There's Hope Yet for Renewable Energy

July 12, 2007 by Linda Li

After the celebrated release of Al Gore's "An Inconvenient Truth" last year, climate change experts, business leaders, and government officials alike held high hopes for progress to be made in 2007. This global warming thing is real after all, and the world's energy demand is accelerating, not abating it. Aside from Gore's entertaining lesson on climate change, the International Energy Agency's 2006 World Energy Outlook as well as Sir Nicholas Stern's Review on the Economics of Climate Change, among other publications, expressed serious concerns over the security of energy supply and environmental deterioration. As fellow HIR editor Killian Clarke accurately predicted in his February post, the entire world is indeed taking this issue seriously now, putting environmental policies at the top of political agendas. So what have countries around the world accomplished thus far?

Formulating updated and effective policies has been an important first step. Australia recognized the need for privatization and reform in the electricity market years before the global attention on energy efficiency. The establishment of the National Electricity Market (NEM) in 1991 heralded a competitive market for the supply and purchase of electricity. Almost a decade after the implementation of NEM in 1998, benefits of the reform can be clearly seen in the lower prices, increased labor and operational efficiency in the entire industry, and a dramatic rise in private investment in renewable energy sources.

Brazil's PROINFA program (Program to Foster Alternative Sources of Electric Power), implemented in 2003, called for the construction of 3,300 megawatts of capacity in renewable sources (wind, small hydropower, and biomass) by 2006. This policy was designed to provide incentives for private energy suppliers to invest in wind, small hydropower, and biomass technologies. While the goal for PROINFA 1 has yet to be realized–its deadline was extended to 2008–PROINFA 2 aims to ensure that the renewable energy sources mentioned above would supply 10 percent of Brazil's annual consumption in 20 years.

Having recently overtaken the United States as the world's leading emitter of greenhouse gases, China is pressured and pulled in multiple directions to fight pollution and environmental degradation while promoting development. Its Renewable Energy Law, issued within the government's Eleventh Five-Year Plan in 2006, set an ambitious target to double the use of renewable energy sources to 16 percent of total consumption by 2020. In close cooperation with multilateral organizations and adhering closely to the Montreal Protocol and the Stockholm Convention, China is learning quickly from its partners about alternative technologies. The government's bet on renewable sources, however, does not equate to a significant decrease on energy consumption. As the state invests billions of dollars (almost 20 percent of the global share) on renewables, energy efficiency is improving too slowly (i.e. energy consumption continues to rise) to meet the mid-term targets of the policy.

Developing countries all share the struggle to improve energy efficiency. For a country such as Brazil, which already has a solid foundation for the renewable energy industry, the struggle is one to initiate healthy competition among private businesses as Australia has done. For heavily coal-dependent countries such as China and India, sustainable development requires sufficient state funds to push industries away from cheap sources of energy and proactive state development of technological improvements. The financial and infrastructural assistance of international institutions and the developed world would obviously be welcome. Efficient and renewable energy consumption is, and will continue to grow as, the primary factor in the amelioration of global warming and environmental deterioration.