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Lourdes Sanchez: Climate change and the new energy revolution

Updated: Jan 6

Lourdes Sanchez, Senior Policy Adviser

Lourdes is senior Policy Adviser and Head of Indonesia, working in the Energy Program of IISD (International Institute for Sustainable Development). Lourdes holds a Master's degree in electrical engineering, supplemented by a master's degree in energy management. Her research focuses on the analysis of energy subsidies (electricity and fossil fuels), the evaluation and design of sustainable energy policies, and the development of communication strategies for energy subsidy reform.

Responses Lourdes Sanchez

Climate change and the new energy revolution

1. We would like to introduce your "5 Steps to Fossil-Free Recycling" to more readers. Can you introduce this point of view in detail here?

In our report we identify five principles that governments can follow to make sure their COVID-19 recovery packages compatible with a transition to a low-carbon economy while using their energy systems to boost their economies, create employment, and meet their climate and development goals. The five principles are:

1. Do not provide public money to fossil fuel production.

2. Raise money from fossil fuel subsidy reform and taxes.

3. Swap support from fossil fuels to clean energy.

4. Incentivize investments in clean electricity.

5. Ensure the transition is a just one.

First and foremost, we need to stop putting recovery money into fossil fuel production, unless it is to transition to cleaner, more sustainable alternatives. But there are many other steps on the way that are crucial to support this process.

The most challenging question today is how to raise money for economic recovery. And this is where the green recovery thinking should start. Because policies that generate revenue can have significant impact for climate action. In this sense, a very green and strategic way for governments to raise revenue is fossil fuel subsidy reform and green taxation. The revenue from these measures can raise billions of USD a year that could support the COVID-19 recovery and clean energy transition.

Then, we face another question: How to spend the revenue strategically so that is aligned with climate action? One of the key things here is to redirect savings from subsidy reform into clean energy, which includes renewables, but also energy efficiency, decarbonization of public and private transport and creating the electricity systems of the future. This should be followed by policies incentivizing private investments in clean electricity.

And finally, the last element, which brings us back to the main goal – we need to make sure that in everything we do, we put people first, and we maximize positive employment and social gains. This is what we call a just transition.

2. You mentioned in the report that China’s adoption of a series of measures and commitments reflects China’s determination to transition to a low-carbon economy. For example, the Nationally Determined Contributions (NDC) promised to achieve global greenhouse gas (GHG) emissions by 2030. This is also facing huge challenges, such as the handover of traditional energy and new energy, the actual operation of policies, etc. What do you think of China's carbon reduction goal?

I do not know enough of China’s carbon reduction goal to comment on this question.

3. New energy vehicles have become the future development direction of the automotive field. The application of electricity will largely replace traditional fuels. However, the current automotive market or urban streets are still dominated by traditional energy vehicles. What do you think of this "future seems What about the phenomenon of optimism, but little change in reality?

We cannot forget that energy systems have an important inertia, mostly considering the cost of related investments. This means that energy systems cannot change from one day to the other, there’s normally a transition period. But we are seeing progress, both in terms of sales of new energy vehicles and in terms of investment.

In the case of e-vehicles, a very important aspect is having an adequate charging infrastructure. As part of their COVID-19 recovery plans, several countries are supporting the electrification of transport, particularly e-vehicles. Governments are pledging funds to create charging infrastructure and to support the purchase of e-vehicles.

By February 2021, China was actually leading the EV revolution for emerging economies and extended subsidies by USD 1.6 billion - which is estimated to support the sale of an additional 6 million EVs. Germany has committed USD 2.4 billion to double existing premiums for buyers of EVs. As part of a USD 1.4 billion support package, France also increased subsidies to incentivize the purchasing of EVs and electric vehicles for professional use. State governments have also taken similar initiatives, such as the USD 700 million that New York has aimed at higher EV penetration or the policies of some Indian states supporting electric vehicles.

These policies are aimed at driving actual change, boosting the related industries, while creating jobs and economic growth.

4. The realization of carbon emission reduction policies largely depends on changes in large enterprises and factories, as well as public transportation. As individuals, we have responded to the government's call for green travel, but the impact has been minimal, greatly reducing people's enthusiasm. Can you analyze the impact of personal life behavior on carbon reduction from a personal perspective?

I believe the role of individuals is very important and goes beyond green travel. Responsible consumption and consumer choices can give signals to suppliers and manufacturers. If companies that have strong commitments to reduce their climate impacts get more customers and higher sales, that gives an incentive to competitors to do the same. And that can affect also products such an electricity, that in principle seem to be in the competency of governments. For example, in Europe there are many utilities that offer to their consumers the option to buy renewable electricity for a small price increase. More and more consumers are opting for these products, what creates an incentive for the utilities and project developers to increase the share of renewable energy in the electricity system.

Energy efficiency is another aspect where the consumer plays a major role. Choosing appliances that consume less electricity has both climate and economic benefits. Improving the thermal isolation of buildings has same effects. In some cases, there are high upfront investments involved, but some governments are also giving financial incentives to help overcome these, or private companies are developing innovative business models that facilitate thermal efficiency investments.

And last but not least, not all generations are exposed to the same level of information. Normally, younger generations have a better understanding of the climate issue and related challenges. It is their responsibility also to raise awareness among their close ones that might not have the same understanding. It is important that the population is aware of what is at stake, so that more and more people can contribute to limiting global temperature raise.

Interviewer: Xu Yiding

Interview date: June 11, 2021

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