2020 is the Key! Now is the time for global “sustainable” recovery plan

“It is estimated that the recovery plan proposed by IEA will require investment amount of USD1 trillion over the next three years (2021-2023). It can add 1.1% to economic growth for each coming year, create 9 million jobs and reduce 4.5 billion tons of carbon emissions, and even reduces air pollution by 5% as a result of the plan.”

The International Energy Agency (IEA) and International Monetary Fund (IMF) jointly released the “Sustainable Recovery-World Energy Outlook Special Report” in an effort to provide action plans that are clean and cost-effective, making 2020 a year that is different from the past!

The International Energy Agency (IEA) released the “Sustainable Recovery Report” at end of June which provides details of many green actions that can increase economic values and job creation (Source: IEA)

The benefits of sustainable recovery? Covers both job opportunities and health 

Firstly, there are three major goals for the IEA plan, namely, “boosting economic growth,” “creating jobs” and “building more resilient and cleaner energy systems.” The green actions developed from the plan require investment amount of USD 1 trillion in the coming three years. It is expected to bring economic growth of 1.1% each year, save or create 9 million jobs and reduce 4.5 billion tons of carbon emissions, and even reduce air pollution by 5%. IEA recommended six key sectors for targeted investments: electricity, transport, buildings, industry, fuels and emerging low-carbon technologies. Among which, because of its low abatement cost and the potential to create jobs, “improving the energy efficiency of buildings” is a valuable target that can be pursued by various countries!

The abatement costs required for implementing measures in selected energy sectors and the jobs created thereof (Source: IEA)

Aligning with the goals of sustainable recovery plan, energy and transportation go greener

Energy demand has shrunk by 20% during the COVID-19 crisis. However, renewable energy is performing well with around 40% of power contribution. In recent years, the costs of solar PV and wind is declining greatly (decreased by 80% and 30~40% respectively). Both are the rising stars in carbon reduction; they not only satisfy the demand of cost effectiveness, but also create many jobs in manufacturing and transportation sectors. 

In the transportation sector, lockdown measures have reduced private forms of transport by 40%, and travel demands are 50% lesser than that of the previous year. At this moment, encouraging the public to substitute drives with cycling or walking will bring the greatest benefit to carbon reduction. Re-planning of bike and pedestrian lanes can also stimulate an increase of 500,000 jobs. In addition, rail travel also has a higher efficiency, as it requires 12 times less energy than aviation and automobiles for long distance travel (within 800km).

Currently, electric vehicles are universally recognized. In fact, over the past five years, the cost of battery electric car has reduced by 70% and will continue to decline in the future. However, whether the payback period of electric cars can be shortened mainly relies on the price of oil per barrel. At an oil price of USD 60/barrel, the payback period for electric vehicles is eight years; if the oil price level dropped to USD 30/barrel, this would add two years to the payback period of EVs.

Solar PV and wind power have lower abatement costs, and a higher job-creation potential (Source: IEA)

Renovating buildings comes with benefits. Industry,fuels and innovative technology also have their magic 

Due to demands such as remote working, video streaming and conferencing, online gaming and social networking, the internet traffic surged by 12 times than in 2010! Future home energy demands may increase between 7 to 23%. Electricity utility growth may be offset by improving the building exterior combining heat pumps and ways to use renewable energy. 

In the industry sector, the most valuable measure is to adopt energy efficient motors that have attractive payback period and low abatement costs of carbon reduction. In addition, improving recycling rate of waste and material is also an important part. In addition to its large job creation potential, an improved recycling rate also generates great benefits: by adding 6% of recycling rate can significantly reduce carbon emissions by 20% from today.

Investment in improving energy efficiency and material recycling in the industrial sector can help to create jobs and boost economic growth (Source: IEA)

Lastly, in fuels and technology innovation sectors, the options available are reducing methane emissions from oil and gas operations and to develop hydrogen technology and batteries. Hydrogen technologies and batteries alone play a central part in technology innovation; the former is the new favorite of R&D in various countries. And batteries are the prerequisite for electric vehicles to develop rapidly. To realize the electrification blueprint, 10 GWh of battery manufacturing capacity would be needed by 2025. 

There are already a couple of effective international recovery plans for a wide range of industries and sectors to choose from. However, in Taiwan, only economic relief plans are set out now. It is hoped that the government would convene cross departmental meetings soon to co-create a more comprehensive plan, so as to accelerate transformation to build back better. 

References:
IEA, Sustainable Recovery-World Energy Outlook Special Report, 2020