Charting a New Energy Future

RE Insider For eight years, people in the Thai province of Prachuap Khiri Kan have fought proposals to build two large coal-fired power plants in the region out of concern for the environmental and health impacts of the plants.

RE Insider – February 17, 2003 For eight years, people in the Thai province of Prachuap Khiri Kan have fought proposals to build two large coal-fired power plants in the region out of concern for the environmental and health impacts of the plants. When Thailand’s Prime Minister visited one possible site in January 2002, he was met by 20,000 protesters. With help from the international environmental organization Greenpeace, people of this province have begun installing what they really want—wind and solar power. Meanwhile, halfway around the world, the state legislature in California passed a groundbreaking law in September 2002 that sets a target of generating 20 percent of electricity from new renewable sources by 2017. From Southeast Asia to California, leaders in business, government, and civil society are calling for a transition to a renewable energy economy. Between the late 1990s and 2020, global energy consumption is projected to rise nearly 60 percent due to population growth, continued urbanization, and economic and industrial expansion. Consumption of electricity, the most versatile form of energy, will increase even more sharply by most estimates—nearly 70 percent. The largest share of this growth is expected to occur in the developing world, where some 2 billion people have no access to modern forms of energy such as electricity and piped gas. And most of the additional energy is projected to come from fossil fuels, according to national and international agency forecasts. But meeting these demands with conventional fuels and technologies will further threaten the natural environment, public health and welfare, and international stability. Renewable energy technologies have the potential to meet world energy demand many times over and are now ready for use on a large scale. Wind and solar power are the fastest-growing energy sources in the world. By some estimates, “new renewables” (which excludes large-scale hydropower and traditional biomass) already account for more than 100,000 megawatts (MW) of grid-connected electric capacity. Globally, new renewable energy supplies the equivalent of the residential electricity needs of more than 300 million people. In 1999, the International Energy Agency noted that “the world is in the early stages of an inevitable transition to a sustainable energy system that will be largely dependent on renewable resources.” This is a bold statement for an organization that represents North America, Europe, and Japan—areas that depend so heavily on fossil fuels. But it seems logical, given the many problems associated with the use of conventional energy and the tremendous surge in renewable energy investments over recent years. The world now uses more than 10 times as much wind energy as it did only a decade ago, and solar power consumption has risen sevenfold. Political support for renewables is on the rise as well. Several countries have recently passed strong new legislation to support renewable energy, opening markets in a rapidly growing list of countries. Yet change is never easy, and there are strong forces—including politically powerful industries—that wish to maintain the status quo. The forces for and against change were on full display at the World Summit on Sustainable Development, held in Johannesburg, South Africa, in summer 2002. The European Union and Brazil proposed the adoption of specific numerical targets for the use of new renewable energy worldwide. Strong opposition arose from the fossil fuel industry and from the governments of most oil-producing nations and major fossil fuel users such as China and the United States. The battle in Johannesburg ended in a watered-down, non-numerical goal to increase renewable energy use. But the fact that the issue even arose at a global summit was highly significant. While the world is sharply divided on what kind of energy future must lie ahead, many nations now view renewable energy as a credible alternative to fossil fuels. Resistance to change is inevitable, but the world cannot afford to be held back indefinitely by those who are wedded to energy systems of the past. Each year new power plants, refineries, pipelines, and other forms of conventional infrastructure—facilities that will be around for at least a half-century—are added to the global energy system to replace existing capital stock and to meet ever-rising demand, much of it in the developing world. An estimated $200–250 billion is invested in energy-related infrastructure every year, and another $1.5 trillion is spent on energy consumption, with nearly all of this investment going to conventional energy. As a result, societies are in the process of further locking themselves into indefinite dependence on unhealthy, unsustainable, and insecure energy structures. At the same time, renewable technologies are now attracting the funds of venture capitalists and multinational corporations alike. The major oil companies BP and Royal Dutch/Shell have invested hundreds of millions of dollars in renewable energy development. While this is a fraction of what they devote to oil and gas, it is a move in the right direction. BP currently has 20 percent of the global market share for solar cells and plans to enlarge its solar business to $1 billion by 2007, while Shell intends to become an industry leader in offshore wind energy. Commitments from major firms to invest in renewable energy over the next few years total at least $10–15 billion, and clean energy investment worldwide is expected to increase more than eightfold between 2001 and 2010, to over $80 billion annually. It is thanks to such investments that the use of renewable energy is expanding rapidly. If current growth rates continue, economies of scale and additional private investments in R&D and manufacturing capability will achieve further dramatic cost reductions, making renewable energy even more affordable in both North and South. Further, if the average growth rates of wind and solar PV over the past decade were to continue to 2020, the world would have about 48,000 MW of installed solar PV capacity and more than 2.6 million MW of wind—equivalent to 78 percent of global electric capacity in 2000, or about 45 percent of projected 2020 capacity. Such continued growth is unlikely, but recent industry reports have concluded that if the necessary institutional framework is put in place, it is feasible for wind to meet 12 percent of global electricity demand by 2020 and for PVs to meet 26 percent by 2040. David Jones of Shell has forecast that renewables could emulate the rise of oil a century ago, when it surpassed coal and wood as the primary source of fuel. The growth of the past decade has been fueled by a handful of countries (including Germany, Japan, Denmark and Spain), and some U.S. states, that have adopted ambitious and deliberate government policies aimed to advance renewable energy. These nations alone cannot sustain the needed growth that Jones and others envision, and whether growth continues at this rapid rate will hinge largely on policy decisions made by governments around the world. But recent developments suggest that political support for renewables is rising globally. And experiences in Germany and elsewhere provide an array of promising policy options that can be disseminated the world over. There are five major categories of policies that, in combination, have acted to propel renewable energy forward. First and foremost are regulations that govern capacity access to the grid and utility obligations. Fair access and standard pricing (or feed-in) laws, which open the grid and establish set payments for renewably-generated electricity, have consistently proved to be the most successful regulatory option for encouraging innovation, capacity installations, strong domestic industries, and broad public support for renewables. Other essential policy types include financial incentives – particularly those that reduce the risks and up-front costs of investing in renewables (such as long-term, low-interest loans and rebates), as well as education and information dissemination, stakeholder involvement, and industry standards and permitting. Perhaps the most important step governments can take to advance renewables is to make a comprehensive change in their perspective and approach to energy policy. Governments need to eliminate inappropriate, inconsistent, and inadequate policies that favor conventional fuels and technologies and that fail to recognize the social, environmental, and economic advantages of renewable energy – including its potential for dramatically reducing the threat of future global climate change. In early 2001, the Intergovernmental Panel on Climate Change released its most recent report, confirming that in order to stabilize the world’s climate, “eventually CO2 emissions would need to decline to a very small fraction of current emissions”—meaning close to zero. If the world is to achieve this—which it must—countries must begin today, not tomorrow, to make the transition to a renewable, sustainable energy future. We still have a long way to go to achieve this vision. Today most of the world is locked into a carbon-based energy system that is neither better nor necessarily cheaper than renewable energy—it is the product of past policies and investment decisions. Breaking the lock will not be easy. But Germany and other countries are proving that change is indeed possible. The key is ambitious, forward-looking, consistent government policies that drive demand for renewable energy and create a self-reinforcing market. About the Author Janet Sawin is a Senior Researcher at Worldwatch Institute. Prior to joining the staff at Worldwatch in June 2002, Sawin worked briefly for Greenpeace on climate change and energy, and wrote a number of reports on renewable energy issues. She has participated in the last four international climate conferences in The Hague, Bonn, Marrakesh and New Delhi. During graduate school, Janet spent a summer in Djibouti, East Africa, working to initiate solar energy projects. She also co-edited a book on international environmental negotiations, wrote a paper for the US Army on environmental security, and co-authored a study on the feasibility of electric vehicles. She has also worked on the staff of the Senate Foreign Relations Committee and for the University of California’s Institute on Global Conflict and Cooperation. She can be reached at Editor’s NoteThis article is an excerpt from Worldwatch Institute’s new book, State of the World 2003 and is used with permission. Copyright 2003 Worldwatch Institute


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