Hydropower, Wind Power

A climate for renewables: ‘Breathtaking breakthrough’ or ‘just bumbling through’ in Bali?

Issue 1 and Volume 11.

While the success of the latest climate negotiations in Bali is not easy to evaluate, one thing is clear, argues Steve Sawyer of the Global Wind Energy Council: the renewables industry needs to engage in climate discussions. For not only will carbon markets be an increasingly important stimulus to renewables, but renewable energy can deliver what is needed

I’m often asked to assess the outcome of climate negotiations. For all but the most dedicated climate aficionados, eyes start to glaze over after the first two sentences, and invocation of even a few of the details induces recollection of urgent phone calls to be made or forgotten appointments. Up until recently, this included colleagues in the renewable energy sector, which I joined just nine months ago. However, there are signs this is changing, and that’s a good thing. When judging the outcome of a meeting like the UNFCCC COP 13 at Bali, it’s always a struggle to decide whether or not the glass is half full or half empty. For one thing, both the phenomenon of human-induced climate change and the attempts to tackle the problem as a global community are unprecedented in human history; so there is nothing much to compare it to, and the relative success or failure of this process will ultimately be judged by our children. After 15 days of negotiations inside the uncomfortably airconditioned confines of the Bali International Convention Centre one tends to get wrapped up in the detailed minutiae of the individual pieces of text. It can seem like the future of the planet hinges on the correct placement of a comma (or in this case quite literally a ‘/’) or in the legalistic interpretation of a 10-year-old text which was quite obviously never intended to cover the present circumstances. After reflection, however, I think the only sensible way to assess Bali is by the twin gauges of a) what was actually agreed; and b) the political ‘movement’ or progress that was achieved. As UNFCCC Executive Secretary Yvo de Boer has repeatedly pointed out, all that was required in Bali was agreement on three things: 1) an agreement to launch negotiations; 2) an agenda and process for conducting those negotiations; and 3) an end date of COP 15 in December 2009 in Copenhagen. At the end of the afternoon on Saturday 15 December, 24 hours after the negotiations were scheduled to conclude, those three objectives were in fact achieved. So, in terms of ‘objective’ reality, what was decided was the very minimum of what was needed – just barely enough to keep up hope in the face of increasingly overwhelming scientific evidence that we are on the edge of a global calamity. But this minimal outcome was somewhat overshadowed by the high drama and political brinkmanship which emerged in the final sessions on Saturday (you can view the webcast at http://www.un.org/webcast/unfccc/2007/?go=05071215).

After surprise returns to the negotiations by both Indonesian President Susilo Bambang Yudhoyono and UN Secretary General Ban Ki-moon to urge, chide, cajole and plead with delegations to finish the job and fulfill the commitments made by their heads of state and government in New York in September, we witnessed:

* First and foremost, a dramatic climb-down by the United States in response to the greatest public display of outrage, anger and desperation that I have ever witnessed in a diplomatic setting; and they agreed to negotiate a future climate agreement by 2009, which up until now was unthinkable.This includes ‘…quantified emission limitation and reduction objectives,’ the kind of legally binding targets which are the basis of the Kyoto Protocol and the global climate regime, and which the Bush Administration had, up until this point, specifically rejected time and time again

* A formal agreement by major developing countries that they need to do their share in the international effort to mitigate climate change, which again, was unthinkable twelve months ago

* A formal affirmation of the commitment made by the Kyoto Parties in Vienna last August, that they would be guided by the science, which indicates that emission reductions of at least 25%-40% compared to 1990 levels by 2020 are what is required of them.The ‘Kyoto Parties’ now include Australia (and 175 others), who, after some dithering, went along with this. So, despite the fact that the outcome of the meeting itself didn’t rock the world, it does give some cause for hope, especially knowing as we do that during the final stages of the negotiation the United States will be represented by a new administration which will move into the White House shortly after lunchtime on 20 January 2009.The stage is set.

WHAT DOES THIS MEAN FOR RENEWABLES?

First and foremost, it means that investors, forecasters and market analysts can look forward with much greater certainty towards the day when the global economy is fully carbon- constrained, and the day when the price of CO2 on the global market will be as important an economic indicator as exchange rates and the price of oil.

The existing carbon caps under the Kyoto Protocol have not yet had a very large direct influence on RE markets. However, it is clear that the much more stringent reduction targets foreseen by the EU in the Council decisions last March – now reinforced and potentially strengthened by the agreement in Bali – are the major driver for the EU’s landmark decision to set mandatory RE targets of 20% of final consumption by 2020. Secondly, it means that carbon markets are here to stay and will only expand over time.They will become a major defining factor in the economic relationship between countries. The European Emissions Trading System (ETS), the Clean Development Mechanism (CDM) and the other various artefacts of the Kyoto Protocol are only the beginning.

While I have had some difficulty persuading my new colleagues that emissions trading can indeed be more than a giveaway of hundreds of millions of Euros to the competition (their not inaccurate assessment of the first round ETS), the inevitable passage of national cap-and-trade legislation in the US Congress in the next year or two means that carbon markets will start to be truly global. And as for the CDM, although it in no way fulfills its initial promise, it has in fact helped spur investment in the RE sector: there are more than 13,000 MW of wind energy projects in the CDM pipeline (which may be seen at http://cdm.unfccc.int/index.html/) in the developing world, albeit mostly in China and India, and discussion on how to improve and expand carbon markets in general – and the CDM in particular – will be a major feature of the negotiations on the post-2012 regime over the next two years.

Thirdly, there are encouraging signs that the moribund ‘technology transfer’ discussion in the UN context could be transformed into something a good deal more useful. Various UN forums have discussed this issue for many years, on the misinformed basis that ‘northern’ governments own environmentally friendly technology and that it should be ‘given’ to the developing world. Now it seems that negotiators are more open to discussing the issue in a way that makes practical sense, in terms of technology deployment and assistance agreements which could actually help expand and facilitate markets for RE globally.

Fourthly, and most importantly, this means that the renewable energy sector in general has to get its act together and engage in these negotiations at the national, regional and international level. There is a fundamental intellectual disconnection between what negotiators now acknowledge the science says needs to be done, and the solutions they are discussing in order to get there. It is not an accident this coincides with the fact that the vast majority of business and industry presence in these negotiations consists of representatives of the fossil fuel industry calling for ‘clean coal’; the nuclear industry trying to ride the climate bandwagon; as well as the carbon capture and storage evangelicals, who preach their gospel of a drop-in technological solution to power-sector emissions that is ‘right around the corner.’ You can’t blame them for trying, but the sad fact is that most policymakers and even many environmentalists have taken that bait, hook, line and sinker. Most of the discussions in the climate negotiations focus on solutions that cannot deliver what is needed.We need to fix that.

The basic facts of our predicament are these:

* Whatever we think of long-term emissions targets for 2050 or 2100, it is clear from the IPCC’s 4th Assessment Report that we need global emissions to peak before 2020 if we are to have any reasonable chance of avoiding the worst ravages of climate change * While forests, agriculture and transport all play a significant role in climate change, the power sector is still the largest source of emissions, accounting for about 38% of fossil CO2 emissions, and about 25% of total greenhouse gas emissions

* It is likely, even according to the IEA, that because of the rapidly ageing nature of the global nuclear ‘fleet,’ that nuclear’s share in the global electricity mix will decline by 2020; it will take a massive building programme of new nuclear power stations just to maintain the current share of about 16% of global electricity production. Not much hope there, despite the fact that a number of governments are looking to buy down the risk of nuclear investments, since the private sector is clearly not otherwise interested * The first commercial-scale carbon capture and storage equipped coal-fired power plant is currently (and somewhat optimistically) scheduled to come on line in 2014; and even its most ardent supporters don’t expect it to play a major role until well after 2020, and only then if there is massive government intervention. So, our options for making major emissions reductions in the power sector in the period before 2020 are efficiency in both generation and use; fuel switching from coal to gas; and wind power, with an increasing contribution from other technologies over time.

Wind power continues to be on track to meet our most ambitious scenario, which would find us in 2020 with an installed capacity of about 1 TW, delivering about 2600 TWh of electricity per year, with associated emissions reductions of about 1.5 billion tonnes of CO2 per year. What percentage of global electricity supply that would be depends radically on the development of global demand, but probably somewhere between 12% and 16%, putting it roughly on a par with hydro and nuclear. Other renewable technologies are growing fast, and with the right policies could become much more global and make a significant contribution in that time frame.

So there’s our challenge. We need to engage fully in the negotiation process, ensure that the carbon markets and technology deployment mechanisms embodied in the new climate agreement focus on supporting the deployment of our technologies, and to be present to continually remind and convince governments, pundits and the negotiators that a big part of the answer to the climate problem lies here with us and not with the promise of ‘future’ technologies which may or may not make a significant contribution in the future, but definitely will not in the critical period before 2020.

I hope to see you later this year in Poznan, and next year in Copenhagen.

Steve Sawyer is the Secretary General of the Global Wind Energy Council e-mail: [email protected]