GLOBAL WIND ENERGY MANIFESTO FOR COP27
The world is in a critical moment, facing unprecedented challenges to energy security, rising inflation and a narrowing time window to limit dangerous global heating. COP27 in November 2022 presents a unique opportunity for governments around the world to take decisive action on climate change, bolster energy security and make clear and practical commitments to a clean, secure and affordable energy system based on renewable energy.
The wind industry is ready to work together with governments, business, communities and citizens to achieve new scales of growth for wind energy and true system transformation.
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Greater short- and long-term ambition in wind power is needed, in line with a net zero trajectory and energy security imperatives. While different regions of the world will transition at different speeds, concrete renewable installation or generation targets should carry a horizon to 2030, 2040 and beyond. Clear short-term actions for the next few years are then required to translate these ambitions into a market-ready framework and effective investment signals.
Scaling up wind energy is a win-win in terms of lowering energy prices, stimulating investment, economic growth and job creation and achieving climate targets while supporting energy security. But overly complex permitting schemes are slowing down deployment in some world-leading wind markets, from Italy to India. In some countries, nearly a decade of lead time is required to develop a wind project. This is a universal challenge which must be addressed on a grand scale to rapidly accelerate renewable energy. The COVID-19 experience has shown that robust physical and digital infrastructure can be assembled in an emergency to reorganise governing procedures and supply chains in line with national interests. Amid the energy security and climate crises, this urgency needs to be applied to renewable energy projects and enabling infrastructure.
Less than one-third of public and private energy investment today targets grid and storage solutions. Resources allocated to planning, constructing and modernising grids for the future energy system must dramatically step up within this decade. Development of secure, smart and flexible grids must keep pace with ever-larger shares of renewable energy on the system. This will require coordination among system operators, regulators, utilities and industry to conduct long-term forward-planning on grid expansion and reinforcement, electrification of transport and other sectors, creation of regional markets for power export and trading and ensuring cyber security.
In many countries, electricity markets struggle to send meaningful and timely investment signals in line with net zero ambitions. Once the current energy crisis eases, the merit order effect in more liberalised markets will mean that wholesale market revenues for renewable energy are cannibalised as wind and solar deployment increases. This price pressure will only intensify with limited volumes of project capacity available, increasing interest rates and rising demand for transition-related commodities and critical minerals. In some countries, auction design has encouraged “negative bidding,” which has been particularly unhelpful and undermines the viability of a renewables supply chain to replace fossil fuels.
Governments across the world face difficult choices in balancing energy security needs amid volatile fossil fuel prices and climate goals. But policymakers must be clear-eyed in their response packages and strategies: The speed of constructing new grid-scale renewable energy projects should be recognised and prioritised over investment in new fossil fuel infrastructure where possible. Wind energy is already set to displace fossil fuel generation in countries worldwide, offering affordable, scalable, zero-carbon power at huge capacity factors. This trend should be accelerated in the current crisis; any short-term energy security concerns must be carefully managed to avoid slowing down renewables expansion or creating stranded assets in the long-term. Government and financial actors should stick to their commitments to phase down coal and phase out subsidies for upstream/downstream fossil fuels, while rapidly scaling up clean power generation. Accelerating energy efficiency and energy conservation efforts in the near term can also ease the current energy crisis.
A 1.5°C-compliant energy transition results in net-positive socioeconomic effects compared to current policies, according to IRENA, including more jobs created through investment in large-scale renewable energy deployment, grid enhancement and energy efficiency. Global North-South cooperation and trust will be vital to ensuring the dividends of the energy transition are equitably distributed to everyone. Wind energy already promotes sustainable development in communities around the world and can play a key role in creating decent work and quality jobs, while enhancing financial flows towards climate-resilient growth in developing economies. Stronger alignment of national energy, climate, trade and industrial development policies can support fair, sustainable and local value creation as the transition advances. Through public-private programmes on reskilling and workforce transition, the growing wind sector offers green job opportunities for workers displaced by the energy transition, such as those in fossil fuels and ancillary sectors.
There is no shortage of capital for wind energy where an enabling investment environment exists. But to collectively accelerate renewable energy to new heights, financing in the energy sector – whether export finance, flows from state treasuries or private capital – must be decided under “Do No Significant Harm” principles that address social and environmental impacts, and avoid the risk of stranded fossil fuel assets. Climate targets should be mainstreamed across financial ministries, development banks and export credit agencies (ECAs) to align public spending with renewable energy and development goals. More organisations should commit to the pledge made by 39 entities at COP26 to align international public support towards the clean energy transition and out of unabated fossil fuels.
Effective and credible market approaches to carbon pricing can send strong market signals to drive investment in low-carbon technologies. COP26 and the Bonn conference of 2022 saw progress on the rules for international transfer of carbon credits and the Sustainable Development Mechanism for trading, but further work is needed to operationalise these to effectively recognise the economic and societal costs of emissions. Good practices for these mechanisms include determent of emissions at source and clear measurement and verification rules for the global carbon market.