Europe - the first climate-neutral continent

How Europe will approach infrastructure needs, and keep up with technological developments, will determine the bloc’s resilience to extreme temperatures, droughts, and floods which are becoming more frequent with climate change. Many technologies are already available, such as advanced water management systems, smart mobility solutions, and digital twins. The question is how fast Europe will be able to roll out infrastructure that is critical for the twin digital and green transitions.

Promoting and adopting cutting-edge technologies in infrastructure is crucial to overcome the EU’s current energy crisis and achieving the bloc’s green and digital goals. Infrastructure is like the ground we stand on: we only notice it when it gives in beneath our feet.

In the EU, infrastructure has become a top political priority in recent months. From the current energy crisis and the ramifications of Russia’s aggression on Ukraine, to record temperatures making railways inoperable, and flash floods prompting calls for a coordinated EU water policy, the importance of future-proofing our infrastructure has crystalized before our eyes.

As President Von der Leyen deliver her third State of the Union address, there is a realization that the vision laid out in the Green Deal of making Europe the first climate-neutral continent—and which critically depends on the ability to execute on infrastructure—has proved challenging.

In particular, the important link between the “green” and “digital” prongs of the twin transitions is often underestimated and misunderstood.

EU member states face different challenges when it comes to going digital in infrastructure. A quick review of the 27 National Recovery and Resilience Plans reveals that the word “digitization” is used to describe many different types of projects, from the conversion of public administration filing systems into electronic formats, to ambitious plans to modernize transport and water management infrastructure.

In no other field is this dichotomy between “green” and “digital” more relevant than in relation to the REPower EU Plan, published by the European Commission in May. Announced as a comprehensive set of measures to eliminate the EU’s dependency on Russian fossil fuels and accelerate the EU’s transition toward renewable energy, it is a once-in-a-generation plan in its ambition and scope.

At the same time, however, the Commission exempted member states from the 20% minimum spend requirement on digital for the new, energy-focused chapter, which they will now add to their respective national plans.

While the current crisis explains why the Commission sought to lower implementation requirements on member states, and EU officials have been at pains to publicly encourage national efforts on digital, there is a real risk that the need to move fast will result in a missed opportunity to modernize European energy infrastructure.

Take infrastructure digital twins for a sustainable grid, for instance—a realistic, dynamic digital representation of a physical asset, process, or system that connects the physical infrastructure asset and virtual world while synchronizing work to make sense of the right data at the right time across the entire lifecycle of the asset. By enabling seamless collaboration between different engineering disciplines and exponentially better visibility on outcomes through the power of AI and machine learning, digital twins lead to better decisions—whether these relate to an electrical grid, a hydroelectric dam, or a gas pipeline in need of retrofitting.

Going one step further, if such infrastructure digital twins are based on openness, interoperability, and robust cybersecurity principles, policymakers can manage energy infrastructure from a holistic perspective to achieve key EU objectives, such as energy security, resilience, and diversification. Digital technologies will enable the implementation of an “energy efficiency first” principle across all sectors of the economy.

This “ecosystem” approach to energy is key to the EU’s future. It is the difference between looking at static assets in isolation, removed from their context and surroundings, and looking at energy needs and outcomes collectively. It is through digital that the EU will move beyond discussing the energy needs of individual member states and execute on policies where the entire EU acts swiftly as one.

It is, therefore, vital that both the execution of REPower EU by member states and other EU initiatives, such as the Action Plan on the Digitalization of the Energy Sector, promote the adoption of cutting-edge technologies such as digital twins. Infrastructure technology has advanced since the days of CAD [CAD: Computer Aided Design] and BIM [BIM: Building Information Modelling] — and it is important that EU policy advances along with it.

The EU is a worldwide leader when it comes to ambition and long-term vision on infrastructure. And it is in infrastructure—the often-invisible things that make our society and economy run—that the biggest and most immediate welfare benefits from digital will be felt.

Now is the time to accelerate toward next-generation EU infrastructure. Going digital will help propel the EU out of this crisis in its truest form: open, resilient and, above all, united.

Deposit refund schemes (DRS)

Most people feel helpless. As if they have no control over their life. In truth, you have more control over that world than you think. It has been said that luck is what happens when opportunity meets preparedness. 

Imagine two men walking down the street on a windy day. A piece of paper blows along the sidewalk in front of one man, then the other. The first man ignores the litter, keeping his eyes on the block up ahead. The second man peers at the scrap realize it’s a $20 bill and picks it up. Is that person luckier?

No. The same opportunity crossed the path of both men, but only one of them was prepared to act. I'm not saying that you should dig through the trash and look at the floor, but... 

This is how people in Croatia improve their budget and help recycle at the same time.

The Deposit Refund System in Croatia started with its implementation in 2006 and the decision was driven by increasing quantities of packaging waste since the 1990s as a result of the rising use of non-refillable beverage packaging: PET, bottles, and cans. The system foresees that a deposit is established for one-way beverage containers of greater volume than 0.2l made of plastic (PET), metal (aluminum and iron), and glass containing alcoholic and non-alcoholic beverages, water, fruit juices, and soft drinks. Milk and milk-containing beverages are subject to an exception and are excluded from the system. A returnable fee of 0.50 HRK (0,06€) is to be applied per packaging unit regardless of the material and size. The take-back process is established in each retail store (automatically by reverse vending machines or manually) where beverages packaged in aluminum, iron, PET, or glass are sold to end consumers with the exception of small retailers (which have less than 200m2).

Learning by example

A container deposit scheme in South Australia which applies an AUD 0.10 refundable deposit to beverage containers has led to a three-fold reduction in the number of beverage containers becoming litter on beaches.

In 2001, Israel introduced a deposit refund law that applies a deposit of ILS 0.25 to glass and plastic containers smaller than 1.5 liters. A cost-benefit analysis in 2010 concluded that the law had had a positive impact, with total benefits exceeding total costs by around 35%, and potentially greater benefits if the scheme were also applied to larger bottles.

In Ecuador, a refundable USD 0.02 deposit paid per PET beverage bottle (in 2011) led to a significant increase in PET bottle recycling, increasing from 30% in 2011 to 80% in 2012, when 1.13 million of the 1.4 million PET bottles produced were recycled.

The USA has no federal legislation on bottle refund schemes, but several States have introduced ‘bottle bills’. The California Redemption Value (CRV) is USD 0.05 for containers smaller than 0.7 liters and USD 0.10 for larger containers. Since its introduction in 1987, it is estimated that 300 billion aluminum, glass, and plastic beverage containers have been recycled.

In the US, the weight of a can fluctuates with various brand designs, but they tend to be around a half-ounce per can. At an average of 59 cents per pound, that makes a single can worth about 1.8 cents. At that rate, you could make $20 for about 1,000 cans (or 84 12-packs of 12-ounce cans). 

Measuring success – and looking for ways to improve

Zeljko Serdar, CEO, and founder of CCRES comments: “By working on the DRS system, we utilize our know-how in the field of digital transformation of waste management. It is very motivating for us to participate in a project with such a positive impact on recycling. When it comes to financial matters, it’s important to keep your eyes and ears open and to know where you are. Only then will you spot the opportunity when it crosses your path. Sometimes we all just need a little help opening our eyes."

India power demand

India’s transition away from coal

This post-industrial revolution demand for fossil fuels has strained our planet’s ecological health. The damage caused by burning the vast quantities of carbon-based fuels needed to run our development engines and modern economies is well known now. We are looking at increasing atmospheric temperatures, melting glaciers, rising sea levels, changing rainfall patterns, failing agriculture, drought, floods, and rampaging rivers. Not to mention the health detriments, deteriorating quality of life, and economic costs of pollution from fossil fuels. Also, fossil fuels are in increasingly short supply.

Energy is the crucial currency of the modern era. An indubitable requirement of a growing economy like India, energy is the lifeblood of manufacturing, transport, construction, communication, and mobility. Wars have been fought, countries subjugated, governments overthrown and established to literally fuel global demands for energy.

Compounding the problem is that in many nations including India, energy sources like coal and minerals such as iron, manganese, and aluminum lie under some of the last wilderness areas. Areas that are vital watersheds, carbon sinks, and home to many endangered plants and animals. So, how we decide to plan our resource needs and extract energy from finite sources will be crucial determinants of India’s social, economic, and environmental sustainability.

India is ramping up its efforts to decarbonize its economy with its commitment to turn Net Zero by 2070 and updated nationally determined contributions (NDC) of getting 50 percent installed energy capacity from non-fossil fuels by 2030. Moving away from fossil fuels; promoting green power and green hydrogen; environmental, social, and governance targets; electrifying transport; and boosting energy efficiency are all initiatives the government is taking to meet its goals. Still, Modi in his speech heralded the growing economic links between India and Russia. 

Piling Into India’s Renewable Industry

The country needs to add renewable energy capacity across all the resources to meet the expectations created through these interventions. India's green energy transition story hinges on the wind. India aims to install 140 gigawatts of wind power capacity over the next decade, of which approximately 100 GW have not yet been established. Wind energy contributes to a resilient system by playing both a complementary and a grid-balancing role since it is available during peak hours and after daylight hours when solar energy is unavailable.

The rising demand for power associated with the simultaneous growth of urban centers and modernizing rural areas is burdening our coal-based energy sector. While current power plants are creaking under the strain, alternative sources like hydropower or wind seem to have limited scope for large-scale power generation in a country where land is tightly contested. Some "renewable" energy modes also come with attendant environmental and social costs if poorly planned, as has already been witnessed with windmills and small-hydel plants in the Western Ghats. Further, inefficient transmission systems cause massive losses of scarce power.

EU-India cooperation on renewable energy

Part of the answer perhaps lies in decentralized, small-scale energy grids. In decentralized models, urban, semi-urban, and rural centers can be designed to have their own grids based on a variety of local power sources. Shorter powerlines can help cut transmission losses. Simultaneously, buildings can be made more energy efficient by changing energy consumption through efficient usage, and integrating solar power generation into building architecture can make rural and urban homes self-sufficient. EU Commissioner for Energy, Kadri Simson, is in New Delhi, India, to strengthen the EU's cooperation with the country in the field of renewable energy. The Commissioner participate in an event on EU-India cooperation in the area of solar energy with India's Minister of State for New and Renewable Energy and Chemical and Fertilizer, Bhagwat Khutba. She will also hold bilateral meetings with the Minister of Coal, Mines, and Parliamentary Affairs, Pralhad Joshi; and the Director General of International Solar Alliance, Ajay Mathur. 

The Commissioner chair the EU-India Green Hydrogen Forum, where she will deliver a keynote address, with the Minister of Power and New and Renewable Energy, Raj Kumar Singh. Norway announced heavy solar investment in India, highlighting the country as a priority market for its renewable energy growth. Funding comes from Norway’s Climate Investment Fund (CIF) and its biggest pension company, KLP, with plans to develop a 420MW solar energy project in Rajasthan. The companies are expected to spend $35 million on the development, with a 49 percent stake in the Thar Surya 1 project, alongside Italian firm Enel Green Power. But the investment doesn’t stop here, with the Norwegian Embassy earmarking $1 billion in CIF finance for renewable energy projects in India over the next half a decade, calling it a “priority market”.

And Norway is not the first investor to see India as a key market for renewable energy development. Foreign investors have been partnering with local energy producers to fund the development of India’s solar power sector, already attracting funding from Singapore and Abu Dhabi, banks such as Goldman Sachs, funds like Copenhagen Infrastructure Partners (CIP), and utilities such as Japan's JERA. JP Morgan, Standard Chartered, and other banks are also offering green bonds for renewable energy projects.

To further cut fossil fuel use, smarter cities should be built to have work-residential complexes that reduce daily travel. Improving public transport will encourage a majority of city dwellers to use this travel option, helping decongest roads and decrease pollution. Importantly, developing such cutting-edge infrastructure across the country can provide vast opportunities for governments and businesses to tap into the emerging ‘green economy’ sector.

India considers new coal imports

However, the current infrastructure is locked into centralized power generation and distribution of fossil-fuel energy. Decentralized models are not in our national psyche. For a vast majority of the rural populace, the idea of ‘development’ is inextricably linked to a connection with the few big power grids. Outreach and education are going to be a crucial component of changing energy models. In the meantime, our old systems of coal and petroleum extraction and use will have to be systematically overhauled to allow for newer distribution models. Much research and discussion are needed to find alternative sources of large-scale power generation that are safe, reliable, and long-term. Of course, any of this can only work with honest, efficient, inclusive, and transparent governance that can adaptively respond to knowledge and information.

Against the backdrop of these demands, ecologists and conservation biologists are tasked with the job of emphasizing the need to keep aside land for wildlife. Not being land-use specialists, we cannot answer many of the planning conundrums we pose, which sometimes earns us bad rap as anti-development Luddites. So, let me try clearing the slate. While saving wilderness and wild species is usually our primary motivation for thinking and talking about more significant questions of sustainability, ecologists and conservationists are only one amongst a more expansive cast of actors that can make this happen. For a country’s development to become sustainable, teams of well-trained experts need to collaborate and reach consensual solutions to best tackle diverse issues. Engineers, land-use planners, developmental economists, social scientists, architects, and agriculture scientists have to gather at the table, recognize the ripple impacts of decisions taken within their narrow domains and try to find cross-disciplinary solutions to the knotty issues of sustainability.

India is seeking to avoid any repeat of the coal crunch

“We are watching the situation anxiously,” CCRES, Zeljko Serdar said in an interview. "Energy officials in India are considering whether further coal imports may be needed to avoid any fresh squeeze on the nation’s power supply. Coal helps produce about 70% of India’s electricity. India’s Prime Minister Narendra Modi said that he is keen to boost ties with Russia, even as the country has become an international pariah following its invasion of Ukraine. Modi spoke of a “special partnership” between the two countries and expressed particular interest in bolstering their cooperation on energy and coking coal. Collective knowledge can help plan a sustainable future for India, but to meet the ambitious sustainability targets, we have to institute appropriate regulatory frameworks for energy use and respect the instruments and mechanisms needed to enforce them. FDI in solar and wind energy, green hydrogen, renewable battery manufacturing, and several other innovative green energy projects could help to produce the clean power required for India to transition away from fossil fuels, as well as export its energy to other countries worldwide in support of a global green transition. The systems we create today will determine whether India will use natural resources judiciously and provide future generations with a cleaner, healthier, and more productive environment".

Secondary Sanctions

 

From now Secondary Sanctions?

Outside of the United States, all economic sanctions imposed by a country are primary sanctions. In contrast, secondary sanctions impose penalties on persons and organizations not subject to the sanctioning country’s legal jurisdiction and are applied against entities engaged in the same dealings prohibited under primary sanctions. 

Penalties for violating a secondary sanction

A party violating the prohibitions or restrictions subject to secondary sanctions is the one subject to the regulatory consequences. However, the penalties are significantly more severe; generally, they consist of restrictions or prohibitions from accessing the imposing country’s financial system and/or the broader economy. 

While there is a range of penalties that can be imposed under various U.S. sanctions regulations, the most severe is the loss of access to the financial system in the U.S. (and by U.S. financial institutions, located wherever). 

This measure effectively bars the sanctioned party from doing business with customers and suppliers in the U.S., since it prevents access to the currency. It also makes being a significant force in international trade considerably more difficult, as the U.S. dollar is not only involved in over 60 percent of foreign exchange deals (which is how the buyer’s currency is used to purchase the goods and services in the seller’s currency) but is also the primary currency in which important commodities such as oil and precious metals are typically bought and sold.

Sanctioning has been dominating world news since the Russian-Ukrainian conflict in February 2022. Harsh sanctions were imposed almost immediately after the invasion. The EU imposed sanctions on several oligarchs and politicians, and the Central Bank of Russia was blocked from accessing foreign-exchange reserves held abroad. 

Sanctions are important political tools that governments use to achieve their foreign policy goals or as a means to punish and discourage violations of international law. Sanctions usually involve the application of economic restrictions against foreign targets (e.g. nations, government regimes, organizations, persons). However, sanctions are not always applied to persons that fall within the jurisdiction of the sanctioning government but also to persons in foreign jurisdictions who trade with targets who have been sanctioned. 

This dual approach to the enforcement of sanctions is often referred to as primary and secondary sanctions. Different categories of sanctions may apply to different situations, and it’s important for financial entities and obliged businesses to understand what they need to do in order to achieve compliance. 

Primary sanctions generally apply to US persons or to situations where there is a US nexus (such as the involvement of a US person, US-originating goods or transactions that take place within US borders). Secondary sanctions authorize OFAC or the US State Department to threaten sanctions on a person – even a non-US citizen – for a specified activity. Sanctions are intended to discourage non-US persons from engaging in specific transactions, even if these transactions are not subject to primary sanctions. 

Sanctions are a strict liability regime, and the act of violation carries civil liability. Persons or entities who willfully violate sanctions may face criminal liability as well as make attempts or conspiracies to violate sanctions. Penalties may include severe monetary fines or imprisonment.

What Are Primary Sanctions? 

Primary sanctions are economic restrictions. These restrictions require compliance from all persons and entities within the issuing country. In the United States, the Office of Foreign Assets (OFAC) imposes a range of sanctions, including full trade embargoes, asset freezes or seizures, and travel bans against foreign targets. 

OFAC primary sanctions may be imposed against countries, businesses, or individuals deemed guilty of committing international crimes or working against national security interests. 

Some of the current sanction targets by the US include North Korea, Cuba, Syria, Russia, and certain Chinese interests. 

Who Needs to Comply With Primary Sanctions?

OFAC requires US citizens, permanent residents (located anywhere in the world), persons of any nationality located within the US, entities organized in the USA or incorporated in the US (including their foreign branches), and all transactions processed via the US financial system or in US dollars to comply with primary sanctions. Failure to comply may lead to fines of up to $1 million per violation or up to 50% of the value of the transaction. 

What Are Secondary Sanctions?

Secondary sanctions are designed to prevent third parties from trading with countries subject to sanctions issued by another country – even if these third parties are not citizens of the issuing country or based in the issuing country. They may face penalties for doing business with the targeted country or individuals. 

The primary difference between primary and secondary sanctions is that secondary sanctions are enforced by targeting domestic entities rather than the third party. In another example, when the US reinstated its sanctions against Iran, they reinstated secondary sanctions for non-US persons trading with Iran for sectors, including the energy, precious metal, software, food, or financial services industries. Thousands of Iranians were added to the SDN list.

Unlike primary sanctions that are enforced by fines or seizure of US-held assets, secondary sanctions rely heavily on the importance of the US financial system and the use of the US dollar as a favored global reserve currency. 

Secondary sanctions can enhance the effects of primary sanctions and protect the security interests of the issuing countries. For example, FinCEN (the Financial Crimes Enforcement Network) prohibited US financial institutions from opening or maintaining any correspondent accounts for or on behalf of the Chinese Bank of Dandong. 

This bank was found to be in violation of the US Patriot Act by laundering money for a Chinese trade conglomerate, Dandong Hongxiang Industrial Development (DHID). This conglomerate has been found to run money laundering schemes for the benefit of the North Korean government. While targeted sanctions have already been imposed against North Korea for some time, this particular sanction hit the DHID hard as they are responsible for a large share of Sino-North Korean trade, which in turn deterred Chinese banks and financial firms located in other nations from transacting with North Korean businesses.  

Who Needs to Comply With Secondary Sanctions?

Non-US entities with business relationships in the US must comply with secondary issues. If they are in violation, they may be restricted partially or totally from participating in the US financial system, including import or export restrictions. US persons who are found in violation of sanctions may find themselves on the Specially Designated Nationals and Blocked Persons (SDN) list. 

Why Are Secondary Sanctions Being Discussed in 2022? 

The vast majority of US secondary sanctions apply to Iran and North Korea. The sanctions have made it difficult for Iran to sell their oil globally and have been designed to make it difficult for Iran to develop a nuclear weapon. 

Secondary sanctions are in the news at present due to heavy sanctions imposed against Russia by the US, UK, and EU. While current sanctions caused inflation to spike in Russia and caused the collapse of many of its major banks, Russia’s ability to sell oil and gas to the rest of Europe has reduced the impact of trade sanctions, albeit slightly, as it helped the ruble recover some of its value. Ukraine is currently asking the US and its allies to consider secondary sanctions against Russia. 

Secondary sanctions are sometimes controversial as they are sometimes considered an extraterritorial application of US laws, and some opponents of secondary sanctions say the US uses these regimes as a means of influencing the decision-making processes of countries that would not otherwise be in violation of US sanctions. There is also a risk that secondary sanctions may damage alliances across the globe, e.g. if the UK continues to buy oil and gas from Russia, the US may not take kindly to it.

Secondary sanctions are often misunderstood and can lead to over-compliance or confusion, which in turn could slow down global business. 

Multinational or cross-border firms must remain compliant with primary and secondary sanctions and screen customers against all relevant sanctions lists. UK firms that conduct business with clients in both the US and Russia must carefully screen using the UK Sanctions List and OFAC Sanctions List. 

When assessing sanctions-based risk, businesses and other obliged entities or persons must consider the following:

• Any entities or individuals which are SDN-listed, including entities that are majority-owned by listed entities or designated individuals;
• Whether or not there is a US connection to the proposed transaction or activity, including transacting in US dollars or through the US financial system; 
• The scope of the sanctions regime, including whether sanctions all transactions/activities with SDN-listed businesses and individuals or just targeted sector-related transactions and activities; 
• Whether or not sanctions are primary or secondary. 

Conclusion 

Whether you are dealing with either primary or secondary sanctions, it’s important to adopt accurate and rapid screening solutions that can capture and check customers’ data as they are being onboarded. The ideal solution produces very few false positives and reduces the administrative burden placed on already stretched compliance officers. 

These solutions should also have the ability to handle aliases, non-Western naming conventions, and the use of a non-Latin alphabet. If you would like to know about sanctions.io and sanctions screening, do not hesitate to get in touch.

*For the rest of the year, G7 partners will attempt to find workable solutions to the conundrum of keeping oil and gas flowing out of Russia while reducing revenue inflows.

*The likelihood of imposing secondary sanctions against Chinese firms selling into Russia is now higher but China is taking a careful approach in order to avoid these.

Western sanctions have succeeded in causing Russia to default on its sovereign debt and isolated Russia from the global economy, but the cost has been high. Uncertainty oversupply has sent energy prices flying. Figuring out how to minimize the blowback on Western economies will be a priority for G7 partners. We will see whether the US Treasury, which is actively promoting the price cap idea, will succeed in getting the EU on board to enforce it. In the meantime, China is likely to do enough to avoid US secondary sanctions, even if that requires moving away from transactions with Russia and reducing the volume of its exports. 

Energy security

 

 Image: CCRES

Rising concerns over energy security and climate change will galvanize record new capacity to generate renewable power in 2022, the International Energy Agency (IEA). The IEA forecasts that 320 gigawatts will come online this year, equivalent to top European economy Germany's total annual demand, up from a previous record of 295 gigawatts in 2021.

Nothing, it seems, can hold back the advance of renewable energy. Despite post-pandemic delays and rising raw material costs, a record amount of renewable capacity was installed in 2021.

Now the International Energy Agency (IEA) expects that record to be beaten again in 2022, at least in part as nations that have relied on fossil fuels from Russia, push ahead with new renewable capacity in response to the war in Ukraine.

Renewable energy growth means the world now has 295 gigawatts of green generating capacity, says the IEA, demonstrating what the World Economic Forum’s Fostering Effective Energy Transition 2021 report described as its “unprecedented acceleration” in recent years.

As the transition to clean energy gathers pace, it can be challenging to see the full picture. These four charts reveal the state of renewable energy around the world today.

Net renewable capacity additions by technology, 2017-2023. Image: IEA

The IEA says 2021’s 6% growth will be followed by an 8% rise in installed capacity in 2022, led by a surge in solar power. However, progress has been uneven, with a 17% decline in new wind installations in 2021 offset by the rise in solar and hydropower.

In India, the rate of growth in renewable energy doubled in 2021 after a record slowdown in 2020 caused by the impact of COVID-19 on projects. Brazil’s incentives led to a growth in rooftop solar and onshore wind also accelerated, the IEA said.

The power of government initiatives to help or harm renewable roll-outs was demonstrated in Viet Nam, where the ending of a feed-in tariff for rooftop solar saw a dramatic slowdown; while in South Africa, the completion of pre-approved wind and solar led to resumed growth.

Solar PV and onshore wind investment cost estimates for new projects under high commodity prices 2015-2023. Image: IEA

Even if current high energy prices are maintained, the IEA says solar will retain and even increase its cost advantage over the next two years. This is despite the rising cost of raw materials used to construct renewable energy installations.

In the past 12 months, the cost of polysilicon used in solar panels has more than quadrupled, says the IEA, while the price of steel rose by 50% and copper by 70%. Overall, raw material costs for all types of renewable energy were 15% to 25% higher, the IEA says.

Renewable net capacity additions by country and region 2019-2021. Image: IEA

China accounted for 46% of the new generating capacity added in 2021, with subsidies encouraging record-breaking rises in the amount of offshore wind which increased sixfold. In Europe, solar accounted for most of the growth, with projects in Spain, France, Poland, and Germany.

The IEA expects Russia’s invasion of Ukraine to lead to increases in renewable energy capacity, particularly in Europe. Russia, which supplies around 45% of the European Union’s gas, has already cut supplies to Bulgaria, Finland, and Poland.

Incremental growth in renewable capacity in Europe by 2023 could almost entirely replace electricity generation, which is currently powered by Russian gas, says the IEA. Even on current trends renewables could reduce dependence on Russian gas “significantly”, it says.

Renewable net capacity additions 2019-2021. Image: IEA

Solar is expected to account for 60% of the increase in global renewable capacity in 2022, taking the global total to more than 300 gigawatts. Two-thirds will be large-scale projects encouraged by policies in China and the European Union, says the IEA.

New onshore wind capacity is also expected to recover after slipping back in 2021, but the global rate at which new offshore wind installations are built will slow significantly, reflecting the end of subsidies in China which drove a record capacity surge in 2021.

Even so, China’s total installed offshore wind capacity globally is expected to surpass the European Union and the United Kingdom combined by the end of 2022.

As the largest player in renewables, events in China affect global totals. The IEA says additions to the world’s hydropower capacity will be 40% lower in 2022 as the number of new projects in China falls.

 Image: CCRES

The COVID-19 pandemic and Russia's invasion of Ukraine have driven inflation to multi-decade highs and led to soaring energy prices in some advanced economies, leaving policymakers scrambling to find cheaper and reliable energy. Energy market developments in recent months – especially in Europe – have proven once again the essential role of renewables in improving energy security, in addition to their well-established effectiveness at reducing emissions. But the growth of renewable power has been hampered by supply chain difficulties, and the cost of installing solar photovoltaic (PV) panels will remain high this year and next due to higher commodity and freight prices, CCRES president Zeljko Serdar said.