The Modern Energy Context
Energy is at the very foundation of modern economies. Since the Industrial Revolution more than 200 years ago, all countries have developed on the back of the production and burning of fossil fuels. There is no doubt that the comfortable lives many of us live today would not be possible without the fossil-fueled development of the past. But the merits of fossil fuels now seem less and less convincing.
First, take subsidies. Currently, we throw about 10–12 times more taxpayer money at fossil fuels than we put into renewables—and those are just direct subsidies. In addition, local air and water pollution and related health consequences cost trillions of dollars worldwide. The U.S. National Research Council estimates the “hidden” costs of fossil fuels in the United States (the real costs to society that are not reflected in the fuels’ market prices) at $120 billion annually. The Chinese government believes pollution and related healthcare costs amount to 10 percent of that country’s GDP.
Then there is the volatility of fossil fuel markets, which has arguably led to enormous economic instability in the recent past. Just to give an idea of what this volatility means to some nations: An increase in the world oil price of just $10 can mean a decrease in the GDP of some small nations of 2–3 percent.
And finally, fossil fuels are causing what many prominent commentators—presidents, prime ministers, and secretary-generals—have called this century’s greatest problem: climate change. Nearly 70 percent of global carbon dioxide emissions comes from the burning of fossil fuels. With energy use expected to double over the next two decades, it is clear we will run into an environmental, economic, and social crisis of unknown proportions if we continue to develop based on the current unsustainable energy system. In response, many, such as German Chancellor Angela Merkel, believe “renewable energy should become the central pillar of our future energy supply.”
Just as breakthroughs in the harnessing of coal power fueled the Industrial Revolution of the 18th century, the development of new technologies powered by renewable resources is contributing to a modern energy paradigm shift. Renewable energy technologies offer the opportunity to power the societies of today without jeopardizing those of the future.
Falling cost is just one of many factors that should position these technologies to play an even greater role in current and future development. The high upfront costs that have long slowed renewable deployment are quickly becoming a thing of the past. Solar photovoltaic prices, for example, are predicted to further decrease by up to 40 percent by 2015 for typical commercial systems, resulting in $1 per watt systems being distributed widely by 2020, making solar PV cost competitive with energy sources such as nuclear and coal.
Renewable energy should become the central pillar of our future energy supply.—Angela Merkel
Sustainable energy is a driver not only of economic growth but also of social development. The UN General Assembly has stated that “access to modern affordable energy services in developing countries … would help to reduce poverty and to improve the conditions and standard of living for the majority of the world’s population.”
With these guiding principles, the UN Secretary-General’s Sustainable Energy for All Initiative (SE4ALL) has highlighted 2012 as the International Year of Sustainable Energy for All, and will promote the development and deployment of renewable energy technologies as one of the key focus areas of the upcomingRio+20 UN Conference on Sustainable Development.
Traditional fuels leave 1.3 billion people worldwide without access to electricity (with an additional 1 billion people having unreliable access) and 3 billion people dependent on biomass to meet their energy needs. To solve these challenges the Secretary-General’s SE4ALL group has committed itself to achieving three significant goals by 2030:
- Ensuring universal access to modern energy services;
- Reducing global energy intensity by 40 percent;
- Increasing the share of renewables in global energy use to 30 percent.
With the international community’s goals for renewable energy deployment being matched by falling technology prices, the world appears to be on the precipice of a systemic shift toward a sustainable future.
Creating a Critical Metric: The Renewable Development Index
The Worldwatch Institute, in partnership with the International Renewable Energy Agency (IRENA), is taking a leading role in facilitating this shift through the creation of the Renewable Development Index.
Countries worldwide are recognizing the significant role that renewable energy can play in their national development. As of early 2011, nearly 100 countrieshad set targets for wind, solar, biomass, and other renewable energy sources. Governments aim to utilize these technologies to meet a host of development priorities, including reducing carbon emissions, expanding energy access, enhancing energy security, and creating new jobs and industry opportunities. At both the national and sub-national levels, they are using a variety of policies and measures to support centralized and decentralized renewable energy installations and to work toward achieving wider national development goals.
Despite the many forces working in favor of renewables, growth within the sector remains constrained. Although renewable energy technologies accounted for roughly half of the newly installed power generation capacity during 2010, they were responsible for only 16 percent of global final energy consumption and close to 20 percent of electricity generation that year. Government support policies, adopted by 118 countries as of early 2011, continue to be one of the most significant forces driving renewable energy deployment.
As of early 2011, nearly 100 countries had set targets for wind, solar, biomass, and other renewable energy sources.
To more efficiently harness the potential of renewables to meet national goals, decision makers must have a better understanding of the effectiveness of support policies in overcoming existing barriers. Countries continue to face challenges in the renewables sector, including gaining public acceptance and buy-in, mobilizing financing, attracting investment, building local capacity, and facilitating collaboration between the public and private sectors.
Worldwatch is partnering with IRENA to help governments develop policies aimed at best utilizing their renewable energy potential as a way to meet national growth and development goals. As a first step, the project seeks to identify barriers constraining renewable energy deployment. It will then developstrategies that can help policymakers overcome those hurdles. Finally, the project aims to develop a set of renewable energy indicators, with the goal of helping countries assess the effectiveness and efficiency of renewable support programs. Because there is no one-size-fits-all policy for promoting renewable energy, fully inclusive indicators can help to inform the policy community in a more objective manner.
In the development arena, well-designed high-level indicators, such as the United Nations Development Programme’s Human Development Index (HDI), have been influential in shifting the discourse away from one based solely on domestic economic growth, providing the basis for a deeper understanding of national progress toward overarching development goals. The Renewables Development Index aims to achieve a similar goal in the energy arena, steering the discourse away from conventional fossil fuel energy usage and toward cost-effective and more environmentally sound approaches to meeting global energy needs.
Worldwatch has actively engaged key actors from leading institutions in the international energy community on this initiative. Through a series of interviews, meetings, and workshops, the Institute’s Climate & Energy team will facilitate the development of this new and influential tool.
When completed, the analysis based on this small and concise set of renewable energy indicators will provide governments with a powerful new instrument to better inform domestic policymaking, implementation, and monitoring processes. The indicators can be used for guiding investment, refining policy choices, optimizing the impact of limited financial resources, and understanding the outcome of policy results supporting renewable energy development.
This Renewables Development Index will fill an important void in the landscape of sustainability indicators and will help countries in their important transition to a sustainable energy future.
Evan Musolino is a Climate and Energy Research Associate at the Worldwatch Institute, an international environmental research organization. Alexander Ochs is Director of the Climate and Energy Program at Worldwatch.
© 2012 Worldwatch Institute. Republished with kind permission.