Authors: Martin Raiser, Sebastian Eckardt

The conflict in Ukraine has caused a massive shock to the global economy. Crude oil prices in early March spiked to as high as $140 per barrel, levels that were last seen in 2008. While prices have since come down from these peaks, they remain elevated, fueling already high inflation and hurting consumers and economic growth worldwide. Faced with this shock, countries everywhere are reappraising priorities, putting resilience at front and center. A renewed emphasis on food and energy security has compelled governments to reintroduce fossil fuel subsidies and ramp up domestic oil, gas and coal production, seemingly placing efforts to curb climate change on the back burner.

These reactions are understandable. A tactical retreat in the short run may be the price to pay to maintain public support for the long-term goal. But the economic case for accelerated climate action remains as strong as ever. For a country such as China with the domestic policy space to act, there are three key reasons to stay the course on the low carbon transition and aim for an early peak in emissions.

First, accelerating the energy transition would strengthen Beijing’s resilience to the volatility of global fossil fuel prices by reducing its dependence on oil & gas imports. Last year alone, China imported fossil fuels – oil, gas, and coal – worth $ 365.7 billion – the equivalent of more than two percent of the country’s gross domestic product (GDP). This dependence on fuel imports is exposing the economy to global commodity price fluctuations. In contrast, renewable energy is essentially a domestic resource, especially for China, which is a major producer of key renewable energy technologies from wind turbines to battery storage.

Secondly, while higher energy prices may boost the short-term global supply of fossil fuels, in the longer-term outlook, higher and more volatile energy prices will push incentives for energy importers to diversify away from fossil fuels. This will likely catalyze individual and global efforts to decarbonize energy systems, boosting global demand for low carbon technologies and alternative sources of energy. China has the technological capabilities to benefit by anticipating and getting ahead of this all-important global shift.

Additionally, rising energy prices would challenge China’s investment and industry-led growth model, reinforcing the case for accelerated structural changes and rebalancing. High prices will increase pressures on China’s economy to diversify away from traditional investments and heavy industries, including iron, steel and cement production, which account for a disproportionate share of the country’s GDP but face diminishing returns and low productivity growth. The slowdown in the domestic real estate sector is already pointing in this direction. Higher energy prices could galvanize the shift toward an innovation- and services-based economic growth model.

Even as policymakers remain focused on mitigating the economic and social impact of recent sharp changes in relative prices, there are measures they can take today to prepare for the low carbon transition and reduce its costs. For example, rising energy prices will create incentives for more sustainable business models, but only if investors believe they are here to stay. This is why credible long-term guidance on the intended trajectory of carbon pricing and other policies to decarbonize China’s economy is so important. This would help investors anticipate future price increases and help bring clean energy investments forward without any immediate need to regulate or raise the price of carbon. The current period of high energy prices is the moment to provide such forward guidance, as market price incentives are already pointing in the right direction.

Fiscal policy can complement the role of price signals by supporting the necessary economic adjustment rather than trying to slow it down. The prospect of additional government stimulus to boost growth could provide the financing for a wave of green investments, including in the build-out and integration of more renewable energy capacity. In agriculture, rising fertilizer prices should provide incentives to reduce excessive usage. However, this shift would be thwarted if input-based subsidies remain in place. Instead, farmers could be compensated for higher input prices with subsidies that are tied to a shift toward resilient production methods. Field studies reveal that chemical fertilizers can be effectively substituted with animal manure, reducing agricultural greenhouse gas emissions at no cost to yields. To realize such a shift, greater investment in agricultural extension is required. 

Finally, rising energy and food prices would hurt the poor and more vulnerable households the most. But rather than providing subsidies across the board, a more robust and targeted social safety net could protect the vulnerable populations in urban and rural areas. Offering such targeted protection could ensure price signals are not diluted but the structural changes necessary for the transition to a greener and more innovative growth model don’t come at the expense of rising poverty and social inequality.

While adding headwinds to the near-term economic outlook, the current energy price shock reinforces the case for accelerating China’s energy transition. Policymakers should keep their eyes on the long-term target and use this opportunity to prepare the ground.

(first published on CGTN via World Bank)

Energy communities bring renewable power to the people

The Dilemmas of the Global South

China’s Imminent Precarious Era of High Inflation

The American empire is being defeated; Asia will lead the future

A Little Britain’s Reach Out To The Big Indo-Pacific

New development projects for Mozambique

The India-Gulf Spat: Protagonists in glass houses

Traditional energy production in advanced economies involves the importation of large amounts of oil and gas from a small number of suppliers. Renewable energy systems under new community ownership structures are being pioneered all over the Europe. The goal is to develop cheap, clean and secure energy by bringing power generation closer to the people who will use it.  

Squeezed between the war in Ukraine, the pandemic and climate change, the European energy system is experiencing an unprecedented crisis. Bill payers are coping with sharp increases in energy prices which show no signs of abating. In the second half of 2021, average prices for electricity (and gas) jumped by more than 11% in the EU, compared to the same period in 2020, according to Eurostat electricity price statistics. That was before the geopolitical crisis arising from the invasion of Ukraine by Russia in late February prompted sanctions which further squeeze energy supply.

The European Green Deal strategy which plans to decarbonise energy production in the European Union has been strengthened by the REPowerEU plan to decrease dependency on Russian fossil fuels. This combination will accelerate the green transition. ‘In this respect, the Ukraine crisis can be seen as a catalyst in renewable energy transitions,’ said Nicolien van der Grijp of the NEWCOMERS project.

One answer to the global energy challenge is being devised at the local and regional level through clean-energy communities. These are groups of people that voluntarily pool their resources to produce energy together. The goal of NEWCOMERS is to identify thriving and sustainable business models in newly emerging clean communities. A senior researcher with the department of Environmental Policy Analysis (EPA) at VU Amsterdam, van der Grijp says energy communities ‘contribute to making citizens more aware of energy issues and give them a perspective to take action themselves’.

Heating and cooling alone making up 30% of Europe’s energy use. To satisfy this demand, about 60% of EU energy needs are met with imports and over 66% of the EU’s energy imports in 2020 were petroleum products, followed by gas and coal. Instead of importing fossil fuels from far away, the growth of renewables makes it possible to produce energy closer to the location where it is consumed.

The main renewables produced in energy communities are solar, wind and hydro-power, but other sources such as hydrogen, geothermal and district heating are increasingly being tested and deployed. Members of the energy community usually consume the electricity produced and, depending on local conditions, they may also adopt other activities such as car shares, communal gardens and green roofs.

NEWCOMERS highlights the types of policy environments in which energy communities flourish, how the players are organised, the technologies used and how the business models work. It also analyses the value the energy community creates for members and broader society as well as the effects membership has on energy-related behaviour.

‘Besides helping to tackle the climate crisis, energy communities also provide value in economic and social respects,’ van der Grijp said. ‘They may create local jobs and enhance social cohesion.’ The advantages of this approach go beyond independence from polluting sources, to include a tangible social transformation.

NEWCOMERS’ research results show that awareness levels differ greatly between European countries. According to van der Grijp, this presents challenges around creating supportive policies and laws in EU Member States. It also complicates subsidy schemes that support a good business case, and services dedicated to helping people to set up and operate energy communities.

‘We hope that our findings will contribute to several policy changes that are urgently needed,’ said van der Grijp, who formulated a series of policy recommendations and a policy brief for European policy makers together with similar projects.

Dr Maria Rosaria Di Nucci is coordinating the COME RES project which aims to facilitate the diffusion of renewable energy communities (RECs) in nine EU countries and to support the implementation of a regulatory framework for RECs. In doing so, the project will initiate learning processes and exchange between regions with advanced REC development and regions with expansion potential. Each country has a target and a learning region. 

‘Renewable energy communities are important vehicles for reducing greenhouse gas emissions and for providing positive social, environmental and economic impacts,’ said Di Nucci. ‘They also foster regional and rural development.’ 

‘The vision is the evolution from an energy system based on large centralised power plants to a citizen-led distributed energy production model based on renewable energy sources, which still represents a socio-political and regulatory challenge in most European countries,’ said Di Nucci.

The unique selling point of COME RES and the operative arm of the project are the nine so-called country desks. These can be regarded as informal dialogue fora involving the national project partners, community energy organisations, other key actors and market players from specific target regions and beyond. They organise thematic dialogues and policy roundtables to create solutions to overcome existing barriers for the growth of community energy. 

COME RES also provides input to policy through policy labs, action plan proposals, policy recommendations and engagement with stakeholders. Some fundamental changes are needed ‘if the energy transition is to continue to be implemented locally and democratically.’ Di Nucci mentioned simplifying financing, reducing bureaucratic barriers, and reforming the auction model for renewables projects. 

Most energy communities adopt the legal form of a cooperative, but they can also take the form of associations or foundations. Some have developed specific approaches to include marginalised groups and people living in energy poverty.

For the energy communities to be successful, civic engagement is key. W4RES is working to scale up the involvement of women in supporting and accelerating market uptake of renewable energy sources. A total of 50-60 renewable heating and cooling projects and initiatives across eight countries is expected to be supported by the end of the project.

The W4RES perspective is that women as agents of change can make a difference in the energy transition,’ said W4RES coordinator, Ioannis Konstas. Energy communities should engage more women in their organisational structures and provide leadership.

‘To be truly transformative, energy access and the energy sector must be linked with an agenda that challenges the stereotypes of women,’ said Konstas, ‘And that also advances their rights, dignity and visibility in their various roles as consumers, producers, investors, experts, and agents of change.’

Although a relatively new innovation, renewable energy communities possess a huge potential. Their development will have a profound impact on the energy transition and the everyday lives of European citizens.

The research in this article was funded by the EU. This article was originally published in Horizon, the EU Research and Innovation Magazine.  

A battery to most people is something that goes in a car, or is a cell used in flashlights, toys, video games, controllers, TV remotes, etc.  But there is another kind of battery and on a different scale — a reservoir of energy.

As a young engineer, I joined a trip organized by a professional society to a new power station in Wales that also worked on the same principle as a battery.  During off-peak hours when electricity demand was low, water was pumped up to a higher reservoir — North Wales is hilly.  It was then allowed to flow down during peak electricity demand times (usually 6pm to 10pm) to drive water turbines and generate power. 

While ‘pumped hydro’ provides over 90 percent of the world’s high capacity energy storage, it has drawbacks:  the vertiginous terrain required together with and an abundance of water for example.  Lithium ion storage using lithium salts is also being used and some say is poised to dominate energy storage.  And there are new advances to make use safer and cheaper.

Another storage idea being employed is in conjunction with alternative energy sources like solar or wind.  Gravitricity is an Edinburgh company that has a small demonstration model.  It hoists a 50 tonne iron weight inch by inch before releasing it gradually to generate power.

Their small test system produces enough power to supply about 750 homes.  What has been encouraging is the system’s longevity, the life of the lifting cable in particular and how the team were able to control it.  Also individual components are designed to be easily replaceable giving the whole a decades-long working life with regular maintenance.

Then there is the obvious attraction of disused mine shafts.  Obviating the need for building higher derricks, the weight can be dropped down from a much smaller supporting structure.  If North Wales has the craggy hills, South Wales has the abandoned coal mines.

However, there are safety issues in mines with methane gas and the possibility of flooding.  For these reasons plus the greater uniformity of purpose-built shafts, Gravitricity is proceeding also with sinking new holes. 

At the same time, the attraction of a deep, clean mine shaft is difficult to resist.  A full-sized Gravitricity installation with a 300 meter deep mine shaft is expected to be functional by 2024 — most likely in the Czech Republic.  Clearly a subterranean endeavor is less of a blot on the landscape.

Energy from a green source, and an installation that stores unused energy for release during peak loads …  plus it is mostly underground.  All of it satisfies the public mood for an equitable transition into a low-carbon economy.  Emissions are reduced and the former mine workers secure alternative jobs.  Green energy may still be a minor player but the fact remains it has surpassed coal, and green means of storage can alleviate some of its drawbacks. 

One hundred year before, despite world promise for Independent Kurdistan after post world war’s Ottoman division, Britain government’s decision to divide Kurdistan and merge it in new forming Iraq and Turkey, as well as bloodily suppressing the Kurdish rebel movement by using intense bombardment deprived the Kurds of their right to self-determination, built a historical aloofness between the Kurds and Britain, which has been deepened over time, and brought profound bilaterally distrust, it’s still lasting.

While, majority of people in Middle East (M.E) strongly still believe that Britain’s interests or intentions are in behind of most of the sufferings in this region, but Kurds found their fate directly changed by Britain policies in the M.E. Britain’s role in Iraq’s political and economical process of Iraq  by 1972 were main obstacle in Kurdish movements for independence. This policy continued then, with no proper reactance by Britain for Iraqi Baathi government’s violences against Kurds, such as chemical attacks and Infal (Massacre of more than 180,000 people) deepened these mutual reluctances, but Britain’s cooperation along with France and the United States in passing UN Security Council’s Resolution 688 to prevent a mass extermination of the Kurds by the Iraqi government in 1991, is unforgettable turning point in Britain’s approach toward Kurdish people.

Twelve years later, when international coalition, led by U.S, Overthrew Baath’s Saddaam Hussein in 2003, British forces focused on south of Iraqi province of Basra, where later in 2009, British giant oil, bp, signed its first oil contract in modern Iraqi era to develop the big field of Rumaila in cooperation with Chines CNPC. Four years later, British bp entered new cooperation with Iraqi federal for redeveloping oil fields in Kurdish city of Kirkuk, where first oil well in Iraq’s history were drilled by British led Iraq Petroleum Company (IPC) in 1927. Kirkuk, where known as heart of Kurdistan, is one of disputed regions between Kurdish government and federal government of Iraq, stipulated in Iraqi constitution (article 140) to be determined by a referendum, so far it has been postponed.

Meanwhile, despite British bp’s interest to Kirkuk, less than 100 km far from Erbil, KRG’s capital, lack of any British giant oil and gas companies’ desire to enter the projects in Kurdish administrated region, raise a doubt over Britain’s support for 2017’s October attacked by Iraqi federal forces on the Kurdish peshmerga’s bases in Kirkuk, in contrast to the close mutual cooperation in the fight against ISIS terrorism in Iraq.

When the distance between the Kurds and Britain was predicted to widen, bike-tour of Erbil streets by Kurdistan President and British ambassador to Iraq, in April 2021, dispatched positive pulses. The improvements in mutual relationship continued, when British foreign minister visited Erbil, June of 2021. Then, Kurdistan President’s visit of No.10 of Downing Street strengthened the ties, brought hopes for more developments.

Russian invasions on Ukraine, which highlighted Europe’s need for reform in Energy policies and diversifying energy sources, mainly for Natural gas supplies, made historical opportunity for Kurdistan, world biggest undeveloped oil and gas reserves. Kurdistan Region of Iraq own about 45 billion barrels of oil reserves and about 5.7 trillion cubic meters of natural gas, while the KRG’s oil production is still below 500,000 bpd and about 15 million cubic meters of natural gas. While Baath government of Iraq left Kurdistan oil and gas reserves undeveloped until end of its rule in 2003, Kurdish semi-autonomous government began development plan of its oil and gas, soon after 2007, when its oil and gas law was passed in region’s parliament. The semi-autonomous region’s oil production is over three OPEC members including Gabon, Congo and Equatorial Guinea, according to OPC Monthly Oil Market Report – April 2022.

Kurdistan government targeted fast raise in natural gas production to 725 million cubic feet by 2023 and more than one billion cubic feet by 2025, which enabled region to start export natural gas in next two years. Kurdish government president and prime minister recently visited regional countries, incising Qatar, UAE and Turkey to receive their support. In next step, Kurdish PM, Mr. Masrour Barzani, showed Kurdistan’s plan to develop the region’s natural gas production and infrastructures to export to Europe, through Turkey, during his Dubai Energy Forum. He also during his meeting at mid of April 2022, with Britain’s PM, Mr. Brouris Johnson, discussed Kurdistan’s interest  to connect region’s natural gas to international transmitting pipeline in Turkey, seems supported by British PM, a great chance for more development in mutual economical relationship.

Kurdistan’s ambitiously plan for fast development of its natural gas production to be supported by west, mainly US and UK in several categories. While KRG should internally conduct radical reforms in directing the sector, the international supports to be achieved against threatening of Kurdistan by Baghdad’s view on Kurdistan’s oil and gas sector, seeking to centralize its administration, which is needed to be resolved with federal government swiftly. International racing, is also vital for facing the regional and global competitor’s challenges, seems to be next step facing Kurdish natural gas project.

New era in Kurdistan and Britain ties sparked hopes to bring Britain’s support for Kurdistan’s oil and gas industry, not only technically, but also, politically. British companies would be welcomed in Kurdistan to participate in developing Kurdistan’s oil and gas plan, financially and technically supports. Also, Britain’s political support for Kurdistan’s natural gas, mainly, would be softening Iraq’s position against Kurdistan’s natural gas, which could back Britain’s strategy for diversifying UK and Europe natural gas sources.

The new turning point in Kurdistan and Britain is recently kicked off, would strengthen ties and raise hopes for strategical achievement, if Britain is ready to warmly shake the hands with Kurdish government, mainly for gas policy.

A new white paper, published on World Ocean Day by the World Economic Forum, outlines critical steps to channel funding...

Since the start of the Ukrainian conflict more than 6 million refugees have left Ukraine in search of a better...

by Alex Whiting The most significant changes can be sudden, not gradual, if the circumstances are right. Horizon Magazine listened in on...

Ambika Mathur, a renowned social media influencer who has debuted as an author with her book ‘In Conversation with Light...

As new trade barriers and restrictions are emanating from the advanced economies there is a stronger case for the affected...

The study of economic growth is mandatory for those who pay attention to the economy, and that is precisely what...

Alexander Mercouris is a commentator on international affairs whose predictions I have been keeping track of for a long time,...

What Is Happening In India?

How to Publish Great Analytical Commentaries: Or, how Gene Kelly saved my writing

Vladimir Putin’s Aggression Against Ukraine has thrown China’s Policy in a Geo-political Quagmire

Double standards haunt US and Europe in NATO dispute with Turkey

Israel and the moon effect: From Beresheet to the Lunar Library

It is Not Enough: African Ex-Slave Reparations in a Deeply Troubled Racist Plural America