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The future of energy
– by Henrike Koschel, Ulf Moslener
© Silke Reents/VISUM/Lineair
An offshore Chinese windmill: thanks to investments in the People’s Republic, the developing world overtook the rich nations in terms of investing in renewable energies in 2010
According to the Renewables 2011 Global Status Report (REN21 2011), the slowdown in global economic growth has had little impact on renewable energies. In 2010, renewables delivered around 16 % of the final energy consumed on the planet. They also accounted for about half of the new power generating capacity created worldwide. The sharpest growth was seen in wind, hydro and solar power. REN21 identifies multilateral and bilateral development banks in the public sector as major catalysts for the growth of renewables.
With a global investment volume of around $ 211 billion in 2010 – about a third more than in 2009 – renewables can no longer be considered a niche market. This fact is stressed in “Global trends in renewable energy investment 2011”, a report that was jointly prepared by the United Nations Environment Programme (UNEP), Bloomberg New Energy Finance and the Frankfurt School of Finance and Management. The authors observe that the need for energy is growing fast, especially in Asia. In 2010, massive Chinese investments in wind power reversed a global trend. For the first time, the developing and emerging economies spent more on utility-scale renewable energy than the rich nations did.
Policymakers play the crucial rule. At the beginning of 2011, REN21 found that 118 countries had defined targets or other governmental policies to expand renewable energy capacities. The most common programmes are feed-in tariffs for contributing electricity from renewable power generation to national grids. In remote areas, however, the focus is on other issues, especially access to energy. In these regions, the distributed nature of renewable power generation is most welcome.
The International Energy Agency (IEA) recently published a report called “G-20 clean energy, and energy efficiency deployment and policy progress” (IEA 2011a), which similarly notes the enormous dynamism in the renewables sector. As evidence, the IEA points to high annual growth rates for wind power (on average 27 %) and photovoltaics (56 %) since 2005. What is more, the report identifies a promising new trend towards public tenders in Mexico, Brazil, Argentina and South Africa, for instance.
However, a report published by the Inter-Governmental Panel on Climate Change (IPCC 2011) puts the performance figures into a sobering perspective. It is true that around 13 % of global primary energy consumption (and nearly 20 % of electricity supply) comes from renewable sources, but around ten percentage points are thanks to the traditional use of biomass fuels for cooking and heating in developing countries. Hydropower accounts for merely two percentage points, and the other up-to-date renewable technologies (wind, geothermal, photovoltaic, solar heating etc.) still provide far less than one per cent of the primary energy consumed in the world, according to the IPCC.
The IEA sees progress hampered not just by costs; institutional barriers and lack of experience of the new technologies matter too. At the same time, the IEA notes that up-to-date renewable approaches deliver benefits beyond mere energy supply. They have positive impacts on health, for instance, and thus contribute substantially to sustainable development.
2011 saw the publication of lots of scenarios for the possible future of the global energy system. The IPCC report compares more than 160 such scenarios, reaching the optimistic conclusion that there will be considerably more use of renewables all over the world in future and indicating a substantial growth potential for respective technologies.
The IEA World Energy Outlook (2011b) assesses three scenarios that are based on different energy and climate policy assumptions, and considers their consequences
– The Current Policies Scenario assumes that no new policies will be added to those in place in mid-2011. Renewable energies (including biomass and hydro power) would then meet around 14 % of global primary energy demand in 2035 and account for 23 % of power generation. In the long run, global mean temperatures would rise by at least six degrees Celsius.
– The New Policies Scenario, which is the IEA’s most important one, supposes that countries broadly implement their energy and climate policy commitments. That would not be enough to achieve the two degrees target, however, in view of vigorous economic growth in important emerging markets, in particular China and India. This scenario shows global energy demand growing by 40 % by 2035 and carbon emissions rising around 20 % above the 2010 level, and the global mean temperature would rise by 3.5° Celsius or more in the long run. Renewable energies would meet 18 % of global primary energy consumption but less than a quarter of that would be generated by wind, solar and geothermal facilities. The share of renewable energies in primary energy consumption would vary from region to region, amounting to 23 % in the EU, 20 % in India, 16 % in the United States and 13 % in China. In 2035, renewable energies would account for 31 % of power generation and 60 % of the $ 17 trillion invested in the power sector – including grids – by that time. In Asia alone, $ 7 trillion would be spent on power generation.
– The more ambitious 450 Scenario shows that all countries that belong to the Organisation for Economic Co-operation and Development (OECD), the club of advanced nations, and even some countries that are not OECD members must introduce carbon pricing of $ 90 to $ 120 per ton of carbon dioxide and subsidies for renewable energies if the two degrees target is to be met. In this scenario, the share of renewable energies in global primary energy consumption would reach 27 % in 2035 and the share in power generation would rise to 47 %.
Since investment costs are still high, growth is generally limited more by economic considerations than by technological constraints. Nevertheless, more than half of the scenarios published in the IPCC report see a realistic chance of renewable energies accounting for more than 27 % of global primary energy supply in 2050.
One particularly optimistic scenario was published by the World Wide Fund for Nature in collaboration with the consulting firm Ecofys and the Office for Metropolitan Architecture, a private sector company. “The energy report – 100 % renewable energy by 2050” (WWF, Ecofys and OMA 2011) seeks to demonstrate that the world can almost completely switch to renewable sources by 2050.
The scenario basically shows global energy demand rising for some time, but then dropping back below its 2010 level by 2050 thanks to higher energy efficiency. Buildings and transport would be increasingly electrified and the power required, which would account for nearly 50 % of global final energy consumption by 2050, would be generated entirely with renewables. From 2050 on, industry would only need small amounts of fossil fuels. Biomass and solar energy would contribute the lion’s share to global power generation – accounting for 40 % and 31 % of output respectively – followed by wind power with 12 %. Hydro and geothermal power would both deliver six per cent. In the Ecofys scenario, the cost of investing in renewable energies – minus the fuel costs saved – would rise to nearly two per cent of global GDP in 2025, but then fall in the years to 2040, when the energy costs saved would outweigh the annual investment costs.