilling them.

This not only applies to Jane and John Smith turning on the lights in their house, but buyers and sellers in the energy sector. The simple explanation is as follows. Johan runs an energy investment firm, and when looking to buy shares of a power producer, his maximum price for carbon-based power is 5,000 euro per share, and for renewable power, 8,000 euro per share. He can afford to pay more for renewables because he stands to make more money from those shares.

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Jurgen, who runs a carbon-based power source, can only afford to sell at 10,000 euro per share, because of current market demands for renewables. This difference of valuation of 5,000 euro between Jurgen and Johan prevent a sale from being made, and so Jurgen must either find a willing buyer, a way to reduce operating costs, or another energy project.

Whether catalyzed from climate activism, science, or whichever technology costs the least to operate, these simple supply and demand forces are causing people to put their money in renewables—and money-talks.

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Free Market Forces Will Obliterate Global Coal Reliance Within 10 Years, Says Study

Contrary to the image of greedy fossil fuel billionaires lobbying politicians for favors, it is now the free market, not world governments, that are doing the most to advance the use of clean renewable energy.

In the most basic sense, it is no longer a lucrative business path to invest in carbon emission-heavy sources. Today, investing in coal projects is more expensive—across all world energy markets—than renewables. In as little as 10 years, it will be cheaper to build renewables than to run coal power resources, much less build new ones.

How much more expensive? Right now, the report estimates that the cost of operating and investing in coal—not in Europe, but in the U.S., India, and China—is about 50% more expensive than renewables. By 2030, that number doubles to 100% assuming market forces remain constant rather than intensify, which they are likely to do.

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“The market is driving the low-carbon energy transition, but governments aren’t listening,” writes Matt Gray, co-head of power and utilities for Carbon Tracker, and co-author of a new global economic report about coal investments entitled “How to Waste Half a Trillion Dollars.”

“Renewables are outcompeting coal around the world and proposed coal investments risk becoming stranded assets which could lock in high-cost coal power for decades.”

Indeed, the number of countries in which it is cheaper in invest and operate renewable energy assets could make someone optimistic about the future since most underdeveloped Asian energy markets, as well as the three biggest coal consumers on earth, would all save money switching to renewables, according to this helpful infographic from the report.

However, many of these countries still have nationally-planned coal power projects either in early investment stages, or already in production.

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As repeatedly demonstrated by the national debt of the US government, a stranded asset is manageable for most nations, but insufferable for a private firm that is unable to borrow more dollars every year than they invest.

It is an economic term for an asset—like a coal plant—which will cease to generate returns even before the end of its economic life. These carbon-heavy facilities not only have a slow rate of return and open the door for market competition from renewables, they also are becoming more expensive to invest in, build, and operate, than they are to make returns for those investors.

That is partially why free market economic forces are working where many governments are failing; it costs a lot of money to build electricity-generating resources, and since banks and financial institutions are the largest funders of energy projects, they simply aren’t willing to finance coal power projects, choosing instead to invest in solar and wind resources.

Vietnam: a Greenhouse Government

The government of Vietnam is currently considering backing away from 15 gigawatts of proposed coal power as financial constraints make it a harder to build new plants, which it wants to do in order to increase economic development.

The proposed projects would allocate 50% of energy production to coal-fired plants, but an end to the deal would see it drop to 37%, with others like hydroelectric and gas remaining stable, and renewable energy swooping in to cheaply meet the demand and fill the gap in supply.

Much of the nation’s energy projects are funded by investors in other coal-fired East Asian nations like Japan and South Korea, as well as powerhouse lender Singapore. After a recent aligning of principles with EU nations to restrict coal financing, however, many coal projects in Vietnam will be left stagnating with the government’s only options being to either finish the projects with taxpayer money or listen to market forces and move into cleaner energy production.

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On the other hand, private sector giants like Sir Christopher Hohn, who is the billionaire hedge fund manager and co-founder of the Children’s Investment Fund Foundation (CIFF), threatened to sue British banks Barclays, Standard Chartered, and HSBC over the financing of new coal projects.

“Coal is the single largest source of greenhouse gas emissions globally and the risks of its continued use in the power sector are not being adequately addressed by regulators and the financial system,” he said in a statement on the CIFF website.

Irresistible Market Forces

A high price of carbon and significant investment in renewable energy has created a very unfriendly market for coal in the EU, while “How to Waste Half a Trillion Dollars” finds that today, even big coal consumers like China, India, and the U.S. are on the right path and “not far behind” the EU in terms of renewable energy investments.

“The report finds that market forces will drive coal power out of existence in deregulated markets, where renewable energy developers will take advantage of the growing price gap,” reads the report summary on Carbon Tracker’s website. Across the world, 6,700 coal plants produce 2,045 gigawatts of energy, and another 1,000 or so accounting for another 500gw are in early stages of production or investment.

As the cost of investment, production, and operation of coal plants continues to increase as market forces push investors further and further towards renewables, hundreds of billions of dollars in energy markets the world over will become available at a lower cost, and coal could become twice as expensive, and begin to rapidly vanish—even in large coal-consuming countries like China and India, within just 20 years.

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A report from Reuters found that coal power generation fell worldwide by 3% in 2019, while wind and solar power contributed 270 more terawatts, or an additional 15%, to grids. The research went on to illustrate how this growth would be needed every year for 15 years in order to meet the Paris Agreement targets. The power generation would have to continue to fall from 3% to 11% to prevent 1.5 degrees celsius of warming—the rough estimate of wiggle room needed to avoid the worst effects of global climate change.

Money talks—and if coal production will rise from from 50% to 100% in the U.S., India, and 60% to 100% in China, in just ten years, it means that far from unlimited growth targets being met for investors, coal barons will have to cope with a 5% yearly rise in capital requirements, as well as any future blows coal might be forced to absorb such as carbon taxes, coal embargoes, and other brutish legislative measures.

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British Carbon Tax Leads to Whopping 93% Drop in Coal-Fired Electricity

A tax on carbon dioxide emissions in Great Britain, introduced in 2013, has led to the proportion of electricity generated from coal falling from 40% to 3% over six years, according to research led by University College London (UCL).

British electricity generated from coal fell from 13.1 TWh (terawatt hours) in 2013 to 0.97 TWh in September 2019, and was replaced by other less emission-heavy forms of generation such as gas. The decline in coal generation accelerated substantially after the tax was increased in 2015.

In the report, ‘The Value of International Electricity Trading’, researchers from UCL and the University of Cambridge also showed that the tax—called Carbon Price Support —added on average £39 to British household electricity bills, collecting around £740m for the Treasury, in 2018.

Academics researched how the tax affected electricity flows to connected countries and interconnector (the large cables connecting the countries) revenue between 2015—when the tax was increased to £18 per tonne of carbon dioxide—and 2018. Following this increase, the share of coal-fired electricity generation fell from 28% in 2015 to 5% in 2018, reaching 3% by September 2019.

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Increased electricity imports from the continent reduced the price impact in the UK, and meant that some of the cost was paid through a slight increase in continental electricity prices (mainly in France and the Netherlands).

Project lead Dr Giorgio Castagneto Gissey (Bartlett Institute for Sustainable Resources, UCL) said: “Should EU countries also adopt a high carbon tax, we would likely see huge carbon emission reductions throughout the Continent, as we’ve seen in Great Britain over the last few years.”

Lead author, Professor David Newbery (University of Cambridge), said: “The Carbon Price Support provides a clear signal to our neighbors of its efficacy at reducing CO2 emissions.”

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The Carbon Price Support was introduced in England, Scotland and Wales at a rate of £4.94 per tonne of carbon dioxide-equivalent and is now capped at £18 until 2021.The tax is one part of the Total Carbon Price, which also includes the price of EU Emissions Trading System permits.

Report co-author Bowei Guo (University of Cambridge) said: “The Carbon Price Support has been instrumental in driving coal off the grid, but we show how it also creates distortions to cross-border trade, making a case for EU-wide adoption.”

Professor Michael Grubb (Bartlett Institute for Sustainable Resources, UCL) said: “Great Britain’s electricity transition is a monumental achievement of global interest, and has also demonstrated the power of an effective carbon price in lowering dependence on electricity generated from coal.”

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The overall report on electricity trading also covers the value of EU interconnectors to Great Britain, measures the efficiency of cross-border electricity trading and considers the value of post-Brexit decoupling from EU electricity markets.

The report annex focusing on the Carbon Price Support was produced by UCL to focus on the impact of the tax on British energy bills.

The findings from UCL and the University of Cambridge were part of wider research to examine cross-border electricity trading between Great Britain and connected EU markets, commissioned by energy regulator Ofgem to inform its annual flagship State of the Energy Market report.

Reprinted from University of College London – Photo by Matthew Black, CC

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