Reflections on Glasgow and COP26

Insights from the Institute of the Americas Energy & Sustainability Program Reflections on Glasgow and COP26

Reflections on Glasgow and COP26

Introduction This brief provides a summary and highlights of the recently-concluded COP26 meeting in Glasgow, Scotland. In addition, we include reflections from our fellows and team, who through their diverse perspectives considered how the results are likely to impact our hemisphere and the world. It appears likely that going forward, we will probably talk less about the Paris Agreement and instead start referencing the Glasgow Climate Pact. Indeed, the deal reached last week by nearly 200 countries, which appears to keep alive the 1.5C goal - although on life support as some suggested. No doubt COP26 provided important momentum with daily announcements covering its four topics of focus (Mitigation, Adaptation, Financing and Collaboration). Rather than seeking absolute consensus, progress seems to have been made through alliances and partnerships involving different parties that nevertheless made commitments according to their circumstances. Significant progress has been made across the board: a big shift away from coal and setting targets for all cars sold to be zero emissions by 2040, growth of the Adaptation Fund for supporting the transition of developing countries, creation of financial (dis) incentives, mechanisms and standards which should mobilize the funds needed to close the gap in new energy infrastructure and, putting it all together, the finalization of the Paris Rulebook. As highlighted by the UK Presidency of COP26: “Two years ago, only 30% of the world was covered by net-zero targets. This figure is now at around 90%. Over the same period, 154 Parties have submitted new national targets, representing 80% of global emissions.” It is now expected that the renewed collective commitments reached at COP26 could hold temperature rise to 1.8C. Progress, yes, but we must also understand that countless communities around the world will continue to feel the dire impact of climate change. The gathering also attempted to bring on board civil society and took steps towards promoting the inclusion of youth and women in the fight against climate change. However, the voices of young activists echoed loudly at side events blaming world leaders for complacency and insufficient action. The lack of access for the Israeli Minister in a wheelchair was not a positive image for inclusion. Key absentees were Xi Jin Ping, Vladimir Putin and Jair Bolsonaro. Viral photographs of President Biden and PM Boris Johnson with eyes closed during sessions reminded us that the public is paying close attention to world leaders. Having said that, the UK, as the party holding the Presidency of COP26, the EU and the US have shown strong leadership. A summary 1 of COP26 and what was achieved per sector follows as well as our “reflections.”

1 Based on and extracted from official announcements, for further reference see www.ukcop26.org Other sources referenced as used.

Reflections on Glasgow and COP26

Reflections Cecilia Aguillon, Director, Energy Transition Initiative

Severe weather, fires, floods, and droughts are already costing billions of U.S. dollars worldwide. Is it more cost effective to pay for the effects of climate change, which affects both developing and developed countries, or transition to an emissions-free society? Many people were counting on their governments to come together at the COP26 to urgently eliminate the causes of climate change. Gains were achieved in that an agreement was reached at the final hour of the summit, but many opportunities were missed as the agreement might not eliminate harmful emissions fast enough, and the language to eliminate coal and methane gases was watered down. However, clean energy technologies continue to develop on their own and some with the help of local policies and incentives, financial institutions pledged to move away from coal, and some of the major car manufacturers pledged to abandon production of combustion engine driven cars by 2035-2040. In addition, prior to the COP26 the United States and the European Union signed a trade agreement that is to support the import green steel and aluminum. Who knows, maybe the final arrangement, due by 2024, will include other green industries, including agriculture. Thus, meaningful action could be achieved outside COP through local policies and the marketplace. Leonardo Beltran, Non-Resident Fellow One of the key results of COP26 is the realization that there needs to be an all-in approach to face the challenges of the climate crisis, not only because the effort of a single jurisdiction will not be enough, irrespective of their relative contribution or size, but also because the speed at which the climate system is changing requires a corresponding action to coordinate globally across multiple fronts. Despite cautious optimism, stemming from pledges on finance, methane, reforestation, adaptation, and net-zero announcements of major economies, i.e., China, India, US, etc., today we are on an unsustainable path; and yet, Latin American and the Caribbean, one of the hardest hit regions in economic and health costs arising from the COVID-19 pandemic, compounded by more frequent and stronger weather related events as last year has shown, is demonstrating its commitment, resilience and leadership committing more than half of its countries to have at least 70% of renewable power generation by 2030. Marta Jara, Non-Resident Fellow It is common wisdom that in a crisis, things must get worse before the awakening to the urgency of needed change. Investment in energy infrastructure has been lagging demand predictions for some years now and markets’ early reaction to ESG risks in fossil fuels. But the ability to de-risk, assess and finance clean energy is still insufficient for keeping the development of new decarbonized supplies on track. It should not get too bad, as supply disruptions and price volatility can cause a social backlash of counter reactions and end up slowing down the net-zero journey. COP26 rightly focused on finance and addressed a key gap between aspirations and reality. New instruments and better governance, coupled with stronger political leadership, shall enable that the new high-level pledges translate into real projects on the ground.

Reflections on Glasgow and COP26

JeremyM. Martin, Vice President, Energy & Sustainability

Long before the opening gavel, expectations for the meeting in Glasgow had become outsized. Heightened even more once the Biden administration took office in January and placed climate action at the center of its agenda. As the meeting neared, it dominated news and headlines. Would the world come together and reach a landmark deal to turn back the climate threat? Many stories breathlessly described the emergency. The publication of the latest IPCC assessment report in August furthered

the dramatic narrative. This is our last chance to save the planet, many intoned.

In a world barely out of the throes of a horrific pandemic, with all the well-known economic impacts, many of which have yet to be fully managed, there was still forward progress. It is too easy to argue that we needed a major deal and did not get one. We did get a deal, perhaps a moderate one, but a deal that keeps the world moving forward and attentive to possible solutions for myriad issues including financing adaptation, managing fossil fuel subsidies and phasing-down coal. Most notably, over 100 countries joined the EU-US global methane pledge and agreed to measures that should bring critical emission reduction results by the end of the decade for that potent gas. How to manage fossil fuel-dependent economies and growth in an international climate pact has and will always be extremely thorny and contentious. There is an unavoidable friction between major economies that have been longtime emitters and large developing economies concerned with providing equitable economic development and energy access for all citizens. Which emphasizes the importance of the global methane pledge given the breadth of participation from across the globe and economic status. In sum, the world did not chamber a silver climate bullet in Glasgow. But that was never the goal. Glasgow did move the world forward, continuing to build feasible pathways and compromises toward meaningful emissions reduction across the impossibly diverse roster of nations that make up our globe. Nelson Narciso, Non-Resident Fellow The outcomes from COP-26 can be summed as below what was needed, yet above expectations. Amongst a turbulent backdrop that includes the Covid-19 pandemic, a global energy crisis and rising geopolitical tensions, it required a massive diplomatic effort to reconcile the different interests from 197 nations. Nonetheless, there were significant advances made in Glasgow in comparison to the Paris Agreement signed in 2015. For the very first time the talks mentioned fossil fuels, albeit with reservations. The pressure for a gradual reduction in coal use is another positive outcome, as it signals a real collective effort to limit the use of this energy source. Another relevant highlight was that 100 countries pledged to reduce methane emissions by 30% by 2030. Methane is a powerful greenhouse gas dozens of times more harmful than CO². Most importantly, there was the historic agreement between the USA and China to reduce emissions. The two most polluting countries in the world, jointly accounting for around 40% of global GDP, briefly halted their geopolitical tensions and hegemonic claims to establish a diplomatic commitment with the international community. Nevertheless, it is important to stress that promises are not enough. In face of the climate urgency, it is necessary to honor the promises. The asymmetry between developed, emerging and developing countries present conflicts that sometimes might be irreconcilable. Additionally, there is still a lack of financial support to make the energy transition viable. Therefore, at COP-27 to be held in 2022 in Egypt, we shall see whether we will have made actual progress to fulfill the next conference.

Reflections on Glasgow and COP26

Francisco Xavier Salazar, Non-Resident Fellow

As with previous meetings, now that COP26 is over we have mixed feelings. Certainly, there were positive results and progress in some areas, but the commitments fall short of what needs to be done to limit the 1.5 °C increase in temperature. Also, as it is normal, we have changes in the positions of several countries. Of course, one of the best things is that the US is back. Unfortunately, some countries that used to be on the forefront of the battle against climate change, like Mexico, are now

implementing policies that will not reduce emissions but, on the contrary, increase them. This is the result of changes in governments whose leaders may or may not be really committed in fighting the problem. As these changes will continue to happen, the challenge for the people and particularly the young, will be to raise their voice to assure that independently of their political parties the new elected leaders pledge to make this issue one of their priorities if not the first one. Chris Sladen, Non-Resident Fellow Many countries have not yet reached peak coal, let alone peak oil, or peak natural gas consumption. The best thing was that nobody was disputing that we have a big climate problem, what the sources of that problem are, and the kinds of actions needed; the road-map is clearer. But 2050 is now less than 1,500 weeks away. We should start reporting week-by-week, not annually. This will help focus on turning the COP26 agreements and pledges into action. We have to deliver because what has been achieved to date is nowhere near enough. Many countries in Latin America will continue to rely on fossil fuel income. The challenge remains immense. Roger Tissot, Non-Resident Fellow diplomatic tensions between global powers and their failure to respond early, fairly and globally to the risk of the Covid-19 pandemic were sufficient reasons to doubt there was any political capital left to address the challenges of a warming planet. While technology, science and innovation is expected to be a key component of the solution, significant uncertainty remains in terms of adaptation. At the most fundamental level, COP26 exposes the deep inequalities between the global north and the global south. It questions traditional views of economic development centered on economic growth while many countries of the global south are supposed to capture a demographic dividend - with large young population entering the work force. Although many pundits and experts show optimistic forecasts of "green jobs," too much remains to be done to ensure the global south can capture those jobs. Failure to employ a growing young population in the global south could become one of the major barriers to the lofty goals signed in Glasgow. The common headlines from Glasgow COP 26 suggest a sense of relief - a deal was signed - but also frustration because the modesty of the goals agreed. The fact that there was an agreement in the first place should be seen as a victory, if not for the environment, at least for the ability of world's leaders to reach consensus on fundamental issues. The emergence of political populism, nationalism, and growing

Reflections on Glasgow and COP26

COP26 Highlights COP26 and its goals

COP21 took place in Paris in 2015. On that occasion, and for the first time, almost every country in the world agreed to work together to limit temperature increase to below 2 degrees, aiming at 1.5 degrees, compared to pre-industrial levels. The progress was to be tracked every 5 years, but due to the breakout of COVID in 2020, that important milestone became COP26 in 2021. COP26 took place from October 31 to November 12 in Glasgow under the Presidency of UK in partnership with Italy and set out the following goals: Goals

• Secure global net-zero by mid-century and Keep 1.5 degrees within reach with ambitious 2030 reduction targets • Accelerate the phase-out of coal • Curtail deforestation

MITIGATION

• Speed up the switch to electric vehicles • Encourage investment in renewables

ADAPTATION

• Protect and restore ecosystems • Build defenses, warning systems and resilient infrastructure and agriculture to avoid loss of homes, livelihoods and even lives • Mobilize at least $100bn in climate finance per year by 2020. • International financial institutions must work towards unleashing the trillions in private and public sector finance required to secure global net zero • Finalize the Paris Rulebook (the detailed rules that make the Paris • Agreement operational) • Accelerate action to tackle the climate crisis through collaboration between governments, businesses and civil society

FINANCING

COLLABORATION

Reflections on Glasgow and COP26

What has been achieved? Mitigation Coal

C oal is considered the single biggest contributor to climate change. There has been a 76% drop in the number of new coal plants planned globally over the last six years since the Paris Agreement was adopted. This roughly translate to the cancellation of more than 1000GW of new coal plants. The shift away from coal has gained additional momentum at Glasgow: • At least 23 countries have made new commitments at Glasgow to phase out coal

power, including five of the world’s top 20 coal power-using countries • Major international banks have committed to effectively end all international public financing of new unabated coal power by the end of 2021. • At least 25 countries and public finance institutions commit to ending international public support for the unabated fossil fuel energy sector by the end of 2022. This follows recent announcements from China, Japan and South Korea to end overseas coal financing which now means all significant public international financing for coal power has effectively ended. • Developed nations have pledged new support to help developing countries make the transition to clean energy. Support for South Africa, the most carbon intensive electricity producer, is a noteworthy example (see more under Financing) • Collectively, this could shift an estimated $17.8 billion a year in public support out of fossil fuels and into the clean energy transition. Methane Pledge The US and the EU announced a global partnership to cut emissions of the greenhouse gas methane by 2030. The Global Methane Pledge aims to limit methane emissions by 30% compared with 2020 levels and has been signed by more than 100 countries. (source: www.BBC.com/news)

Reflections on Glasgow and COP26

Transport

• 30 countries have agreed to work together to make zero emission vehicles the new normal by making them accessible, affordable, and sustainable in all regions by 2030 or sooner. • A number of emerging markets are agreeing to accelerate the transition to ZEVs in their markets (including India, Rwanda, Kenya) • Launch of a new World Bank trust fund that will mobilize $200 million over the next 10 years to decarbonize road transport in emerging markets and developing economies. • This goal is guiding the Zero Emission Vehicle Transition Council (ZEVTC), co-chaired by UK and US. The ZEVTC will launch its first annual Action Plan, which sets out areas for sustained international cooperation to accelerate the transition during 2022. • Nineteen governments have also stated their intent to support the establishment of ‘green shipping corridors’ – zero-emission shipping routes between two ports. This will involve deploying zero- emission vessel technologies and putting alternative fuel and charging infrastructure in place in ports to allow for zero emission shipping on key routes across the globe. • The UK has pledged to shift to clean trucks by committing to end the sale of most new diesel trucks between 2035 and 2040. Land Use • Twenty-six nations set out new commitments to change their agricultural policies to become more sustainable and less polluting, and to invest in the science needed for sustainable agriculture and for protecting food supplies against climate change, laid out in two ‘Action Agendas’. All continents were represented, with countries including India, Colombia, Vietnam, Germany, Ghana, and Australia. Hemispheric highlight is Brazil’s plan to scale its ABC+ low carbon farming program to 72m hectares, saving 1 billion tons of emissions by 2030 • The UK also announced funding of £500m to support the implementation of the Forest, Agriculture and Commodity Trade (FACT) Roadmap that was launched during the World Leaders Summit (happening before COP26), in which 28 countries are working together to protect forests while

Reflections on Glasgow and COP26

promoting development and trade. A further £65 million will support a ‘Just Rural Transition’ to help developing countries shift policies and practices to more sustainable agriculture and food production. • Commitments made by countries today will help to implement the Glasgow Leaders’ Declaration on Forests and Land Use which is now endorsed by 134 countries covering 91% of the world’s forests. The Declaration aims to halt and reverse forest loss and land degradation by 2030. Adaptation • Global leaders commit to a shift towards locally-led adaptation through over 70 endorsements to the Principles for Locally Led Adaptation and over $450m mobilized for initiatives and programs enhancing locally-led approaches • Race to Resilience campaign brings together initiatives that are strengthening the urban, coastal and rural resilience of 2 billion people worldwide. • Australia, New Zealand, Italy and the African Development Bank (AfDB) have committed to a balanced approach to climate finance and joined the Champions Group on Adaptation Finance. • $232 million has been committed to the Adaptation Fund, the highest single mobilization to the Fund and more than double the previous highest collective mobilization with a $20m contribution from the UK. Commitments came from the USA, Canada, Sweden, Finland, Ireland, Germany, Norway, Qatar, Spain, Switzerland, the UK and the Quebec and Flanders governments. • The UK has announced £290 million in new funding for adaptation today, including £274 million for the Climate Action for a Resilient Asia (CARA) program. • 88 countries are now covered by Adaptation Communications or National Adaptation Plans (NAPs) to increase preparedness to climate risks, with 38 published in the last year. Finance Finance has been a key topic at COP26 as it is a key enabler for pledges to become actions. Many initiatives provide a boost to energy transition in itself but further new expertise and funding is expected to leverage more finance for low carbon, resilient development. $100 billion commitment for financing adaptation • Countries made new commitments to increase finance to support developing countries to deal with the impacts of climate change, including a commitment from Norway to triple its adaptation finance, commitments from Japan and Australia to double their adaptation finance, and commitments from Switzerland, the US and Canada for the Adaptation Fund. • This included the largest US adaptation finance commitment to date, to reduce climate impacts on those most vulnerable to climate change worldwide. While Canada committed to allocate 40% of its climate finance to adaptation. • New commitments for climate financing also came from the United Kingdom, Spain, Japan, Australia, Norway, Ireland and Luxembourg, that build on the plan set out ahead of COP26 to deliver the $100 billion per year to developing countries. • To combat the difficulties many countries face with the bureaucracy of securing climate investment, £100 million in new funding from the United Kingdom was announced to support the approach of the Taskforce on Access to Climate Finance, co-chaired by the UK and Fiji.

Reflections on Glasgow and COP26

• The taskforce launched a partnership with five ‘pioneer countries’ – Bangladesh, Fiji, Jamaica, Rwanda and Uganda – to support them and their local communities to get the finance they need for their climate plans. Public finance to support transition • South Africa, the United Kingdom, the United States, France, Germany and the European Union formed a partnership to support South Africa with an accelerated just energy transition has been formed. As a first step, the international partnership announced that $8.5 billion can be made available over the next 3-5 years to support South Africa to achieve the most ambitious emissions reduction target within its upgraded and ambitious Nationally Determined Contribution. • The International Finance Corporation (IFC), with the Hong Kong Monetary Authority (HKMA) and Allianz Global Investors launched a new global platform, MCPP One Planet, for Paris-Aligned climate smart investments that will provide up to $3 billion to private enterprises in developing economies. • The Asian Development Bank (ADB) launched the Energy Transition Mechanism (ETM) to accelerate the retiring of coal power and the move to clean energy. As part of the pilot phase in Indonesia, the Philippines, and Viet Nam, the ETM is expected to raise $2.5 to $3.5 billion to retire 2-3 coal-fired power plants per country. • The International Finance Corporation (IFC), together with Amundi, announced a new $2 billion fund that will help to directly mobilize private investment into sustainable and green bonds in emerging markets. It will channel capital from institutional investors into anchor investments involving sustainable bond issuances from developing countries. It will provide a new model for other asset managers and institutional investors to replicate. Mobilizing private finance • Finance Ministers also discussed that the billions of dollars in public finance must be used to leverage the trillions of dollars in private finance needed for a climate resilient, net zero future, and how to support developing countries to access that finance. • The United States, the European Commission and the UK also committed to work in partnership with countries to support a green and resilient recovery from COVID-19 and boost investment for clean, green infrastructure in developing countries. • The UK also committed £576 million at COP for a package of initiatives to mobilize finance into emerging markets and developing economies, including £66 million to expand the UK’s MOBILIST program, which helps to develop new investment products which can be listed on public markets and attract different types of investors. • Initiatives announced by the World Bank Group and Asian Development Bank will share risk with developing countries and aim to raise up to $8.5 billion in new finance in support of climate action and sustainable development. There was also the launch of an innovative new financing mechanism – the Climate Investment Funds’ Capital Markets Mechanism (CCMM) that will boost investment into clean energy like solar and wind power in developing countries. • Private financial institutions also took a major step to ensure that existing and future investments are aligned to the global goal of net zero.

Reflections on Glasgow and COP26

• The Climate Investment Funds (CIF) Capital Market Mechanism (CCMM) initiative which plans to issue bonds in 2022 to raise finance for projects in clean energy and sustainable infrastructure in developing and emerging economies mobilizing up to $700 million annually. • 36 countries agreed to mandatory actions to ensure that investors have access to reliable information about climate risk to guide their investments into greener areas. And to ensure common standards, 38 countries welcomed the announcement of a new international body, the International Sustainability Standards Board (ISSB). • Over $130 trillion of private finance is now committed to science-based net zero targets and near term milestones, through the Glasgow Financial Alliance for Net Zero (GFANZ). • GFANZ members are required to set robust, science-based near-term targets within 12-18 months of joining, and more than 90 of the founding institutions have already done so. A key focus of GFANZ is supporting developing countries and emerging markets. Global climate reporting standards

• The IFRS Foundation announced the establishment of an International Sustainability Standards Board (ISSB) to develop comprehensive global baseline sustainability reporting standards under robust governance and public oversight. The IFRS Foundation confirmed agreements with existing sustainability reporting bodies to create the global standard-setter for sustainability disclosures for the capital markets. • The Foundation also published two prototype standards to enable the ISSB to rapidly build on existing frameworks – including the Task Force on Climate-Related Financial Disclosures (TCFD) – when developing its standards. Standards will be subject to full public consultation and can be considered for adoption by jurisdictions on a voluntary basis. Jurisdictions will have their own legal frameworks for adopting, applying or otherwise making use of international standards. • Finance Ministers and Central Bank Governors from 38 jurisdictions from across 6 continents (see below) publicly welcomed the announcement of the establishment of the ISSB and its work

Reflections on Glasgow and COP26

programme to develop a set of internationally consistent, high-quality, and reliable baseline standards for disclosure of sustainability-related information on enterprise value creation. • Jurisdictions are: Australia, Brazil, Canada, Chile, China, Egypt, Ethiopia, European Commission, Fiji, France, Germany, Greece, Guatemala, India, Indonesia, Italy, Jamaica, Japan, Kenya, Korea, Luxembourg, Maldives, Mexico, Morocco, Netherlands, New Zealand, Nigeria, Philippines, Saudi Arabia, Seychelles, Singapore, Spain, Switzerland, Tonga, Turkey, UK, Uruguay, USA. Collaboration

Finalizing the Paris Rulebook • All countries agreed to revisit and strengthen their current emissions targets to 2030, known as Nationally Determined Contributions (NDCs), in 2022. This will be combined with a yearly political roundtable to consider a global progress report and a Leaders summit in 2023. • The Paris Rulebook, the guidelines for how the Paris Agreement is delivered, after agreement on a transparency process which will hold countries to account as they deliver on their targets. This includes Article 6, which establishes a robust framework for countries to exchange carbon credits through the UNFCCC. One sun – one world – one grid Plans for the first international network of global interconnected solar power grids, known as the Green Grids Initiative – One Sun One World One Grid (GGI-OSOWOG), spearheaded by the governments of India and the UK in partnership with the International Solar Alliance (ISA) and the World Bank Group. It intends to bring together a global coalition of national governments, international financial and technical organizations, legislators, power system operators and knowledge leaders to accelerate the construction of the new infrastructure needed for a world powered by clean energy. In doing so, the

Reflections on Glasgow and COP26

project aims to reduce reliance on non-renewable energy such as coal by enabling them to purchase affordable solar power from other countries. (source:www.theweek.in) Science and Innovation

• Initiatives to enhance international cooperation between governments, academics, businesses and civil society and ensure science and innovation delivers for all in order to meet the goals of the Paris Agreement: • 47 countries have committed to building health systems which are able to withstand the impacts of climate change and which are low carbon and sustainable. These include 42 countries, representing over a third of global health care emissions, which have committed to develop a sustainable, low- carbon health system. 12 of these 42 countries have set a deadline of 2050 or earlier, by which their health system will reach net zero. Inclusiveness • YOUNGO presented the COY16 Global Youth Position statement, representing the views of over 40,000 young climate leaders from across the world. The statement presented their priorities directly to Ministers, including action on climate finance, mobility and transportation, through to wildlife protection conservation. • Countries and non-state actors set out gender and climate commitments (as part of activities during a Gender Day), following on a Gender Action Plan agreed at COP25. Several countries pledged to include gender aspects throughout climate strategy and action plans, recognizing the dual challenges of climate change and gender inequality and the need to promote opportunities for girls and women as economies transition. A full list of commitments made under Feminist Action for Climate Justice can be found on the Generation Equality website (PDF).

Reflections on Glasgow and COP26

From our Hemisphere

• Bolivia committing to promote the leadership of women and girls, especially indigenous, Afro- Bolivian, community and rural women, through their involvement in sustainable development projects, as well as to reflect gender data in its Nationally Determined Contributions, and to work with UN Women to promote the use of gender breakdowns in official national statistics on environment and climate change. • Canada to ensure that 80% of its $5.3 billion climate investments over the next five years targets gender equality outcomes. • Ecuador committing to strengthen leadership, negotiation, and decision-making capacities within women’s organizations working on climate. About the Institute of the Americas Established in 1981, the Institute of the Americas is an independent, inter-American institution devoted to encouraging economic and social reform in the Americas, enhancing private sector collaboration and communication and strengthening political and economic relations between Latin America and the Caribbean, the United States and Canada. Located on the University of California, San Diego campus in La Jolla, 30 miles from the border with Mexico, the Institute provides a unique hemispheric perspective on the opportunities opened by economic and social reforms in Latin America and the region’s relationship with the United States and Canada. Since 1992, the Institute’s Energy & Sustainability program has played a crucial thought-leadership role in shaping policy discourse and informing policymakers and investors on the most important trends in the energy sector.