* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
As governments try to rescue their pandemic-hit economies, they need to keep a clean energy shift at the forefront
Angela Picciariello is a senior research officer at the Overseas Development Institute and Molly Webb is the founder and CEO of Energy Unlocked.
Over the last few months, governments have introduced an unprecedented number of policies to rescue their economies and promote a post-crisis recovery. It’s crucial that these policies take climate change into account to hold global warming to 1.5°C.
But do they?
The Energy Policy Tracker has recorded commitments made by governments in the energy sector since January 2020. It finds that $169 billion – about 47% of all energy funding pledges – support fossil fuels through airline bailouts, incentives for car manufacturers and other policies. 85% of this fossil fuel funding has no environmental conditions, such as cutting the greenhouse gas emissions that cause climate change.
Only $138 billion – 39% of all energy funding pledges – are directed to clean energy. (The remainder flows to other energy types, such as biofuels or nuclear power.)
These spending choices are at odds with public opinion. 45% of 18-35 years olds want to work in jobs that protect the planet, while just 6% want to work for fossil fuel companies. With 21.3% of the UK’s energy stimulus flowing to oil and gas, the public are rightly concerned that we will miss the opportunity for a greener economic recovery and a more stable future.
In the UK, Extinction Rebellion has poured on to the streets of Cardiff, London and Manchester to demand more ambitious action.
How can we boost climate ambition?
The news is not all bad. There are lots of examples of radical climate action during the pandemic, particularly by local governments building sidewalks and cycle lanes to help people travel safely without infection.
Even before the pandemic, cities were providing national governments with an opportunity to accelerate the low-carbon energy transition. Urban areas account for more than two thirds of the world’s final energy consumption, and demand is growing fast. Moreover, urban residents, firms and governments are often the first to experiment with new technologies, transforming the production, distribution and consumption of energy.
We have just published new research looking at the “3Ds”: how decarbonisation can be achieved through increasing decentralisation and digitalisation of the energy markets. Our work looks at how the rise of new technologies – from solar panels, to smart meters, to electric vehicles – creates opportunities to cut emissions.
But the decentralization and digitalization megatrends are playing out differently in cities around the world. We need to understand these different pathways to steer cities and countries to net-zero emissions.
London
London aims to generate 15% of its power from clean, local sources by 2030 and be a net-zero emission city by 2050. To do this, London will need to retrofit hundreds of thousands of buildings in the coming years.
Those buildings must be more efficient and electrified, reducing our dependence on fossil fuels to heat our homes and travel around our cities.
Decentralised technologies present huge challenges for developers and infrastructure managers. Digital technologies offer a solution. For instance, local authorities can use geospatial mapping to build electric vehicle charge points where local grid constraints can best be managed.
Better data and remote control over energy use allows new business models, carefully managing energy demand across hundreds of buildings in response to intermittent wind or solar generation.
A gap still remains between recovery measures and the investment needed for deep decarbonisation. For instance, the UK has committed to a one-off £3 billion in energy efficiency retrofit subsidies to stimulate the economy after COVID-19.
This is a far cry from the £5.2 billion annual investment needed to 2035. Local governments and the private sector will need to develop creative policies and business models to fill the gap.
Cape Town
South Africa has not allocated any money to energy in its fiscal stimulus – but the sector was wrought with challenges even before the pandemic struck. 89% of the country’s electricity is generated from coal-fired power stations, and costly diesel is also an important source of power.
The state-owned utility company, Eskom, has become notorious for load shedding (intentional shutdowns to prevent a total power blackout), fuelling tensions with the municipal governments that have been required to purchase electricity only from this national company.
South Africa’s pathway to energy decarbonization has therefore been constrained by local-national dynamics. Cape Town has had limited authority to invest in decentralised renewables or purchase from independent, clean power producers. This may change with recent legal challenges.
Without a national effort to decarbonise the grid or successful legal challenges to allow the city to procure electricity independently, Cape Town has limited scope to reduce its electricity emissions. Increased household investment in rooftop solar panels, smart meters and building efficiency may help the city make faster progress, but the city cannot reach net-zero emissions without a more supportive national environment.
Shenzhen
Since the pandemic began, China has thrown over $27 billion at clean energy compared to just under $4 billion for fossil fuels. Indeed, by many measures China is the world’s largest investor in renewable technologies.
Yet the country’s electricity grids remain very carbon-intensive and China continues to be one of the world’s largest financiers of coal.
In contrast with the national picture, the Guangdong province where Shenzhen is located has a more varied electricity supply, including hydropower, nuclear, wind and solar. Looking to 2030, the main route to decarbonisation for Shenzhen will be through the inclusion of more renewables on the grid, both large-scale and distributed.
The city excels at an international level when it comes to its smart grid, perhaps because it is also at the forefront of electrification: Shenzhen became the world’s first city to replace its entire fleet of 16,000 diesel buses with electric vehicles.
Conclusions
These three cities demonstrate that there is no ‘one size fits all’ approach. Digitalisation and decentralisation are playing out differently everywhere, so each country will need a careful strategy to unleash the potential of cities to support a rapid energy transition.
In the absence of national consensus, urban governments can go further and faster in tackling climate change – as Cape Town proves with its efforts to secure clean energy. Cities can be hotspots for innovation in technology, regulation and business models – as Shenzhen proves with its electric buses.
And local governments can respond quickly to citizens’ demands for a low-carbon future – after earlier Extinction Rebellion protests, boroughs across London declared a climate emergency.
But we need to act now, before billions more of taxpayers’ money flow to fossil fuels.
