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Posts Tagged ‘renewable energy

The carefully constructed mirage of the ‘green economy’

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Not a week goes by nowadays without one high-profile institution or high-powered interest group directing us all to be part of the ‘new, green economy’. That’s where the next jobs are, where innovation is, where the next wave of financing is headed, where the best social entrepreneurship lies. There are the big inter-governmental organisations telling us this: United Nations Environment Program, UNCTAD, OECD, International Energy Agency, the big international lending agencies like the World Bank and Asian Development Bank. There are big think-tanks telling us the same thing – backed up by hefty new reports that are boring to read but whose plethora of whiz-bang charts are colourful. There are big companies, multinationals and those amongst the Fortune 500, also evangelising the new green economy and patting themselves on the back for being clean and green and so very responsible.

Artisanal blacksmith and his family, Maharashtra, India

What on earth are they all talking about? Does it have to do with us average, salaried, harassed, commuting, tax-paying types who are struggling with food inflation and fuel cost hikes and mortgages and loans that break our backs? Are they talking to our governments and our municipalities, who are worried about their budgets and their projects and their jobs too?

Here are a few answers from working class Asia. Let’s start with restating a couple of trendlines. One, the era of growth in the West is over. Growth is Asia is what is keeping the MNCs and their investors and bankers and consultants interested, and this means China and India (also Brazil, Russia, South Africa, Indonesia). Two, the environmental consciousness which began in the 1970s to spread quickly in the West led to many good laws being framed and passed. These were responses to the industrial and services growth in the Western economies. As globalisation took hold, people in less industrialised countries – ordinary citizens – saw what had happened in the West and learnt from their experiences with industrialisation. Green movements took root all over Asia and South America, protests were common, confrontations just as much, and global capital found itself being questioned again, even more fiercely.

These are the two major trends. The forces of production want to move much further into what used to be the ‘developing’ world, but want to meet much less resistance. That’s why they appeal to the consumer minds of China, India and the other target countries – you need jobs, homes, nice cars, big TVs, cool vacations, credit, aspirations, and lifestyle is what the messages say, whether they’re from telecom companies or condominium salesmen. But it’s hard to market all this stuff – real stuff, virtual stuff – to people who are still struggling to make ends meet.

This was after all the old 'green economy'. A late 19th century painting in a maritime museum near Mumbai, India

That’s where the ‘new, green economy’ tagline and its earnest-sounding philosophy comes in. “The main challenges to jump-starting the shift to a green economy lie in how to further improve these techniques, adapt them to specific local and sectoral needs, scale up the applications so as to bring down significantly their costs, and provide incentives and mechanisms that will facilitate their diffusion and knowledge-sharing,” said one of these recent reports. Look at the text which contains all the right buzzwords – ‘scale up’, ‘jump-start’, ‘applications’ (that’s a favourite), ‘knowledge-sharing’, ‘local’.

This makes the ‘old economy’ sound good but changes nothing substantial on the ground, or on the factory shopfloor or for the tens of thousands of little manufacturing units that do small piecework jobs for the bigger corporations up the chain. The world’s business philosophy has changed drastically even without the impact of environment and energy. To drive home this point, it has been a long time since we heard anything like ‘industrial relations’, and that alone should tell us how far the dominance of capital has reached, when labour, whose organisation gave the West its stellar growth rates in the 1960s and 1970s, has now become all but ignored. This is because the dominant interests associated with capital have insisted, successfully for investors and for pliant governments, that the manufacturing firms break loose from the industrial relations moorings they had established. The restructuring of firms to emphasise leaner and meaner forms of competition – as the ruthless management gurus and greedy consulting agencies instructed – was in line with market pressures that are viewed by the powers-that-be as crucial to the revitalisation of the economy.

Read their greenwash carefully and the control levers are revealed. “Further innovation and scaling up are also needed to drive down unit costs. Technologies will need to be ‘transferred’ and made accessible, since most innovation takes place in the developed countries and private corporations in those countries are the main owners of the intellectual property rights covering most green technologies.” So says ‘World Economic and Social Survey 2011: The Great Green Technological Transformation’ (UNESCO, Department of Economic and Social Affairs). Rights and access are built in from the start, as you can see.

And yet it is this very system of production, of the arrangement of capital and of the effort to weaken working regulations that is now talking about the ‘green economy’. Why do they even imagine we should believe them? They are the ones who have remained locked into the fossil fuel economy and who have partnered the enormous influence of the finance markets, who have followed every micro-second of the way the dictates of capital flows and what the market investors want in their endless quest for greater profits in ever-shorter cycles of production. For the major business of the world, ‘green economy’ is yet another route to super-profits and the consolidation of both forces of production and masses of consumers. The difference between now and the 1970s is that today they are able to successfully enlist the apparently authoritative inter-governmental organisations with their armies of economists and social scientists and engineers, to support this new profiteering. Only now, the cost is planetary.

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The IPCC speaks, on renewable energy and climate change

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Demand for energy services is increasing. GHG emissions resulting from the provision of energy services contribute significantly to the increase in atmospheric GHG concentrations. Graphic: IPCC-SRREN

The Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN), agreed and released by the Intergovernmental Panel on Climate Change (IPCC) on 09 May 2011, has assessed existing literature on the future potential of renewable energy for the mitigation of climate change. It covers the six most important renewable energy technologies, as well as their integration into present and future energy systems. It also takes into consideration the environmental and social consequences associated with these technologies, the cost and strategies to overcome technical as well as non-technical obstacles to their application and diffusion.

The chapters are dense, but there is a Summary for Policy Makers which provides an overview of the SRREN. It summarises the essential findings concerning the report`s analysis of literature on and experiences with the scientific, technological, environmental, economic and social aspects of the contribution of six renewable energy sources to the mitigation of climate change.

The IPCC has said that on a global basis, it is estimated that renewable energy accounted for 12.9% of the total 492 Exajoules (EJ) of primary energy supply in 2008. The largest RE contributor was biomass (10.2%), with the majority (roughly 60%) being traditional biomass used in cooking and heating applications in developing countries but with rapidly increasing use of modern biomass as well.

Hydropower represented 2.3%, whereas other RE sources accounted for 0.4%. In 2008, RE contributed approximately 19% of global electricity supply (16% hydropower, 3% other RE) and biofuels contributed 2% of global road transport fuel supply. Traditional biomass (17%), modern biomass (8%), solar thermal and geothermal energy (2%) together fuelled 27% of the total global demand for heat. The contribution of RE to primary energy supply varies substantially by country and region.

Deployment of RE has been increasing rapidly in recent years. Various types of government policies, the declining cost of many RE technologies, changes in the prices of fossil fuels, an increase of energy demand and other factors have encouraged the continuing increase in the use of RE.

The current global energy system is dominated by fossil fuels. Shares of energy sources in total global primary energy supply in 2008. Graphic: IPCC-SRREN

Despite global financial challenges, RE capacity continued to grow rapidly in 2009 compared to the cumulative installed capacity from the previous year, including wind power (32% increase, 38 Gigawatts (GW) added), hydropower (3%, 31 GW added), grid-connected photovoltaics (53%, 7.5 GW added), geothermal power (4%, 0.4 GW added), and solar hot water/heating (21%, 31 GWth added). Biofuels accounted for 2% of global road transport fuel demand in 2008 and nearly 3% in 2009. The annual production of ethanol increased to 1.6 EJ (76 billion litres) by the end of 2009 and biodiesel to 0.6 EJ (17 billion litres).

Of the approximate 300 GW of new electricity generating capacity added globally over the two-year period from 2008 to 2009, 140 GW came from RE additions. Collectively, developing countries host 53% of global RE electricity generation capacity. At the end of 2009, the use of RE in hot water/heating markets included modern biomass (270 GWth), solar (180 GWth), and geothermal (60 GWth). The use of decentralized RE (excluding traditional biomass) in meeting rural energy needs at the household or village level has also increased, including hydropower stations, various modern biomass options, PV, wind or hybrid systems that combine multiple technologies.

Climate change will have impacts on the size and geographic distribution of the technical potential for RE sources, but research into the magnitude of these possible effects is nascent. Because RE sources are, in many cases, dependent on the climate, global climate change will affect the RE resource base, though the precise nature and magnitude of these impacts is uncertain. The future technical potential for bioenergy could be influenced by climate change through impacts on biomass production such as altered soil conditions, precipitation, crop productivity and other factors. The overall impact of a global mean temperature change of less than 2°C on the technical potential of bioenergy is expected to be relatively small on a global basis. However, considerable regional differences could be expected and uncertainties are larger and more difficult to assess compared to other RE options due to the large number of feedback mechanisms involved.

For solar energy, though climate change is expected to influence the distribution and variability of cloud cover, the impact of these changes on overall technical potential is expected to be small. For hydropower the overall impacts on the global technical potential is expected to be slightly positive. However, results also indicate the possibility of substantial variations across regions and even within countries. Research to date suggests that climate change is not expected to greatly impact the global technical potential for wind energy development but changes in the regional distribution of the wind energy resource may be expected. Climate change is not anticipated to have significant impacts on the size or geographic distribution of geothermal or ocean energy resources.

The levelized cost of energy for many RE technologies is currently higher than existing energy prices, though in various settings RE is already economically competitive. Ranges of recent levelized costs of energy for selected commercially available RE technologies are wide, depending on a number of factors including, but not limited to, technology characteristics, regional variations in cost and performance, and differing discount rates. Some RE technologies are broadly competitive with existing market energy prices.

Renewable energy costs are still higher than existing energy prices, but in various settings renewable energy is already competitive. Graphic: IPCC-SRREN

Many of the other RE technologies can provide competitive energy services in certain circumstances, for example, in regions with favourable resource conditions or that lack the infrastructure for other low-cost energy supplies. In most regions of the world, policy measures are still required to ensure rapid deployment of many RE sources. Monetising the external costs of energy supply would improve the relative competitiveness of RE. The same applies if market prices increase due to other reasons. The levelized cost of energy for a technology is not the sole determinant of its value or economic competitiveness. The attractiveness of a specific energy supply option depends also on broader economic as well as environmental and social aspects, and the contribution that the technology provides to meeting specific energy services (e.g., peak electricity demands) or imposes in the form of ancillary costs on the energy system (e.g., the costs of integration).

By lanternlight in rural Asia

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The Shivalaya Bazaar, Kanpur, Uttar Pradesh, India

One of the magazines of the CR Media group of Singapore interviewed me about energy needs in rural Asia. My responses to some thoughtful questions have been published, although I don’t have a link yet to any of the material online. Until then, here’s a selection of questions and replies.

Do you have a case study or know of an innovative instance when an Asian country has broken the mould successfully in generating energy for its citizens in a way that is remarkable?

When you travel in rural South Asia you see that in almost every unelectrified village there is a flourishing local trade in kerosene and kerosene lanterns for lighting, car batteries and battery-charging stations for small TV sets, dry cell batteries for radios, diesel fuel and diesel generator sets for shops and small businesses and appliances. It’s common to spot people carrying jerricans or bottles of kerosene from the local shop, or a battery strapped to the back of a bicycle, being taken to the nearest charging station several kilometres away. People want the benefits that electricity can bring and will go out of their way, and spend relatively large amounts of their income, to get it. That represents the opportunity of providing power for energy appliances at the household level (LED lamps, cookstoves, solar- and human-powered products) and of community-level power generation systems (village bio-gasification, solar and small-scale hydro and wind power).

Household income and electricity access in developing countries, IEA, World Energy Outlook 2010

Household income and electricity access in developing countries, IEA, World Energy Outlook 2010

In areas such as western China, the South American rainforest or the Himalayan foothills, the cost of a rural connection can be seven times that in the cities. Solar power has spread rapidly among off-grid communities in developing countries, only sometimes subsidised. A typical solar home system today in South Asia provides light, power for TVs, radios and CD players, and most important charges mobile phones. At US$ 400-500, such a system is not cheap for rural Asia, especially when households are struggling with rising food and transport costs. But targeted subsidies and cheap micro-credit has made this energy option more affordable.

How can Asian countries cooperate to bring a new energy reality into Asia and balance development with conservation?

Let’s see what some authoritative forecasts say. The Sustainable World Energy Outlook 2010 from Greenpeace makes projections of renewable energy generation capacity in 2020: India 146 GW, developing Asia 133 GW, China 456 GW. These are enormous quantities that are being forecast and illustrate what has begun to be called the continental shift eastwards of generation and power. India dwarfs developing Asia the way China dwarfs India – the conventional economies today reflect this difference in scale. It’s important to keep in mind, while talking about energy, that Asia’s committed investment and planned expansion is centred to a very great degree around fossil fuel.

Factory and high-tension power lines, Mumbai, India

Certainly there are models of regional cooperation in other areas from where lessons can be drawn, the Mekong basin water sharing is a prominent example. But cooperation in energy is a difficult matter as it is such an essential factor of national GDP, which has become the paramount indicator for East and South Asia. Conversely, it is because the renewables sector is still relatively so small in Asia that technical cooperation is flourishing – markets are distributed and small, technologies must be simple and low-cost to be attractive, and business margins are small, all of which encourage cooperation rather than competition.

What could be immediately done to help alleviate energy shortage in South Asia for the masses, at a low cost? Do you have a case study of this?

Let’s look at Husk Power Systems which uses biomass gasification technology to convert rice husk into gas. Burning this gas runs generators which produce relatively clean electricity at affordable rates. Rice husk is found throughout northern, central and southern India and is a plentiful fuel. While Husk Power says that the rice husk would otherwise be “left to rot in fields” that isn’t quite true, as crop biomass is used in many ways in rural South Asia, but the point here is that this entrepreneurial small company has successfully converted this into energy for use locally.

Household income and access to modern fuels in developing countries, IEA, World Energy Outlook 2010

Household income and access to modern fuels in developing countries, IEA, World Energy Outlook 2010

I think it’s important that access to energy be seen for its importance in achieving human development goals. Individuals in governments do see this as clearly as you and I, but disagreements over responsibility and zones of influence get in the way. Responsible private enterprise is one answer. If you look at micro-enterprise funders, like Acumen, they recognise that access to electricity is also about healthcare, water and housing, refrigerated vaccines, irrigation pumps and also lighting in homes so that children can study.

What issues (externalities etc) do Asian governments do not factor in when they go for new sources of energy?

The poverty factor has for years obscured many other considerations. Providing energy, infrastructure and jobs has been the focus of central and provincial governments, and in the process issues such as environmental degradation and social justice have often been overlooked. That has been the pattern behind investment in large, national centrally-funded and directed power generation plans and in many ways it continues to shape centralised approaches to renewable energy policy.

Developing Asia is still mired in the legacy bureaucracies that have dominated (and continue to) social sector programmes, which for decades have been the cornerstone of national ‘development’. Energy is still seen as a good to be allocated by the government, even if the government does not produce it. And it still takes precedence over other considerations – ecosystem health, sustainable natural resource management – because of this approach. If India has a huge programme to generate hydroelectricity from the rivers in the Himalaya, there is now ample evidence to show both the alterations to river ecosystems downstream and the drastic impacts of submergence of river valleys, let alone the enormous carbon footprint of constructing a dam and the associated hydropower systems. Yet this is seen as using a ‘renewable’ source of energy.

A banner year for renewables

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REN21 (the Renewable Energy and Policy Network for the 21st Century) has released its annual publication – the ‘Renewables 2010 Global Status Report’. REN21 is a global policy network that provides a forum for international leadership on renewable energy.

The new report says that 2009 was unprecedented in the history of renewable energy, despite the headwinds posed by the global financial crisis, lower oil prices, and slow progress with climate policy. “Indeed, as other economic sectors declined around the world, existing renewable capacity continued to grow at rates close to those in previous years, including grid-connected solar PV (53%), wind power (32%), solar hot water/heating (21%), geothermal power (4%), and hydropower (3%). Annual production of ethanol and biodiesel increased 10% and 9%, respectively, despite layoffs and ethanol plant closures in the United States and Brazil.”

Many recent trends also reflect the increasing significance of developing countries in advancing renewable energy. Collectively, developing countries have more than half of global renewable power capacity. China now leads in several indicators of market growth. India is fifth worldwide in total existing wind power capacity and is rapidly expanding many forms of rural renewables such as biogas and solar PV. Brazil produces virtually all of the world’s sugar-derived ethanol and has been adding new biomass and wind power plants. Developing countries now make up over half of all countries with policy targets (45 out of 85 countries) and also make up half of all countries with some type of renewable energy promotion policy (42 out of 83 countries).

Key findings: (1) For the second year in a row, in both the United States and Europe, more renewable power capacity was added than conventional power capacity (coal, gas, nuclear). Renewables accounted for 60% of newly installed power capacity in Europe in 2009, and nearly 20% of annual power production; (2) China added 37 GW of renewable power capacity, more than any other country in the world, to reach 226 GW of total renewables capacity. Globally, nearly 80 GW of renewable capacity was added, including 31 GW of hydro and 48 GW of non-hydro capacity; (3) Wind power additions reached a record high of 38 GW. China was the top market, with 13.8 GW added, representing more than one-third of the world market — up from just a 2% market share in 2004. The United States was second, with 10 GW added. The share of wind power generation in several countries reached record highs, including 6.5% in Germany and 14% in Spain.

‘Global Trends in Sustainable Energy Investment 2010 – Analysis of Trends and Issues in the Financing of Renewable Energy and Energy Efficiency’ is also a new report by SEFI, the United Nations Environment Programme’s (UNEP) Sustainable Energy Finance Initiative – a platform providing financiers with the tools, support, and global network needed to conceive and manage investments in the complex and rapidly changing marketplace for clean energy technologies. SEFI’s goal is to foster investment in sustainable energy projects by providing up-to-date investor information, facilitating deal origination, developing partnerships, and creating the momentum needed to shift sustainable energy from the margins of energy supply to the mainstream.

Key findings: (1) New investment in sustainable energy in 2009 was $162 billion, down from a revised $173 billion in 2008. The 7% fall reflected the impact of the recession on investment in Europe and North America in particular, with renewable energy projects and companies finding it harder to access finance; (2) China saw a surge in investment. Out of $119 billion invested worldwide by the financial sector in clean energy companies and utility-scale projects, $33.7 billion took place in China, up 53% on 2008. Financial investment in Europe was down 10% at $43.7 billion, while that in Asia and Oceania, at $40.8 billion, exceeded that in the Americas, at $32.3 billion, for the first time; (3) Research, development and deployment spending by governments and corporations totalled $24.6 billion in 2009, with government R&D up 49% at $9.7 billion and corporate RD&D down 16% at $14.9 billion. The shifts reflected greater willingness by governments to invest in research on sustainable energy technologies – to help generate economic activity – and also caution on the part of some big corporate players at a time when their profits were under pressure.

The SEFI report said that global new investment in sustainable energy reached $162 billion in the year 2009, the second highest figure ever, after 2008’s revised $173 billion. Although the 2009 figure was down by 7%, it was higher than the $157 billion achieved in 2007, at the height of the world economic boom, and it was nearly four times the 2004 total of $46 billion.