Energy transition is one of the prominent drivers of change in global commodity markets today. The world is moving swiftly towards green forms of energy and every step towards cleaner energy further accelerates demand for key energy commodities.
At the time when Covid almost stopped the unstoppable World, flights were grounded, factories closed, vehicle owners were chained at home and the global energy systems toppled out of sufficient demand.
According to a new report by IEA, a part of revolutionary energy systems called Renewable Energy generation went higher by 45% in 2020, fastest since 1999. This accounts for an additional 280GW to the world supply, that too green.
Wind energy has been the topmost contender at 90% while solar energy bagged 23% growth. Solar Photo Voltaic installations may add-up to reach over 160 GW annually by 2022, breaking all records.
“Wind and solar power are giving us more reasons to be optimistic about our climate goals as they break record after record,” said IEA executive director.
“Governments need to build on this promising momentum through policies that encourage greater investment in solar and wind, in the additional grid infrastructure they will require, and in other key renewable technologies such as hydropower, bioenergy and geothermal. A massive expansion of clean electricity is essential to giving the world a chance of achieving its net zero goals.’’
Which Countries garnered most Renewables and reasons:
China, the US and Vietnam were the countries who led the renewable push that was necessary after its demand and popularity slumped due to pandemic.
China alone is responsible for nearly half of the new capacity installations and is expected by IEA to remain as leader in this regard.
It was due to global policy decisions and deadlines that countries had set for themselves to submit to renewable drive.
The report explains: “Overall, IEA quarterly deployment estimates indicate that the slowdown in renewable capacity additions was limited to Q1 2020 only, mainly in China, while construction activity continued strongly in the rest of the world despite continuous movement restrictions and supply chain delays”.
Experts expect EU to surpass US as the second-largest renewable market in 2021 because of consistent Climate policies (target 2030) and approaching deadlines as such.
The incentives offered by government for Renewables were about to expire, so restless installations were undertaken. It established nearly twice as much renewable-energy capacity that was added in the fourth quarter of 2020 than in the last three months of 2019.
In 2020, it was seen that market for corporate power-purchase agreements for clean energy, in order to distribute electricity (DisComs) also boomed in these countries.
IEA also predicts renewable energy sources to be responsible for 90% of global power expansion in 2021 and 2022.
Any unexpected slowdown in China shall be compensated by Renewable growth in Europe, the United States, India and Latin America with constant government’s support, falling prices for solar PV and wind in order to drive the infrastructure building.
What happened to conventional fuel simultaneously?
Oil prices fell and even became negative for the first time in early 2020s, as alternative fuel demand grew. Crude has recovered for the time being as investors hope for strengthened economies in some time.
Production of biofuel even fell by 8% in 2020.
India’s case for Renewables:
Government of India has set an ambitious target of installing 175 GW of renewable energy capacity by 2022, comprising 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro-power. By 2030, it hopes to generate 450 GW of renewable energy capacity.
But its capacity-additions declined by almost 50% last year compared with 2019. Experts expect that this growth is set to rebound and renewable expansion is expected to set a new record by 2022 (driven by already delayed projects) but uncertainty prevails.
Does increase in Renewables mean a downfall in Fossil based energy?
Fossil fuels continue to rule the markets and be the most dominant source of energy. Another IEA report suggests its production to increase in 2021 along with Carbon emissions upto 5%. Even the reduction may get reversed.
“Energy transition” is considered to be one of the best options to limit Global warming as vehicles and Industries continue to emit their toxins into the air.
However, any further sufficient supplies of the critical minerals needed for building wind turbines and other equipment—such as nickel, cobalt, lithium, copper and rare-earth metals.
Therefore, Experts have recently called out for mandatory recycling of wastes containing rare elements present in circuit boards, magnets used in disc drives and electric vehicles, batteries for electric vehicles and fluorescent lamps.
The production and refining is only done in bare handful of countries with China controlling about 90% of these rare-Earths. For better access, IEA suggests better recycling.