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Climate-related risks amplify the impact of traditional risk categories

Photo-illustration: Pixabay

The increasingly frequent materialization of physical and transition climate-related risks has led companies around the world to include climate-related risks in their risk management systems. Climate-related risks can intensify the effect of the so-called traditional risk categories and thus cause disruptions in the companies’ operations, local and global supply chains, as well as disruptions in financial markets. Also, the impact of climate-related risks on overall financial stability is increasingly being considered.

According to data from the World Meteorological Organization, the number of weather disasters increased five times from 1970 to 2010, while economic losses caused by weather disasters reached 1.38 trillion dollars from 2010 to 2019. On the other hand, companies develop sustainable business strategies that include analysis of exposure to climate-related risks, disclosure of exposure to these risks, use of scenario analysis to assess the impact of different climate scenarios on business, and development of management strategies for identified material climate-related risks.

Analysis by the rating agency S&P shows that over 90 per cent of the world’s largest companies will have at least one part of their assets significantly exposed to physical climate risks by 2050, while in the case of limiting the growth of the average global temperature in accordance with the Paris Agreement, the number of companies that are exposed to physical climate risks would be significantly lower and amount to 39 per cent.

Climate-related risks spill over into traditional risk categories. They can act as a multiplier of these risks, which can have significant financial consequences both at the level of individual companies and at the level of entire economies.

Climate-related risks and operational risk

Operational risks, as risks inherent to the companies’ business, are affected by climate-related risks primarily at the micro level, i.e. at the level of individual companies. Increasingly frequent and extreme weather events can damage and/or destroy company property, causing material damage due to loss of property but also potentially significantly greater damage through business interruptions. Business interruptions cause losses not only to companies exposed to physical risks but also to companies in their supply chain, that will consequently experience certain business interruptions or stoppages. An additional channel of the impact of physical climate risks on companies’ operational business is the reduction of worker productivity. Increasing temperatures in the summer months reduce the productivity of workers in construction, agriculture, and other industries whose operations require workers to stay outdoors. Transitional climate risks will act as a multiplier of operational risks, most often in the event of sudden changes in regulatory requirements that will result in the need to close parts of the plant or the entire plant. For example, a directive requiring the reduction of harmful gas emissions into the air can lead to the shutdown of entire plants if it is judged that their adaptation to new regulatory requirements is unprofitable for the company.

Also, the transmission of climate risks into operational risks usually ends at the micro level. Impacts on the macroeconomic environment will only exist if there is a large geographical concentration of companies from the same sector. For example, the floods in Thailand in 2011 significantly threatened the global supply of semiconductors because a large number of semiconductor components are produced in Thailand.

Photo: ESG team EY Serbia

Climate-related risks and credit risk

Climate-related risks can be a significant credit risk multiplier for companies. Property damage and/or business interruption due to the materialization of physical climate risks may result in a loss of revenue and profit for the company and jeopardize its ability to service debts. In such situations, the company’s probability of default increases. Similarly, regulatory changes or changes in consumer expectations as a form of transition risks can lead to a premature write-off of the company’s assets and, thus, lower collateral value or impact the company’s ability to service its obligations. The transmission of climate risks into credit risk can have significant implications at the macroeconomic level and is one of the main reasons for the increasing involvement of financial sector regulators in the management of climate-related risks by financial institutions. Banks should assess the degree of exposure of their portfolios to the impact of both physical and transition risks.

Climate-related risks and liquidity risk

Droughts, floods, extremely high temperatures and other forms of physical climate risks, as well as technological progress, changes in regulations, changes in client expectations and other forms of transitional climate risks, can significantly affect the liquidity position of companies. The materialization of climate risks can lead to significant and sudden changes in the value of listed companies. The materialization of climate risks can significantly pressure the banking sector. At the same time, there can be a substantial withdrawal of deposits and a high demand for liquid assets (cash) on the one hand and a greater demand for loans from companies on the other hand. This situation can result in a liquidity shock that can have wider macroeconomic implications if it covers entire sectors or regions. However, climate-related risks are more likely to affect individual companies through the channel of credit risk than liquidity risk.

Photo: ESG team EY Serbia

Climate-related risks and insurance risk

When it comes to insurance risks, greater exposure to physical and transition risks can lead to a significant increase in insurance premiums for certain sectors or a decrease in the willingness of insurance companies to provide insurance coverage to high-risk sectors. High insurance premiums can significantly increase costs and thus reduce the profitability of companies, while limited access to insurance can seriously threaten the company’s operations. If the company is not insured, it must pay for any damage to property or the costs and fines of its court cases, which may threaten its liquidity, profitability, and ability to continue operating.

Climate-related risks and market risk

Transition and physical climate risks can become a significant component of the price of shares and bonds of companies listed on the stock exchange, which would lead to the so-called pricing of climate-related risks, i.e. a gradual adjustment of the prices of financial instruments for climate risks to which the company is exposed. This would mean that in addition to, for example, the country risk premium, which is an integral part of the price of financial instruments of companies from developing economies compared to companies from developed countries, a certain premium is also incorporated into the price of financial instruments that reflects the greater exposure of companies from certain markets and/or from certain sectors to climate risks. Adjusting the prices of financial instruments for the effects of climate-related risks can cause significant changes in portfolio values, especially for companies whose portfolios are dominated by carbon-intensive “brown” companies.

The tendency of investors to value climate-related risks is visible through the rates of return on green and other types of sustainable bonds. Investors are ready to accept a lower yield for a green bond than for a conventional bond, so we have the emergence of the so-called greenium. Greenium occurs when a bond on the primary market has a higher price and a lower rate of return compared to the existing debt of the same issuer on the secondary market, indicating that investors are willing to accept a lower return for green bonds that contribute to the achievement of sustainability goals and have low exposure to climate-related risks. On the other hand, it is cheaper for issuers to raise funds by issuing green compared to conventional bonds.

Photo: ESG team EY Serbia

Climate-related risks and country risk

Climate-related risks may also lead to a significant increase in the risk of the entire country in a situation where the country is quite exposed to the materialization of risks, such as floods, which, in addition to the destruction of the physical property and significant public expenditures, can result in lower GDP growth and more expensive state debt on the international market. Also, countries whose energy mix largely depends on fossil fuels certainly have high exposure to transition risks (primarily regulatory and technological risks), which can additionally increase the cost of their borrowing on the international market due to a potentially limited ability to service debt in the coming period.

The materialization of climate risks will first affect companies from the real sector, and their ability to service debt will also affect the financial sector. Realizing that climate risks can significantly impact entire sectors, regions, and even the broader macroeconomic environment in the coming years and that they no longer represent a negligible risk category, regulators at the global level are paying more and more attention to climate and environmental risks. Adequate identification, evaluation, and mechanisms of climate risk management as well as transparent reporting on these processes, will represent the basis of the competitive advantage of companies in the years to come. On the other hand, transparent reporting of the real sector on climate and environmental risks will provide banks with a large enough database to incorporate this risk category into risk management and business decision-making.

Source: ESG team EY Serbia

IEG Among the First Companies in Europe to Obtain ISO 20121 Certification

Foto: Ecomondo

Photo: YouTube (screenshot)

Group has certified the Rimini and Vicenza expo centres and the organization of Ecomondo and, at the beginning of 2023, the procedure will also regard Rimini’s Palacongressi conference centre. The prestigious acknowledgment was obtained thanks to the consultation of the Hera Group Increasingly sustainable expo events for Italian Exhibition Group (IEG) who, among the sector’s first companies at European level, has added ISO 20121 certification to its long series of records in the environmental safety, health protection and sustainability fields.

IEG, one of the sector’s major players, has obtained certification for its Rimini and Vicenza expo centres and the organization of Ecomondo, for 25 years the European expo for the circular economy, and at the beginning of 2023 the procedure will also regard Rimini’s Palacongressi Conference centre, a process that will result in it being one of the first and most important players to certify all its facilities. A process of environmental sustainability that began a long time ago, on the inauguration day of the new Expo Centre in 2001.

Starting with the prestigious Elca international Building with Green acknowledgement in Nuremberg, IEG then achieved ISO 14001 Environment certification, ISO 450001 occupational health and safety and GBAC Star accreditation from the Global Biorisk Advisory Council.

The consultation of the Hera Group for strategic certification, unique in Europe

IEG’s choice to aim at obtaining this coveted sustainability certification assumes an extremely high strategic value, finalized at qualifying itself increasingly as a mature subject committed to transition towards the circular economy. In fact, ISO 20121 certifies activity planned and carried out in respect of economic, social and environmental aspects: observing it means assuming a long-term balanced approach to carrying out business activity, environmental responsibility and generating social progress, to meet the necessities of the present day and favour corporate development, qualifying it.

For the complex certification process, IEG decided to take advantage of the consultation and expertise of the Hera Group, one of Italy’s major multi-utilities managing environmental, water and energy services for approximately 5 million Italians and which has always put sustainability and circular economy at the heart of its strategy. During the certification process, begun in March 2022 and particularly complex for a company structured like IEG, the Hera Group provided its support on the various documentary, management, organization and operational aspects, to complete the process necessary for obtaining ISO 20121 under the profile of environmental, economic and social sustainability. In particular, a dedicated team from the multiutility was committed to a busy calendar of activities: from on-site inspections at the venues involved to meetings with the various corporate areas and with suppliers, from Bureau Veritas audits to the phases of analysis of the documents and assessment from the point of view of sustainability, through to the revision and processing of new procedures, planning of the potential development of activities and processes from a circular point of view.

ISO 20121 certification in brief and best practices

In short, ISO 20121 certification commits IEG directly, by means of its collaborators and suppliers, to: stimulating the complete satisfaction of the activity carried out, a condition necessary for the creation of value and sustainable development; ensuring all-round accessibility regarding the rights of disabled persons; using equipment, operational methods and organization aspects that safeguard the environment with the reduction of emissions; optimise mobility systems and reduce waste production; increasing source-segregated waste collection and reducing energy and water consumption; using suppliers that are qualified from the point of view of quality, safety and environmental aspects; informing and ensuring that all employees, suppliers, local partners, clients and participants in the events are aware of environmental and sustainability issues. 

The best practices introduced with the planning of the Ecomondo event include that regarding the elimination of carpet in the halls’ indoor corridors, with an annual environmental saving of over 140 tons of carpet; the collection and recovery of cigarette butts; the increase of recharging stations for electric cars; accessibility to the expo centre by disabled visitors; the increase of installed power regarding the photovoltaic systems; the involvement of local stakeholders. The expo centre has 1,500 trees and bushes irrigated by surface water-bearing strata, illumination in the halls is favoured by 850 LED lighting fixtures, which save emission of 120 tons of CO2 annually and 360.000 Kwh of consumption. The photovoltaic systems ensure the production of 8.5 million Kwh of clean energy, equal to that necessary to ensure the Italian facilities are self-sufficient. The recovery of water saves 23 million litres and all the fountains recycle the water they use. The underground “ice bank” contributes to cooling the venues, halving consumption. The on-site railway station is used by 20 percent of the visitors and reduces traffic flow; there are 7 recharging columns for electric cars and motorbikes and this number will soon be doubled. 

IEG CEO Corrado Peraboni states, “With this important certification, which, with Ecomondo, we are the first to have obtained in Europe in the context of expos on the environment, we have given concrete form to the objectives for sustainable development of the Agenda 2030, principles that are in line with the values of IEG and at the base of our corporate policy. In recent years, acknowledgements and best practices have also generated virtuous behaviour among our hundreds of thousands of international visitors, but ISO 20121 represents a further step forward, a tangible contribution to the process of cultural change, taking the form of behaviour necessary for protecting the planet.” Orazio Iacono, Hera Group CEO, specifies, “The support for one of the major players in the sector such as IEG in the complex process of certification of its expo centres, and for an important event such as Ecomondo, represents the natural consequence of sharing objectives of sustainability and circular economy, which have always been at the base of our corporate strategy. Thanks to ISO 20121 certification, the planning of sustainable events in respect of the economic-social aspects becomes even more strategic and tangible, while at the same time providing a balanced long-term approach to environmental responsibility and social progress.” 

Source: Ecomondo

Gebrüder Weiss targets climate neutrality by 2030

Photo: Gebrüder Weiss

Photo: Gebrüder Weiss / Sams (Gebrüder Weiss aims to operate all of its locations as climate neutral by 2030. Here: The photovoltaic system at the Lauterach location, with the head office in the background)

As a modern logistics service provider, Gebrüder Weiss has set the goal of gradually reducing the company’s carbon footprint to zero with its sustainability strategy GWcares, aiming to make the company’s logistics facilities climate-neutral by 2030. This is one of the ways in which the company is facing up to its responsibility and contributing to efforts to meet global climate targets. Gebrüder Weiss will be taking a close look at CO₂ emissions at all 180 locations. The company has quantified the current CO₂ emissions and energy consumption of its locations in its current Sustainability Report. These emissions are to be reduced gradually – by ten percent per year.

The sustainability report also outlines important measures to be taken in the quest for climate neutrality and ways in which our modern logistics facilities can harness any and all possibilities available for saving energy and reducing dependence on limited resources. Installing photovoltaic (PV) systems on the roofs of logistics terminals has an important role to play, with 18 such installations already existing at Gebrüder Weiss. Together, these installations generate more than 4,600 megawatt hours of electricity per year and currently meet 18 percent of the group’s electricity needs. The aim is to increase this share by 15 percent each year by further increasing the number of PV installations. Gebrüder Weiss has also installed an energy monitoring system at its locations in Europe to track the effectiveness of these efforts and plans to deploy it worldwide in the coming years.

Investments in alternative drives
Gebrüder Weiss is also increasing the share of alternative drives in heavy-duty transport and developing low-emission solutions for the last mile. In the Greater Vienna metropolitan area, an electric truck is used for short-distance transport, and deliveries are made to end customers in Austria using electric vans. On top of this, one of the world’s first hydrogen (H2) trucks has been in regular operation in Switzerland since January 2021, and there are plans to deploy five more H2 trucks in Germany in 2023. Gebrüder Weiss is also working with partners and competitors in Austria to introduce fuel cell trucks. The Company intends to invest around ten million euros in alternative drive systems by 2025.

Further information on Gebrüder Weiss’ activities in the area of sustainability can be found HERE

About Gebrüder Weiss
Gebrüder Weiss Holding AG, based in Lauterach, Austria, is a globally operative full-service logistics provider with about 8,000 employees at 180 company-owned locations. In the last fiscal year (2021), it posted annual sales of 2.5 billion euros. Its portfolio encompasses transport and logistics solutions, digital services, and supply chain management. The twin strengths of digital and physical competence enable Gebrüder Weiss to respond swiftly and flexibly to customers’ needs. The family-run organization – with a history going back more than half a millennium – has implemented a wide variety of environmental, economic, and social initiatives. Today, it is also considered a pioneer in sustainable business practices. www.gw-world.com

Source: Gebrüder Weiss

Air France Early Bird campaign of over 1000 destinations across the globe

Photo: Air France

French airline company has an amazing idea for all those who wish to avoid long and cold European winter and at the same time save on the gas, electricity and heating bills. Simply pack your bags and go to warmer areas, the Caribbean, for example.

If you would like to visit Pointe-à-Pitre (Guadeloupe), Fort-de-France (Martinique), Havana (Cuba) or other destinations in the Caribbean during the “winter” which starts in November and top season which lasts from December to February with temperatures form 15 to 30oC, now is the time to start planning your journey.

Knowing that a significant part of the budget goes for plane tickets, Air France starts „Early Bird” campaign offering lower prices for return tickets for over 1000 destinations worldwide. The campaign lasts from November 10 to November 23 for journeys until March 31, 2023.

Besides the Carribean destinations, Air France also offers Delhi, Tokio, Toronto, European capitals, exotic Mauricius and the Seychelles and other destinations in the Indean ocean, Central and North America.

The offer is valid for round trips and includes all taxes.

For more information on this offer please visit this LINK

To book the tickets or obtain addition information, please visit company’s website airfrance.rs or partner tourist agencies.

Source: Air France

Energy Efficiency and Renewables are Instrumental for Countries in the Greater Horn of Africa to Provide Energy for all

Photo-Ilustration: Pixabay (Coernl)

Photo-illustration: Unsplash (Martin Jeon)

Energy infrastructure in the greater Horn of Africa has struggled to keep pace with a fast-growing population, creating a formidable hurdle for the region’s buoyant economies that can best be overcome through stronger deployment of energy efficiency and renewable technologies, according to a new IEA report.

Countries in the region have already demonstrated they can find innovative solutions to extend electricity access to underserved populations and have huge underexploited potential for wind and solar power. But achieving these objectives requires supportive policies, better regulatory frameworks, regional cooperation and international financial assistance, according to the IEA’s new report on Clean Energy Transitions in the greater Horn of Africa, which is being presented at a conference in Kampala, Uganda.

Energy consumption in the greater Horn of Africa – defined in the report as Djibouti, Eritrea, Ethiopia, Kenya, Somalia, South Sudan, Sudan and Uganda – has grown by 3 per cent per year over the last decade, but half the population still lacks access to electricity and only one in six people cooks with modern fuels. The eight countries represent nearly a quarter of sub-Saharan Africa’s GDP, yet their total energy consumption is less than that of Belgium and the Netherlands combined – but with 10 times the population.

“The greater Horn of Africa is home to some of the world’s fastest growing economies, but its potential is at risk if energy infrastructure can’t keep pace,” said Mary Burce Warlick, the IEA Deputy Executive Director. “The IEA stands ready to provide expertise and policy advice for African countries to develop clean, reliable and affordable energy systems that will serve all their people. These efforts will hinge on regional cooperation and international assistance.”

Ms Warlick is providing the keynote remarks at the Kampala conference along with Ugandan Minister of Energy and Mineral Development Ruth Nankabirwa and Netherlands Vice Minister for International Cooperation Kitty Van Der Heijden. All eight regional countries have sent representatives from their energy ministries, and other regional stakeholders are attending as well.

Despite being one of the regions globally that is most vulnerable to the impacts of climate change, the greater Horn of Africa has one of the lowest levels of emissions per capita. In 2020, the region emitted about the same amount of carbon dioxide as New York City.

Bioenergy – often in the form of gathered firewood, charcoal and agricultural waste – currently meets around 80 per cent of the greater Horn of Africa’s energy demand. For electricity, the region has one of the world’s most sustainable systems, with more than 85 per cent of generation coming from renewables – mostly in the form of large hydropower projects in Ethiopia, Sudan and Kenya. But the region has massive, underutilised potential for solar, wind and geothermal power.

Source: IEA

Four Ways the Planetary Crisis is Impacting Mental Health

Foto-ilustracija: Unsplash (Adrian Dascal)

Photo-illustration: Pixabay (StockSnap)

“A healthy environment is not only a key ingredient for human health and well-being, but also a foundation for One Health since the health of humans, animals, plants, and the wider environment and ecosystems are closely linked and interdependent,” says Cristina Zucca, who coordinates work on pollution, environment and health at UNEP. “This calls for action at the individual and policy levels to create a healthy environment that promotes mental health.”

Ahead of World Mental Health Day on 10 October, we take a deep dive into four key issues impacting mental health and how we can turn to nature and climate action for solutions.

Noise pollution

UNEP’s Frontiers 2022 report found that as cities grow, prolonged exposure to high noise levels from roads, railways, airports, and industry is impairing people’s mental health by disrupting sleep.

Estimates suggest that in Europe, 22 million people suffer from chronic noise annoyance, and 6.5 million are affected by sleep disturbance. The elderly, pregnant women and shift workers are most at risk.

The study highlights natural ways to improve mental health and mitigate the adverse effects of noise pollution, such as planting vegetation in urban environments to absorb acoustic energy, diffuse noise and reduce street amplification.

Tree belts, shrubs, green walls and green roofs can have positive visual effects and help amplify natural sounds by attracting urban wildlife. Some sounds, particularly those from nature, bring health benefits as they can signal a safe environment which reduces anxiety.

Air pollution

Ninety-nine percent of the global population breathes air that exceeds World Health Organization (WHO) guidelines, with an estimated seven million people dying prematurely due to air pollution.

Photo-illustration: Pixabay

According to WHO, air quality is among the many environmental, social and economic determinants of mental health. Research also shows that high levels of fine inhalable particles (PM 2.5) can also hinder cognitive development in children. UNICEF’s Danger in the Air report shows that exposure to high levels of air pollution could result in psychological and behavioural problems later in childhood, including attention deficit hyperactivity disorder (ADHD), anxiety and depression.

The BreatheLife action platform, a partnership of WHO, UNEP, the Climate and Clean Air Coalition (CCAC) and the World Bank, presents several localized solutions that governments can use to beat air pollution and create healthier cities and healthier citizens.

These focus on electric mobility, walking and cycling and other low-carbon options for countries and cities to reduce air pollution, mitigate climate change and create green spaces. The campaign also highlights the importance of tackling air pollution from industry, transport, waste management, households and agriculture and improving air quality management by adopting and meeting good air quality standards. While progress is being made, UNEP research shows that much remains to be done. Recognizing the importance of addressing air pollution, the UN General  Assembly has declared 7 September, the International Day of Clean Air for blue skies, as an opportunity to celebrate progress and generate momentum for global action.

Chemical pollution

Chemicals in the environment are a global health issue. While chemicals and waste are major contributors to world economies, their sound management is essential to avoid risks to human health and ecosystems and substantial costs to national economies.

Research shows that around one in three children has lead in their blood at levels that may be associated with decreased intelligence, behavioural difficulties and learning problems.

Photo-illustration: Pixabay

UNEP is working closely with its partners to develop mainstream solutions for the sound management of chemicals and waste. Last month, Member States, industry representatives, academia, NGOs, and youth groups agreed on a vision for the Strategic Approach and sound management of chemicals and waste beyond 2020 to help protect human and planetary health.

Climate change

A recent Intergovernmental Panel on Climate Change (IPCC) pointed to the expected rise in mental health impacts due to exposure to high temperatures, extreme weather events and climate-related economic and social losses, as well as anxiety and distress associated with concerns about the climate crisis.

WHO has confirmed this trend, noting that climate change is having stronger and longer-lasting impacts on people’s mental well-being. A recent report shows that depression, anxiety and stress-related conditions have been reported following extreme weather events.

The report calls for accelerated response to the climate crisis by governments, including efforts to address its impacts on mental health and psychosocial well-being.

Source: UNEP

UN Urges Europe to Boost Environmental Ambition to Fight Planetary Crisis

Foto-ilustracija: Pixabay (RitaE)

Photo-illustration: Unsplash (Carlos Grury Santos)

Despite progress in certain areas, governments in the pan-European region must show far greater ambition in tackling climate change, protecting ecosystems and managing and tackling waste and pollution, stresses a new UN assessment presented to European ministers. The 7th pan-European environmental assessment, was presented at the 9th Environment for Europe Ministerial Conference, the United Nations’ highest body on environmental policy in the region – covering 54 countries across the European Union, European Free Trade Association members, the Balkans, the Caucasus, Eastern Europe and Central Asia.

The joint report by the United Nations Economic Commission for Europe (UNECE) and the United Nations Environment Programme (UNEP) calls for greater action to tackle the triple planetary crisis affecting climate, nature and pollution, whose effects are taking their toll more than ever on the lives and wellbeing of people in the pan-European region.   

“The findings of this assessment almost halfway through Agenda 2030, must be a wake-up call for the region,” said UNECE Executive Secretary Olga Algayerova. “The historic drought the region faced this summer announced what we should expect in years to come and shows that there is no more time to lose. As highlighted in the report, the UN has developed multiple tools and approaches to cut pollution, step-up environmental protection, reduce resource use and foster the shift to a circular economy. Their implementation must be significantly accelerated. This will require urgent and bold political commitment and behavioural changes from all of us before it is too late”. 

“We know what we need to do, and we must act together. As citizens feel the pinch and are facing higher energy bills than ever before, as they see record temperatures and their water reservoirs shrink, and the continent is confronted with other profound challenges, countries must show that there is a plan,” said UNEP Executive Director Inger Andersen. “The science is unequivocal. The only way forward is to secure a clean and green future. This assessment can be a guide for lowering emissions, a healthier environment for people and for nature, and better waste management and cleaner air”.

Greater efforts needed to tackle air pollution

Some progress has been made in the past years through the implementation of policies to tackle air pollution, but increased effort is needed, as air pollution remains the greatest health risk in the region. The report notes that between 2009 and 2018, 41 European countries recorded a 13 percent reduction in premature deaths due to long-term exposure to fine particulate matter (PM2.5). Yet PM2.5 concentration continued to exceed the 2005 World Health Organization air quality guideline of 10 µg/m3 — 10 millionths of a gram per cubic metre of air — and the subsequent stricter 2021 limit of 5 µg/m3 across the entire region.

In response, the assessment calls for additional measures, including the use and further sharpening of the best available techniques to prevent emissions of particulate matter, NOx and hydrocarbons by the industry, and to reduce emissions from traffic by implementing emission standards known as Euro-6 and Euro-7. All countries should align ambient air quality standards with latest WHO guidelines.

Rising GHG emissions must be slashed

While all countries in the pan-European region have committed to reducing greenhouse gas emissions, net emissions are still rising. Reductions, mostly achieved in the western part of Europe (2014–2019), are offset by the increase in emissions in the rest of the region.

The use of renewables increased in 29 countries in 2013-2017, but the region still largely relies on fossil fuels – accounting for some 78 percent of total final energy consumption. The share of renewables in the energy mix is rising more slowly than overall energy consumption in the region.

Governments should therefore eliminate or reform harmful subsidies and incentives (all countries in the region continue to implement fossil fuel subsidies) and develop effective incentives to deepen decarbonization by shifting promotion of investments towards renewable energy.

Cooperation remains key to address water challenges

The region’s river basins, lakes and aquifers are subject to multiple stresses, and climate change is delivering additional challenges for freshwater quantity and quality such as floods, droughts, water-borne diseases and biodiversity changes in aquatic ecosystems. Pollution and urban and industrial wastewater discharges remain significant and persistent organic contaminants are of public health concern. Together with reinforced measures to conserve water, improve efficiency of its use (such as through precision agriculture in irrigated crop production) and to harness nature-based solutions for water retention basins, the potential of non-conventional water sources such as recycled water should be explored.

Photo-illustration: Pixabay

Threatened land and marine ecosystems require concerted action

The status of ecosystems remains a cause for concern, with no evidence of a clear positive overall trend in the region, warns the assessment. Protected areas in the pan-European region have almost tripled over the past 30 years and an overall increase in forest area in the UNECE region of 33.5 million has been observed. Governments should ensure that trends in forest areas remain positive and take additional measures to safeguard the remaining primary and intact forests and their ecological functionality.

While marine protected areas have grown in area by 66 percent and terrestrial ones by 22 percent over the past five years, overall biodiversity loss continues to occur. Governments should eliminate or reform subsidies and incentives for products and activities that lead to biodiversity loss and develop incentives to mainstream biodiversity conservation across sectors and policies.

A circular and a more efficient economy will help address growing waste and resource use 

Even where a strong political commitment for a circular economy exists, such as in the European Union and other Western European countries, the amount of waste generated continues to grow. Recycling rates differ significantly among countries and are particularly low in Eastern Europe and Central Asia. Municipal waste recycling rates above 45 percent exist only in a few EU countries and Switzerland. E-waste collection and recycling are highly deficient across all subregions.

In response, the assessment urges governments to step up waste prevention in production and consumption and repair, refurbishment, and remanufacturing, including through financial incentives such as tax relief. A pan-European e-waste management partnership would enable the recovery of valuable resources.

Over the past half-century, the extraction of minerals has tripled globally, with the extraction and processing of natural resources accounting for over 90 percent of biodiversity loss and water stress and about 50 percent of climate change impacts. Governments in the region should adopt a circular – or resource efficient – economy approach and strengthen management of raw materials, including for example through the application of the UN Framework Classification for Resources and the UN Resource Management System.

Strengthened disaster resilience required 

About 65 percent of the region’s population is covered by local disaster risk reduction strategies. Only 15 countries in the region reported that all their local authorities are implementing such strategies under SDG target 13.1; while 23 countries – which jointly represent a quarter of the region’s population ­– do not report on that target.

Green financing needed

As a share of GDP, public spending on environmental protection (with a maximum of around 0.8 percent) is much lower than environmental tax revenues, implying that revenues from environmental taxes are not earmarked for reducing environmental damage. Governments should therefore favour the development of green finance and consider spending on environmental protection in the wider context of environmental and public finance.

Sustainability must be at the heart of infrastructure development 

Sustainable infrastructure investment has been recognized as one of the ways of achieving the greatest positive impact in the post-COVID pandemic recovery. However, most countries in the region have yet to develop mechanisms to incorporate sustainability considerations (such as climate risk) and externality accounting (e.g., the cost of pollution, ecosystem services, or biodiversity protection) into the cost-benefit analysis of large infrastructure projects. Existing tools offered by UNECE and UNEP can remedy this.

Education for Sustainable Development and a shared data system can strengthen environmental governance

The environmental governance system in the pan-European region remains fragmented in terms of applied policies, institutions, the harmonization of legislation and participation in multilateral environmental agreements. Gaps also remain in the implementation of good environmental governance, including in relation to public participation, transparency, responsiveness, effectiveness and efficiency.

Among solutions, the assessment points to further capitalising on the potential of Education for Sustainable Development (ESD) to endow populations with capacities to play an active role in environmental governance.

The assessment also notes that while, the final review report on the establishment of the Shared Environmental Information System found that such national systems have been successfully established in all countries in Europe and Central Asia, that they vary in form and use and remaining gaps need to be addressed.

Source: UNEP

Nord Stream Methane Leaks are ‘World’s Worst’ – What Does it Mean for Climate Change?

Foto: Printscreen/Youtube

Methane is one of Earth’s most dangerous gases for climate change. And record levels of it are thought to be leaking into the atmosphere from four ruptures in the Nord Stream 1 and 2 natural gas pipelines under the Baltic Sea.

Scientists say the Nord Stream leaks are a disaster for climate change, and that the world must speed up efforts to cut methane emissions.

How bad is the Nord Stream methane leak?

The Nord Stream leak is expected to be the biggest single release of methane on record, Reuters reported after speaking to the International Methane Emissions Observatory (IMEO). This is a United Nations Environment Programme (UNEP) initiative that monitors methane emissions.

Methane equivalent to a third of Denmark’s greenhouse gas emissions in 2020 could leak from the Nord Stream pipelines in a worst-case scenario, the Danish Energy Agency estimates. This would be the methane equivalent to around 778 million standard cubic metres of natural gas. 

The Nord Stream leak may be worse than a major leak in the Gulf of Mexico last December, IMEO believes. This Gulf of Mexico leak released around 40,000 tonnes of methane over 17 days, according to the European Space Agency.

While “extraordinarily huge,” the Nord Stream methane leak is “a fraction” of routine methane leaks from fossil fuel operations including oil and gas fields and pipelines, reports technology news site, The Verge.

According to the International Energy Agency, 82 million tonnes of methane were emitted by the oil and gas industry in 2019. This would be like “the Nord Stream disaster taking place every two days,” The Verge reports.

What is methane?

Methane is an odourless, flammable gas made of carbon and hydrogen, explains Australia’s New South Wales Environment Protection Authority.

It is one of several greenhouse gases that contribute to climate change by trapping heat in the Earth’s atmosphere.

Human activity in three sectors creates more than half of all global methane emissions, according to the Global Methane Assessment report from UNEP and the Climate and Clean Air Coalition.

These are fossil fuel extraction – including oil, gas and coal – the agriculture industry and the waste industry, including landfills and wastewater.

Methane is the main component of natural gas, explains South African news site Business Live.

How polluting is methane?

Methane is a “powerful” greenhouse gas that has 80 times more global warming potential than carbon dioxide over a 20-year period, UNEP says.

Since pre-industrial times, methane has caused about 30 percent of global warming. Volumes of methane in the atmosphere are also growing at their fastest rate since record keeping began in the 1980s.

Technologies are available now that could cut methane emissions by 45 percent by 2030, the Global Methane Assessment finds. This would prevent 255,000 premature deaths a year from respiratory and cardiovascular disease, and avoid 775,000 asthma-related hospital visits a year. A 45 percent cut in methane emissions would also save 73 billion hours of labour lost through extreme heat, and save 26 million tonnes of crop losses globally.

Urgently reducing methane levels is essential to keep global warming within 1.5°C above pre-industrial levels, scientists say.

While carbon dioxide stays in the atmosphere for hundreds to thousands of years, methane starts to break down after around 10 years, the UNEP says. This means cutting methane emissions will have a much more immediate impact on containing global warming and climate change than cutting CO2. 

Could methane be worse than coal for the climate?

Natural gas is widely described by the energy industry as a “bridge fuel” to renewable energy – because it emits half as much carbon as coal per kilowatt when it’s burned.

But the scale of methane gas leaks from the oil and gas industry could mean natural gas is actually worse for the climate than coal, scientists fear.

A recent study by the climate change organization Clean Air Task Force found methane leaking into the atmosphere from 123 oil and gas sites in countries including Germany, Hungary and Poland.

What is the world doing about methane?

More than 120 countries have signed the Global Methane Pledge, a commitment to cut methane emissions by 30 percent by 2030.

The pledge was launched by the United States and the EU at the 2021 United Nations Climate Change Summit (COP26) in Glasgow.

One of its first initiatives is the Global Methane Pledge Energy Pathway, which aims to cut methane emissions from the oil and gas sector. Actions include accelerating methane mitigation technologies and ending routine flaring. This is when unsold gas is burned, explains American media organization National Public Radio.

Moving towards plant-based diets and finding alternative sources of protein can help to reduce methane emissions from agriculture, UNEP says.

In the EU, measures to reduce methane emissions from waste have included the introduction in 1996 of a tax on landfill in the United Kingdom and the European Commission’s Landfill Directive, introduced in 1999 to limit landfilling. Methane emissions from landfill in Europe have almost halved since 1996, according to a joint EU-White House press release on the Global Methane Pledge.

Source: World Economic Forum 

Mihajlovic with the EIB: Energy Transition and Various Gas Suppliers are Crucial for the Development and Security of Serbia and the Region

Foto-ilustracija: Pixabay

Photo: The Government of the Republic of Serbia

Deputy Prime Minister and Minister of Mining and Energy, prof. Zorana Mihajlovic, Ph.D, met with Matteo Rivellini, Head of the Western Balkans Division at the European Investment Bank (EIB), and discussed with him the continuation of cooperation in the mining and energy sector, ongoing and potential new projects, the energy crisis in Europe and plans for improving energy security in Serbia and the region.

Mihajlovic pointed out that the EIB is a very important partner for Serbia, recalling that since 2001 this bank has provided funds in the amount of 4.9 billion euros for projects in Serbia.

“Your support and help are highly significant for us, we achieved a lot together in the previous ministry, in the field of transport infrastructure, and I believe that we can be even more successful in the energy and mining sector.” 

“In addition to current projects, such as the construction of the Serbia-Bulgaria Gas Interconnector, connectivity in the gas sector is one of our priorities. Not only with Bulgaria, but also with other countries, North Macedonia, Albania, Croatia, Romania. We want to have various gas suppliers in the future, because that is the only way to be safe, stable and secure. We are doing everything in our power to ensure sufficient amounts of energy and energy sources for the upcoming winter season, and at the same time we are working to ensure long-term energy stability and security, not only for Serbia, but for the entire region. We created the foundation by changing the legislative framework, which represents the basis for investments, primarily in capacities for the generation of power from RES,” said the Deputy Prime Minister.

During the meeting, in which the representatives of “Elektroprivreda Srbije”, “Elektrodistribucija Srbije” and “Srbijagas” also took part, it was also talked about gas supply, storage capacities, recommendations of the Ministry for reducing consumption, projects implemented in the field of improving energy efficiency, as well as about the current energy crisis.

“It is always easy to discuss specific projects with you, as shown by the many projects we implemented together, despite all the obstacles we encountered. Owing to your responsibility and dedication we managed to be efficient.” I am sure that, besides the construction of the Serbia-Bulgaria Interconnector, we are otherwise proud to finance that project, which is especially important today, considering the situation in the whole of Europe, there are other projects and long-term plans we can work on, such as the modernization of the distribution and transmission networks, improving energy efficiency, the green agenda, but also to cooperate more closely and work together to overcome all the challenges imposed by the energy crisis,” said Matteo Rivellini, Head of the Division for the Western Balkans.

Source: Ministry of Mining and Energy

Germany and Spain Stick to Plan to Build New Gas Pipeline

Foto-ilustracija: Pixabay

Photo-illustration: Pixabay

Germany and Spain are sticking to their plan to build a new gas pipeline across the Pyrenees in defiance of French opposition, a joint action plan showed.

The meeting between German Chancellor Olaf Scholz and Spanish Prime Minister Pedro Sanchez came as their governments disagreed on other possible measures to tackle Europe’s energy crisis.

This is relevant for both electricity and gas interconnections, the document adds, referring to the development of a “hydrogen corridor across the Pyrenees, identified by the RepowerEU Plan, to supply gas to Central Europe, and which in the future will have to carry renewable hydrogen”.

“The construction of a sufficiently big hydrogen-ready gas pipeline across the Pyrenees to be operative by 2025 is of paramount importance in order to achieve a truly robust internal energy market within the EU, accelerate the green transition and reinforce EU’s strategic autonomy.”

EP

The World Must Halt Deforestation and Use Forests Sustainably, FAO Director-General says

Foto-Ilustracija: Pixabay (marijana1)

Photo-illustration: Pixabay

The world must halt deforestation, plant trees to make the planet greener and restore productive capacities, and use forests and trees sustainably, QU Dongyu, the Director-General of the Food and Agriculture Organization of the United Nations (FAO), today told the opening of the 26th Session of the Committee on Forestry (COFO).

COFO26 is being held in hybrid format from 3 to 7 October at FAO’s Rome headquarters and will provide a platform for exchange and dialogue among participants and provide suggestions for FAO’s work in forestry.

Princess Basma Bint Ali of Jordan, FAO’s Goodwill Ambassador for Near East and North Africa, Cécile Ndjebet, Founder of the African Women’s Network for Community Management of Forests and the winner of the Wangari Maathai Forest Champions Award 2022, and Analí Bustos, World Forestry Congress Youth Forest Change-makers winner also spoke at the opening.

Part of the solution

Forests cover 31 percent of the world’s land surface, store an estimated 296 gigatonnes of carbon and are home to the majority of the world’s terrestrial biodiversity. They are a source of fibre, fuel, food and fodder, and they provide livelihoods for millions of people, including many of the world’s poorest. Forests help mitigate and adapt to climate change and improve soil, air and water quality. If sustainably managed, forests are also a source of renewable raw materials.

In his opening remarks at COFO26, Qu said the impacts of the climate crisis and humanitarian emergencies are being felt more than ever around the world, hitting the most vulnerable the hardest. He pointed to droughts, floods, fires and storms of increasing frequency and intensity. At the same time, he said there are overlapping crises from the global pandemic, economic downturns, and price increases of food, feed, fuel and fertilizer. Hunger continues to rise, reflecting growing inequalities.

“Deforestation and land degradation, together with biodiversity loss, are devastating our ecosystems. This must change and stop,” Qu said. “As set out in the Seoul Declaration, forests and trees must be considered a key part of the solution.”

Qu pointed out that there are only seven more years to reach the 2030 Agenda and the Sustainable Development Goals.

The know-how and the tools are available, he said. “Now, we need to implement, scale-up and accelerate action – and, above all, we need political will and a package of solutions.”

He said FAO’s flagship publication, the State of the World’s Forests 2022, which will be discussed during the Session, offers three concrete, interconnected solutions.

Firstly, Qu said halting deforestation is “key to tackling the climate crisis by both cutting greenhouse gas emissions by 14 percent and safeguarding more than half the Earth’s terrestrial biodiversity.”

In addition, another solution is planting trees, restoring productive capacities, and improving ecosystem resilience. The Director-General pointed out that “1.5 billion hectares of degraded land can be restored. Increasing tree cover could raise economic sustainability, which is essential to boost productivity to meet growing demands.”

Thirdly, he stressed the importance of using forests and trees sustainably and building green value chains. “Wood and bushes are a very valuable renewable resource, and an important source of carbon-neutral and even carbon-positive materials. Wild-harvested forest foods improve food security and the nutrition of people living nearby and beyond,” Qu said.

Photo-illustration: Pixabay

Qu also stressed the importance of smallholders, local communities and Indigenous Peoples, who own or manage nearly 1 billion hectares of the world’s forest and farm land. He said they must be at the center of efforts towards sustainable agrifood systems, of which forests and trees are an integral part.

This COFO Session will advance the global forest agenda on climate change, sustainable production and consumption, restoration, biodiversity, and finance and provide technical recommendations on emerging forestry and policy issues, Qu added.

Taking into consideration both FAO’s flagship report, The State of the World’s Forests 2022: Forest pathways for green recovery and building inclusive resilient and sustainable economies, and the outcomes of the XV World Forestry Congress held in May 2022 in the Republic of Korea, the Committee will review FAO’s forestry work under FAO’s Strategic Framework 2022-2031. Ongoing work by FAO on resilient and sustainable economies, the linkages between agriculture and forestry, and forest solutions for combating climate change will also be on the agenda. In this regard, Qu highlighted that for the first time agriculture and forestry were being discussed as a joint agenda item, which is an important step to identify and scale-up win-win solutions for food security and nutrition that protect forests and trees.

Two key reports will be released during the session: the Global forest sector outlook 2050: Assessing future demand and sources of timber for a sustainable economy and Mainstreaming biodiversity in forestry.

FAO’s work on forestry

FAO carries out a broad range of activities concerning the forestry sector.

FAO, together with United Nations Development Programme (UNDP) and United Nations Environment Programme (UNEP), has been supporting over 60 countries in reducing deforestation and forest degradation, through the UN-REDD programme. The Organization’s work on forest law enforcement, governance and trade help countries combat illegal logging and promote trade in timber, which is sustainably produced by small-scale enterprises.

FAO’s Sustainable Wildlife Management Programme is spearheading efforts to ensure optimal health for people, animals and the environment as part of a One Health approach, while strengthening wildlife management and enhancing food security of local communities.

Improving forest-based livelihoods, prosperity and human well-being is the aim of the Forest and Farm Facility. More than 25 million people in 30 countries have directly or indirectly benefitted from this initiative, including during the current COVID-19 pandemic.

FAO’s Action Against Desertification in support of Africa’s Great Green Wall Initiative has helped to restore the productivity of degraded lands and the livelihoods of local communities in the Sahel. Its support in ten countries has resulted in over 56 000 hectares of land being restored.

FAO, together with UNEP and the Secretariat of the UN Convention to Combat Desertification, supports governments committed to restore 100 million hectares of degraded lands, sequester 250 million tons of CO2 and create 10 million green jobs under Africa’s Great Green Wall Initiative.

Held on the margins of the Committee on Forestry, the 8th World Forest Week, from 29 September to 7 October, is a series of special events that bring FAO Members, partner organizations, leaders, scientists, women and youth to discuss forestry’s most pressing issues. The theme of this year’s World Forest Week is Growing a better planet.

Source: FAO

Serbia on the Path of Green Transition

Foto-ilustracija: Unsplash (Ivan Aleksić)

Photo: Courtesy of Sandra Dokić

The most important step that lies ahead for Serbia in order to become a European Union member is the transfer of the regulations of this political and economic community to the national legal system, and their subsequent adequate application at all levels. On this path, the adoption of environmental policies contained in Chapter 27, whose goal is better health of the population, preservation of natural resources, competitive economy, a better quality of life, as well as the fight against climate change at the global level is one of the most demanding tasks.

In addition to harmonizing legislation and passing numerous laws, we need to reach all standards that ensure successful environmental protection, an adequate fight against climate change, as well as efficient waste management and control of greenhouse gas emissions.

Although we are no longer at the very beginning, we still have a long transition road ahead of us. The Green Agenda for the Western Balkans and the European Green Deal are of great importance both for Serbia and the countries that are currently in front of “the gates” of the European Union and are moving towards fulfilling the goal of making Europe climate neutral by 2050. We spoke with Sandra Dokić, Assistant Minister for Environmental Protection, about the changes that await us regarding environmental protection, waste management and conservation of natural resources.

EP: The negotiating position for Chapter 27 was adopted in January 2020. How is the accomplishment of set goals going?

Sandra Dokić: Considering that more than one-third of the EU’s acquis communautaire relates to the environment, apart from the harmonization, fulfilling the set standards requires extremely large investments in the coming period which, according to estimates for some environmental sectors such as water, waste and air, amount to around 12 billion euros. Because of all this, we can say with certainty that this is one of the accession chapters for which we will need a lot of time, commitment, and the active participation of the public and private sectors, as well as the citizens themselves, in order to reach the set standards.

For the sake of complete transposition of EU directives into our legal system, we need to pass around 80 different regulations (laws and by-laws), but we must be aware that EU regulations are constantly changing too and that requirements and standards are being improved, so we are in a process of constant monitoring of changes and harmonization.

A very topical segment, such as climate change, is a great challenge for us and we have to fulfil a multitude of obligations that we are facing for the first time. In March of last year, the Republic of Serbia made a big step in this direction by adopting the Law on Climate Change, and we are currently working hard on preparing relevant by-laws. 

Photo-illustration: Pexels (Djole Sh)

The Law on Climate Change establishes certain obligations for the industry and energy sectors in the shape of a system for monitoring, reporting and verification (MRV) of greenhouse gas emissions (GHG) in industrial and energy facilities and the air transport sector. This specifically means that we will have information on national GHG emissions not only at the sectoral level but also in industrial and energy facilities, such as EPS, NIS, ironworks, cement plants, heating plants (above a certain capacity) and others. Plants above a certain capacity will have the obligation to submit an application for obtaining a greenhouse gas emissions permit and a monitoring plan, i.e. to calculate emissions (according to established methodologies), as well as to submit emission reports verified by an independent verification body recognized by the Accreditation Body of Serbia. Permits for GHG emissions, for all existing as well as new plants, will be issued by the Ministry. Establishing this system is a prerequisite for entering the EU Emissions Trading System.

We have demonstrated our commitment to this segment and our ambition to contribute to the reduction of global warming on a realistic basis by the fact that in August, the Government, following the Ministry’s proposal, adopted the National Determined Contribution (NDC), which stipulates the reduction of GHG emissions by 33.3 percent by 2030 in compared to 1990.

EP: With the help of UNDP, you also created a circular economy roadmap for Serbia. What does this document stipulate?

Sandra Dokić: The Ministry of Environmental Protection is the umbrella institution for defining the strategic circular economy framework, which is why in 2020, as part of the UNDP project “Circular Economy Platform for Sustainable Development in Serbia”, it created the Circular Economy Roadmap for the Republic of Serbia. This is the first document of its kind in the region and it was modelled after developed EU countries. The document provides guidelines for the development of a modern, resource- and energy-efficient circular economy in our country.

In 2020, an Ex-ante analysis of the effects of the circular economy was drafted. The analysis concluded that the circular economy, as a multi-sector topic, needs a separate public policy document to define the relevant strategic framework. Following this conclusion, a proposal for the Circular Economy Development Programme in the Republic of Serbia for the period from 2022 to 2024 with an Action Plan was prepared.

This public policy document has been submitted to public discussion and we expect its adoption after the formation of the new government. The programme’s overall goal is to create a stimulating environment for the development of the circular economy to support the green transition. The measures and activities that are defined through five special goals will secure support to the economic sector in the transformation to a circular business model and local governments in the creation of circular communities, while the waste management system and the use of green public procurements and voluntary instruments will be improved. There will also be special emphasis on raising the awareness of the interested public and educational institutions about the circular economy concept. All this will contribute to establishing the foundation for the transition to the circular economy.

EP: You actively participated in the implementation of the Circular Economy – Nordic Experiences project. How applicable are the experiences of developed countries in our circumstances?

Photo-illustration: Pexels (Nikola Igić)

Sandra Dokić: The goal of the Circular Economy – Nordic Experiences project, which was implemented by Finland, Sweden, Norway and Denmark, was to convey experiences and examples of good practice to the experts in Serbia by organizing a series of conferences in which experts from the Nordic countries. This was also an opportunity to highlight the benefits of the circular economy, as well as the challenges that these countries faced in the previous period. The circular economy is considered a great opportunity for a green transition, because the application of this concept saves resources, encourages innovation, reduces pollution, creates new jobs and increases competitiveness. Waste management was one of the areas that got the most attention at the mentioned conferences.

There is no universal way to transition to the circular economy, as each country has its own idiosyncrasies and needs to find its own model that will be efficient and sustainable. Nevertheless, it was good to hear from Scandinavian experts that achieving circularity at their level requires time, significant investments, great patience and commitment. The result is a healthier environment and that waste can be turned into both a resource and money.

Despite the long transition process, it is encouraging to know that there are good practice examples in our country too, both in the economic sector and local communities. These circular economy pioneers have recognized this concept as a way to save resources and energy, and at the same time, contribute to reducing their carbon footprint, which is a very positive effect from the perspective of climate change.

Interviewed by: Milica Radičević

Natural Gas Markets Expected to Remain Tight Into 2023 as Russia Further Reduces Supplies to Europe

Foto-ilustracija: Pixabay (piviso)

Photo-illustration: Unsplash (Quinten de Graaf)

Russia’s continued curtailment of natural gas flows to Europe has pushed international prices to painful new highs, disrupted trade flows and led to acute fuel shortages in some emerging and developing economies, with the market tightness expected to continue well into 2023, according to the IEA’s latest quarterly Gas Market Report.

Natural gas markets worldwide have been tightening since 2021, and global gas consumption is expected to decline by 0.8 percent in 2022 as result of a record 10 percent contraction in Europe and unchanged demand in the Asia Pacific region. Global gas consumption is forecast to grow by only 0.4 percent next year, but the outlook is subject to a high level of uncertainty, particularly in terms of Russia’s future actions and the economic impacts of sustained high energy prices.

Russia has largely cut off gas supplies to Europe in retaliation against sanctions imposed on it following its invasion of Ukraine. This has deepened market tensions and uncertainty ahead of the coming winter, not just for Europe but also for all markets that rely on the same supply pool of liquefied natural gas (LNG).

“Russia’s invasion of Ukraine and sharp reductions in natural gas supplies to Europe are causing significant harm to consumers, businesses and entire economies – not just in Europe but also in emerging and developing economies,” said Keisuke Sadamori, the IEA’s Director of Energy Markets and Security. “The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier. But all the signs point to markets remaining very tight well into 2023.”

The current gas crisis also casts longer-term uncertainty on the prospects for natural gas, especially in developing markets where its use was expected to rise at least in the medium term as it replaced other higher-emission fossil fuels.  

European natural gas prices and Asian spot LNG prices spiked to record highs in the third quarter of 2022. This reduced gas demand and incentivised switching to other fuels such as coal and oil for power generation. In some emerging and developing economies, the price spikes triggered shortages and power cuts. Europe’s gas consumption declined by more than 10 percent in the first eight months of this year compared with the same period in 2021, driven by a 15 percent drop in the industrial sector as factories curtailed production.

Natural gas demand in China and Japan was almost unchanged in that same period, while it contracted in India and Korea. Chinese gas demand is forecast to increase by less than 2 percent this year, its lowest annual growth rate since the early 1990s. Meanwhile, natural gas prices in the United States hit their highest summer levels since 2008, yet North America was one of the few regions of the world where demand increased, supported by demand from power generation.

Photo-illustration: Pixabay (PublicDomainPictures)

Europe has offset the sharp falls in Russian gas supplies through LNG imports, as well as alternative pipeline supplies from Norway and elsewhere. Europe’s surging demand for LNG – up 65 percent in the first eight months of 2022 from a year earlier – has drawn supply away from traditional buyers in the Asia-Pacific region, where demand dropped by 7 percent in the same period as a result of high prices, mild weather and continued Covid lockdowns in China.

The IEA forecasts that Europe’s LNG imports will increase by over 60 billion cubic metres (bcm) this year, or more than double the amount of global LNG export capacity additions, keeping international LNG trade under strong pressure for the short- to medium-term. This implies that Asia’s LNG imports will remain lower than last year for the rest of 2022. However, China’s LNG imports could rise next year under a series of new contracts concluded since the beginning of 2021, while a colder-than-average winter would also result in additional demand from northeast Asia, further adding to market tightness.

In addition to diversifying supply, the European Union and its member states have taken other steps to increase gas security, such as setting minimum storage obligations and implementing energy saving measures for the coming winter. EU storage facilities were close to 90 percent full as of the end of September, though the absence of Russian supply presents challenges for refilling them next year. Both Japan and Korea have instituted policies to reduce reliance on imported LNG for power generation and have developed contingency plans for possible LNG supply disruptions.

For the new report, the IEA conducted a resilience analysis of the EU’s gas market in the case of a complete Russian supply shutdown starting from 1 November 2022. The analysis shows that without demand reductions in place and if Russian pipeline supply is completely cut, EU gas storage would be less than 20 percent full in February, assuming a high level of LNG supply – and close to 5 percent full, assuming low LNG supply. Storage falling to these levels would increase the risk of supply disruptions in the event of a late cold spell. A reduction in EU gas demand through the winter period of 9 percent from the average level of the past five years would be necessary to maintain gas storage levels above 25 percent in the case of lower LNG inflows. And a reduction in demand of 13 percent from the 5-year average would be necessary through the winter period to sustain storage levels above 33 percent in the case of low LNG inflows. Therefore, gas saving measures will be crucial to minimise storage withdrawals and keep inventories at adequate levels until the end of the heating season.

Source: IEA

EBRD and Sparkasse Bank Makedonija Support Small Businesses in North Macedonia

Foto ilustracija: Unsplash (Micheile Henderson)

Foto ilustracija: Pixabay

The European Bank for Reconstruction and Development (EBRD) is supporting the green economy in North Macedonia by providing a EUR 23 million loan to Sparkasse Bank Makedonija (SMB) for on-lending to local micro, small and medium-sized enterprises (MSMEs).

The loan will enable SMB to expand its MSME lending with a focus on regional and rural enterprises. 30 percent of the credit line will go to investments that can help small businesses improve their energy efficiency, or generate and shift to renewable energy.  

MSMEs account for more than 90 percent of all enterprises in North Macedonia, and are key not only to the country’s economic growth, but to its transition to a green economy. Providing them with access to finance is thus key to unlock this transition and growth.

Andi Aranitasi, EBRD Head of North Macedonia, said: “We are very pleased that, together with our longstanding partner Sparkasse Bank Makedonija, we can provide additional support to SMEs to invest in the competitiveness of their businesses as well as measures that will improve their energy efficiency and lower their carbon footprint

Strengthening the SME sector and investing in the green economy are some of our key priorities in North Macedonia and this new financing will help us in reaching both of these objectives.”

Sanel Kusturica, SBM’s Chief Executive Officer, said: “Today, SBM strengthened even further its long-standing partnership with EBRD, signing an agreement for long-term financing in the amount of EUR 23 million. With this credit line, SBM will enhance the support to micro and small and medium-sized enterprises in financing sustainable projects and investments related to renewable energy. We maintain strong support of the Macedonian economy, and together with our customers, we are dedicated to overcoming and minimizing the negative effects of the energy crisis.”

Sparkasse Bank Makedonija AD Skopje (“SBM”) is a universal commercial bank and the 4th largest bank in North Macedonia, with 11.4 percent market share by total assets. It is considered a systemically important bank domestically, as per the criteria of the National Bank of North Macedonia.

The EBRD is one of the leading institutional investors in North Macedonia. To date, it has invested nearly EUR 2.5 billion in 165 projects in various sectors of the economy.

Source: EBRD

Elnos Group: Future is now

Photo: OIE Srbija

Photo: OIE Srbija

Dreaming big in business and making those dreams come true requires a lot of courage and hard work in real, everyday life. Every success story has a unique formula. However, those coming from modern electrical engineering in recent years are, in their essence, always in connection with renewable energy sources and use of modern technologies.

We discussed development path of Elnos Group, a successful international electrical engineering company which made significant results in the area of sustainable energy sources, with its Vice President, Branko Torbica.

Elnos Group has positioned itself as a regional leader in electrical engineering while, at the same time, the company participates in very interesting and challenging projects in European markets. Where does Elnos Group work today, in which countries and projects?

Photo: OIE Srbija

Branko Torbica: Today, we are a company that operates on 16 different markets and employs approximately 630 people. Apart from countries of former Yugoslavia, the Group actively works in: Sweden, Iceland, Germany, Norway, Spain, Portugal and the Netherlands. During the last two years, we have made large steps into the markets of Great Britain and Denmark. This year, we also established a new member of our Group – Elnos Poland.  

It would be tedious for the readers to talk about all projects we are actively working on. However, I would like to point out that, considering number of ongoing projects, this year is going to be a record year for our Group, since we will be active on more than 130 projects on 11 different markets.

Is it difficult for a local company to be a successful bidder and work on strict and demanding projects in EU countries?

Photo: OIE Srbija

Branko Torbica: An attitude has long been formed in the public that stepping into foreign markets is a highly complex and risky business move for a local company. Elnos Group as a company continuously proves this attitude wrong. We have opened doors to many markets because we employed highly professional staff and were strict in keeping up with trends in technological development.

We, at Elnos Group, realized that future is what is happening to us at this moment and that we can become an important part of modern trends in electrical engineering. Taking this road requires proactive behaviour, patience, knowledge and a lot of energy. Nevertheless, the results are more than rewarding.

Which RES projects are you most proud of?

Photo: OIE Srbija

Branko Torbica: A RES project one can never forget is most certainly participation in construction of NordLink- a HDVC European interconnection that enables share and trade of electrical power, obtained exclusively from renewable sources, between power transmission systems of Germany and Norway.

Also, there is the large project of construction of power plant Burfell 2 (100 MW) on Iceland which we constructed one hundred meters below volcanic soil, or design of solar power plant Morgavel (48.96/44 MW AC) in Portugal, construction of wind park Čibuk 1 (158 MW) in Serbia, revitalization of hydro power plant Zvornik (124 MW) and reconstruction and construction of many small and mini hydro power plants and many other projects.

Which RES projects are you currently actively working on?

Photo: OIE Srbija

Branko Torbica: Our Group is in the process of achieving one of its most important results of the year precisely in within the scope of renewable energy sources where we are performing projects in areas of wind, hydro and solar power.

Regarding wind power, this year, our teams have been engaged on construction of two wind parks in the region. The first one is wind park Bogoslovec (36 MW) in N. Macedonia, which has recently been completed, and the second one is construction of wind park Krivača (103 MW) in Serbia, where works are currently being executed in full swing.

This year, we will add a third green energy HDVC project to our reference list. We will participate in construction of new HDVC interconnection DolWin 5 in Germany, for an offshore wind park that is also a part of the same project.

Concerning hydro power, we are in the phase of intensive preparations for participation in project HPP Dabar and, in relation to solar power, we also made a new step forward through commencement of works on construction of solar power plant Bukovica in Croatia.

It has recently been announced that you are a contractor on wind park Krivača. When can completion of this project be expected?

Branko Torbica: Works on construction of wind park Krivača (103 MW) are being executed in accordance with time schedule. This is a very dynamic project and requires a high engagement of our company’s resources.

Within this project, our task is to execute works on construction of electrical power facilities by which wind park Krivača will be connected to 110 kV electrical power network. This implies construction of two 110 kV transmission lines, 33/110 kV transformation facility WPP Krivača, and expansion of two existing 110/35 kV substations Veliko Gradište i Neresnica.

After Čibuk 1 (158 MW), this is the second wind park we are building in Serbia. Our engagement in construction of wind park Krivača is another great opportunity for us to confirm our competence to work in accordance with the highest engineering standards applicable to renewable energy resources.

Does current energy and security crisis has an impact on business operations of your company and, if yes, in which way?

Branko Torbica: It was not easy for any company to accept the fact that not long “after“ Covid-19 pandemic, it has to adapt its business activities to conditions of a new crisis on a global level. Under current circumstances, it is important to quickly bring adequate decisions and work in a way which will make your company resilient to new and ever changing conditions. Elnos Group is engaging large efforts in implementation of a wide range of activities and processes aimed to establish a unique balance on the Group level. It is thanks to this specific balance that we have managed to stay immune to the crisis so far.

In which way does Elnos Group contribute to implementation of sustainable development principles?

Branko Torbica: In Elnos Group, sustainable development has always been a goal with no alternative. As a company, we are an active participant in projects that have been changing green map of the region and Europe. We perform projects that imply taking proper care of the resources. Our activities are directed towards providing cutting-edge technologies and equipment to reduce emissions of harmful substances. We use water and energy sources carefully and invest in education and training of our employees to raise awareness on importance of environmental protection.

We are very pleased that this year our efforts in the area were recognized by UNDP which classified us as one of companies with the highest degree of engagement to achieve sustainable development.

RES are our distinguishing characteristic  

Transition in production of electrical power towards renewable energy sources is one of the greatest challenges of today’s world. Mr. Milan Kukobat, Director of Elnos Serbia said that this company recignized the trend and had been making bold steps precisely in area of renewable energy sources during last two years.

“Through realizaiton of projects belonging to different scopes of RES, we managed to position ourselves, in a relatively short period of time, as a most competent company in this area. Our teams cooperated with leading world companies and played an important role in green projects. Thus, we significantly contributed to introduction of state-of-the-art technical solutions and innovation in Serbia“, Kukobat pointed out.

Some of the RES projects hold a special place on Elnos Serbia reference list, says Kukobat.

Photo: OIE Srbija

“In domain of hydro power, Elnos Serbia performed a capital project which implied modernization of HPP Zvornik. Thanks to sucessful completion of this project, more than six decades old hydro power plant begun scoring new recods in production. We are also proud of revitalization of seven small hydro power plants in West Serbia. Production plants in these facilities are true perls of electrification in Serbia and we managed to upgrade them entirely by installing new modern equipment“, said Mr. Kukobat.

“However, a crown of our work in RES area is participation in construction of the largest wind park in Balkans, Čibuk 1, with installed power of 158 MW”, he emphasized.

“Through construction of electrical engineering facilities within this plant, we significantly expanded boundaries of our project management capacities at the time, in quantitative terms. As a partner of USA Company General Electric on this project, Elnos Serbia was entrusted with construction of 35/400 kV substation and 400kV double-circuit transmission line”, Mr. Kukobat concluded.

We are currently participating in realization of several RES projects. The most important is construction of WPP Krivača, connection of which to the electrical power network is expected by the end of following year.

Source: OIE Srbija

Energy Crisis Forces More Ambition in EU Green Buildings Law

Foto-ilustracija: Pixabay

Photo-illustration: Pixabay

Soaring energy prices are mounting pressure on Europe to renovate its ageing, inefficient buildings as governments scramble to protect citizens from rising utility bills.

Europe’s buildings are responsible for 40 per cent of its energy consumption and many are in desperate need of better insulation in order to decrease the EU’s reliance on imported fossil fuels.

Buildings are a key sector when it comes to addressing high energy prices and security of supply concerns, said Paula Rey Garcia from the European Commission’s energy department, who spoke at a Brussels event in September.

In light of the energy crisis and the war in Ukraine, there needs to be an “ambitious” revision of the EU’s energy performance of buildings directive (EPBD), added Martin Pejřimovský, energy attaché at the EU representation of the Czech Republic, which currently holds the bloc’s six-month rotating presidency.

As the EU presidency holder, Czechia aims to find a common position among the EU’s 27 member states before handing over the reins to Sweden on 1 January to finalise negotiations on the bill with the European Parliament.

While not a short-term solution to the energy crisis, updating the buildings law must be part of the EU’s answer, said Pejřimovský, who believes the current version is no longer fit for purpose.

“It’s not enough for the challenges that we will be facing tomorrow and in the decades after, especially considering everything that’s going on with the war in Ukraine and the complete revision of a lot of truths and beliefs that were connected to the way we are running our economy,” the Czech attaché told attendees at the event.

Source: EURACTIV.com