Renewable energy targets
Long term policy targets, either in the form of vision statements or legal commitments, usually serve as the harbinger of a planned sustainable energy transition. At the very least, targets indicate a political commitment for the long term where investors are comfortable to participate in a market. It helps in reducing political risks and facilitate easier access to affordable finance. More importantly, and as can be learnt from the countries who have more mature renewable energy markets, targets help build the infrastructure required to sustain high capacity addition of renewable energy. Several countries leading the renewable energy transition race today started their journey by setting long term but ambitious targets for their national energy landscape.
International Energy Agency’s World Energy Outlook 2020
The International Energy Agency (IEA) has published its latest outlook for the global energy sector across fuel type. Its findings have significant implications for national and international energy and climate policymaking. Although the COVID-19 pandemic has slowed down short term energy demand, it will only have a limited impact on global GHG emissions. The report suggests that public investment of around $1 trillion on clean energy as part of Covid recovery plans can lead to GHG emissions peaking in 2019. Reaching net-zero emissions globally by 2050 would need a set of additional dramatic actions over the next ten years. The report also finds that solar power has become one of the cheapest sources of electricity in the history of global power sector. The coal industry, on the other hand, will be most adversely affected in the ten years as demand for coal dwindles below rates previously projected.
Ambitious renewable energy targets
India's Prime Minister set the track in 2015 by ramping up the renewable energy targets to 175 GW by 2022. This meant more than a fivefold jump from the renewable energy capacity of 35 MW in 2015. India's Nationally Determined Contribution subsequently extended this ambition to 40% of non-fossil fuels-based electricity generation capacity by 2030 (250–300 GW). It was estimated that this ambitious target would mobilise an investment of 189 billion dollars and bring about a drastic change in the composition of the country's power generating capacity. This target guided the planning process for the supporting infrastructure as well as the implementation of required incentives and taxes. The planning for the grid integration of this capacity included measures such as green energy corridors, grid operating reforms, and transport electrification, complemented by policy action on auctioning and contractual reforms to reduce investment risks.
Clean hydrogen strategy
Green hydrogen is claimed as the critical fuel for the global transformation to a zero-emissions energy sector. Recognising this emerging market opportunity, Australia has announced its national strategy for hydrogen fuel with a focus on the production of green hydrogen from its abundant renewable energy resources. With this strategy, Australia aims to position itself as “a powerhouse in hydrogen production and exports” to countries where demand is developing, like Japan, South Korean and the EU. Key within the strategy is the creation of hydrogen hubs that will serve as clusters of hydrogen demand. These clusters, mostly involving ports or cities, will give an opportunity for the industry to work at scale and achieve economic efficiency. In parallel, the strategy will involve the creation of markets in sectors such as transport, gas distribution and integration in electricity grid infrastructure.
General Law on Climate Change
The General Law of Climate Change of Mexico has been one of the most successful examples of national climate legislation in the world. Modeled on the UK's Climate Change Act, the General Law of Climate Change helped establish three main defining features of Mexico's climate change strategy: 1) emissions reduction targets of 30% by 2020, and 50% by 2050, subject to international finance and technology transfer; 2) a robust institutional structure for creating an emissions inventory, and co-ordinating and evaluating inter-ministerial efforts on climate change; 3) a climate change fund that channels different sources of funding and mobilises public and private finance. The Act also establishes a partial carbon tax. The latest amendments to the Act, introduced in 2018, have led to establishing a national market for emissions trading for economically efficient emissions reductions.
COVID-19 green recovery stimulus
Experts have argued in favour of mitigating the adverse impacts of COVID-19 while keeping climate goals in sight. South Korea has shown the world a way to achieve this. The government has proposed a Green New Deal, with a budget of $35 billion, that comprises the following policy measures: 1) green transition of infrastructure, seeking to transform public facilities into zero-energy buildings, restore natural ecosystems and improve water infrastructure; 2) low-carbon energy supply, including projects to build smart grids and large renewable energy plants, support coal-producing regions undergoing energy transition, and scale electric and hydrogen vehicles and scrap diesel vehicles; 3) innovation in the green industry, via support for green businesses and cleantech innovation. The plan is expected to generate 659,000 jobs by 2025. In parallel, South Korea has also launched a digital recovery plan that builds strategic interlinkages with the green recovery package to deliver economy wide benefits.