Renewable energy: Our fundamental choice today

The future of renewable energies is a fundamental choice, not a foregone conclusion of technological and economic trends.

© World Future Energy Summit

This is one of the key messages of the Global Futures Report that REN21 launched in Abu Dhabi at the World Future Energy Summit. But the key question remains: Are we managing to make the right choice in time?

Along with 30,000 energy experts, the World Future Council and I start 2013 in Abu Dhabi at the first Abu Dhabi Sustainability Week. While I am discussing the future of our energy system with representatives from governments, regulators, the private sector, international organisations and civil society, daily news remind and warn me of the huge challenges we are facing. According to NASA scientists, 2012 was the ninth warmest year in the world since 1880, continuing a long-term trend of rising global temperatures. This once again confirms that the world is in serious trouble heading towards a dangerous six degrees of global warming. Meanwhile, the UAE’s Minister of Oil Mohammad Al Hamli announces that the country is planning to increase oil production capacity to 3 million bpd in 2013 from the current 2.8 million bpd (Dow Jones Newswires). Even though the UAE’s leaders are praised for their efforts in sustainability, it seems like they are not seeing the fundamental choice needed.

In fact, countries are still proceeding with business as usual simply for political interest. Fatih Birol, Chief Economist and Director of Global Energy Economics at the International Energy Agency, is also in Abu Dhabi to present findings of the World Energy Outlook 2012, showing that subsidies for fossil fuels jumped by about 30% to US $523 billion in 2011. By contrast, renewable energies received US $88 billion in subsidies – a mere one-sixth of the amount given to the already highly profitable fossil fuels sector. And data from financial institutions like Ernst & Young indicate that renewable energy investments is likely to be lower in 2012 than in previous years, a situation that has not arisen for at least eight years. So, at the end of the Abu Dhabi Sustainability Week, I have doubts on whether we will actually manage to make the right choice in time.

The energy transition is not a lifestyle choice but rather an essential way to combat climate change and save our planet. Timely action can avoid a lock-in of non-renewable options and create a longer term competitive advantage. We need political commitment to 100% renewable energies for new investments precisely at this point in time because the long lead time between capital stock build-up and its impact on the energy system means that energy decisions made today will largely determine the energy mix in 2030.

The International Renewable Energy Agency (IRENA) urges its member states at this year’s annual assembly to implement policy frameworks for a faster use of renewable energies. There is a wide recognition that policies have underpinned renewable energy development over the past decades and “that the need for policies will continue well into the future” (Global Futures Report 2013). But what exactly does the right political framework for a better future look like? What kind of government support is needed to redirect investments into renewable energies? As renewable technologies become more cost-competitive and in most cases are already providing cheaper solutions than fossil fuel based systems today, the importance for government subsidies to bridge the increasingly narrow cost gap has decreased. Debates at the World Future Energy Summit instead show that the key challenge is integration. Indeed, the future of renewable energies depends on new business models, which governments have to support by de-risking innovation and future-just investments.

Renewable energy still needs political support in the form of different market regulations: increased grid access, modernised power market design and, to some extent, a different infrastructure. Feed-in tariffs (FITs) are still the basis for the energy transition as they provide long term security.

But political support only follows the political will. High-level renewable energy conferences, like the one that took place in Abu Dhabi, can help to build momentum for good policies and leadership. Knowledge exchange, policy dialogues and platforms for policy learning is absolutely vital.

However, this does not mean that it is only up to experts and policy makers. Christiana Figueres, head of the UN Framework Convention on Climate Change (UNFCCC) put it this way in Abu Dhabi: the challenge in designing the energy mix of the future is not taking the right direction but rather the scale and speed. “While policy certainty is still evolving, the power for change is here at the World Future Energy Summit. But how do you optimise this power? […] Renewable energy is the choice of everyone. When you go home I want you to ask yourself everyday: Is this the best I can do? If the answer is no, you should do more!”

This is why renewable energy is a fundamental choice and not a foregone conclusion of technological and economic trends.

Friday, January 18th, 2013