A Low-carbon, Circular Economy Future – How can flexible, available and affordable energy be ensured for all? Insights from UN Environment and the European Commission

June 2020
Written by Sarah Casey, Portfolio Manager, Energy Council

Last year, the Energy Council held the Energy Capital Leaders Assembly for energy and finance executives who invest in developing, building and operating the future energy ecosystem

We agreed that the road towards a low carbon future and a circular economy is an exhilarating one but will not be without many hurdles along the way. Clear regulation and developed infrastructure are vital to ensure flexible, available and affordable energy for all and this message rang true across both keynote presentations: Mark Radka, Head of the Energy and Climate Division, UN Environment & Paula Pinho, Acting Director, Directorate A “Energy Policy”, European Commission.

Translating a low-carbon future and the Sustainable Development Goals into a reality

Mr. Radka opened the conference, presenting six abatement measures that could bring the world on track to bridge the emissions gap in 2030. The emissions gap is the maths between targets and contributions, enabling an assessment of where we are on the trajectory to stay within climate goals.

Mr. Radka suggested that the potential for sectoral emissions reduction is mainly in the energy and industry sectors and that if coal (existing, under construction and planned) continues on trend, it will take up most of the carbon budget. Countries must continue to focus on working towards realising a low-carbon future and this will be achieved through the Paris Agreement targets and Nationally determined contributions (NDCs).

Mr. Radka highlighted the role of the Finance sector in the road towards a low carbon future and the relevance of the United Nations Environment Programme’s (UNEP) principles for sustainable finance/insurance/banking.

Further, the importance of the Task Force on Climate-Related Financial Disclosures (TCFD) was noted. The TCFD has been described by UNEP as ‘vital to improving the reporting and understanding of climate-related financial risks’[1]. Mr. Radka also noted that the utility sector is affected by energy transition risks the most and pointed out that there is opportunity to make green profits from the sale of low carbon tech to offset transition costs.

The role of regulation in driving lower GHG emissions as part of National Energy and Climate Plans

In a similar vein, Ms. Pinho pointed out that whilst in 2018 renewable energy represented over 18% of energy consumed in the EU (on a path to the 2020 target of 20%), there is a need to decouple growth from emissions. Ms. Pinho explained how at the EU level, regulations are set by the 2030 Climate and Energy Framework, and within the wider policy framework defined by the European Green Deal.

In order to meet the National energy and climate plans (NECPs) by 2030, €400b per year is needed. Ms. Pinho emphasised the importance of green investments as a way to help achieve the goals laid out by the NECPs. In fact, the European Commission have recently been working on an initiative to develop a taxonomy for green investments. This should establish a clear and detailed EU classification for sustainable activities and will create a common language for all actors in the financial system.

[1] Mark Carney, Governor of the Bank of England. ‘Changing Course’, UNEP Finance Initiative