Sustt: Energy transition, diagnostics apartheid, the polluter pays?, CA100+ under the spotlight, inaction on deforestation
The clean energy technology market could grow threefold by 2030
What's happening??The global market for clean energy technologies is expected to grow significantly and will be worth around $650bn a year by 2030 if countries fully implement their energy and climate pledges, according to an assessment by the International Energy Agency (IEA). Consequently, following a net zero scenario, the number of clean energy sector jobs will rise from 33 million in 2021 to 70 million by 2030. (International Energy Agency)
Why does this matter??There is a growing consensus that the energy transition is on the cusp of gaining serious momentum. There have been several contributing factors - Russia’s war in Ukraine and the consequent impact on the energy market forced governments to look within their borders for energy solutions, with renewables offering a clean source with no strings attached.
A cost-of-living crisis has raised consumers'?interest?in energy-saving technology and governments continue to?unveil?new climate and energy pledges regularly. The momentum is reflected in the market – in 2022, clean energy was?responsible?for 70% of the growth in the energy sector. However, two barriers threaten to slow the energy transition, concentrations in the supply chain and resource extraction and a labour shortage.?
Concentrations may cause calamity?– Manufacturers of clean technology and precious metal extractors have become highly concentrated. For example, three countries are responsible for 70% of the manufacturing capacity of solar panels, heat pumps, wind turbines, batteries, and electrolysers. Similarly, 70% of the world's?cobalt?originates from the Democratic Republic of Congo and 90% of lithium production comes from just three countries.
Further, China has?positioned?itself as central to precious metals refinement. By 2030, China will?produce?80% of the world's copper and will dominate the refining capacity of key metals used in batteries - 95% for cobalt, and approximately 60% for lithium and nickel.?
The concentration of suppliers, resource extractors and refiners leaves the market highly vulnerable to a range of risks, including political tension or war, technical failures, policy changes or natural disasters.
In 2022, for instance, a heatwave struck China?forcing?refinery closures, contributing towards global lithium prices doubling year-on-year and the first increase in battery prices for a decade. Climate change is expected to?increase?the frequency and intensity of extreme weather events, heightening this risk.
Labour shortages?– The second issue raised by the IEA report is related to the labour market. A fast and efficient energy transition will be facilitated by a range of skilled professionals, from microbiologists to heat pump installers. Under a net zero scenario, 27 million clean energy sector jobs will be created and 8.5m fossil-fuel sector jobs lost between 2021-2030.
Although more jobs are forecast to be generated, a lack of appropriate labour is already causing bottlenecks. In the US, for example, the Inflation Reduction Act is forecast to?create?900,000 jobs per year for the next 10 years. However, industry leaders?warn?of labour shortages, with the US already at a record-low unemployment rate of 3.5%.
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Stat of the week
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$11 – the cost of a PCR Covid-19 test in Kenya, despite more than a third of the population living on $1.90 per day
Wealthy nations that have hoarded Covid-19 and Mpox tests have created a "diagnostic apartheid", according to a report by the People's Vaccine Alliance and Matahari Global Solutions. The report notes that high prices and intellectual property rules around Covid-19 PCR tests made it difficult for developing countries to purchase supplies. It also highlighted that in 2021, these tests cost an average of $55 in the Philippines – more than double the average daily wage of its citizens.?
By contrast, the test was freely available in the UK and cost less than €20 ($21.50) in the EU during the same period. The report added that Mpox tests cost between $4 and $40 in developing countries, unaffordable for many of their populations. The authors urge governments and international institutions to invest in producing diagnostics locally so developing nations do not need to depend on rich countries that dominate the global market.
The report came as a draft of the World Health Organisation's global pandemic agreement proposed that 20% of any treatments, tests or vaccines developed are reserved for use in developing nations to avoid the "catastrophic failure" witnessed during Covid-19. The draft also continues the argument for waiving intellectual property rights during pandemics, which could enable faster and wider access to life-saving drugs and vaccines. Talks on the agreement will commence this month.?
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Bite-sized insights
What else we're seeing this week ??
?? The polluter pays??Four residents of Pali, an Indonesian island threatened by sea-level rise and increased flooding, have?filed a lawsuit?against the world’s largest cement producer Holcim. The islanders ask for “proportional compensation” from the company, which?emitted?7 billion mt of CO2 between 1950 and 2021, amounting to 0.47% of historic industrial emissions. Consequently, the plaintiffs argue Holcim should cover 0.47% of the expected costs for local climate adaptation measures. They also demand Holcim reduces its greenhouse gas emissions by 43% by 2030 and 69% by 2040 to align itself with the targets of the Paris Agreement. The case is modelled after an ongoing?legal challenge?brought by a Peruvian farmer against RWE.
At the global level, the cement industry is?not on track?to achieve net-zero emissions by mid-century. The world’s number one building material currently accounts for 7% of global CO2 emissions. Between 2015 and 2021, the direct CO2 intensity of cement production has risen by 1.5% while a 3% annual reduction to 2030 is necessary under the International Energy Agency’s global net zero pathway. The agency says that the sector needs to focus on energy efficiency, switching to low-carbon fuels, material efficiency (such as reducing the clinker-to-cement ratio) and technological innovation to bring down emissions. In a recent?panel discussion?at the World Economic Forum, industry experts and stakeholders also highlighted circularity as a promising avenue for decarbonisation.
?? CA100+ under the spotlight – Climate Action 100+ (CA100+) members leading engagement with bp have remained silent following the firm’s decision to lower its emissions reduction target for oil and gas production to 20-30% from a 2019 baseline from an original target of 35-40% reduction.
ShareAction latest Voting Matters report noted that CA100+ members supported more climate resolutions than non-members but still voted against a third of climate resolutions. A subsidiary of BNY Mellon, Mellon Investments recently?became?the first CA100+ member to be delisted due to its inability to meet the group’s minimum targets.
?? Not enough action on deforestation – A third of companies with the greatest influence on tropical deforestation through their supply chains have no deforestation policies in place, according to research by Global Canopy. The analysis found that 31% of the firms with the most influence on deforestation have not set up a single deforestation commitment for any of the commodities to which they are exposed. Furthermore, of the companies with a deforestation commitment for each commodity they are exposed to, just 50% are monitoring their suppliers to ensure they are adhering to this.
In December the EU agreed on a new law to prevent the sale of deforestation-linked products in the EU. The legislation will require companies to issue a due diligence statement when selling products such as coffee, cocoa, beef and wood in the bloc.
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