IN DEPTH: UN sets green targets
The idea that renewable energy can one day save the world has always felt an odd mixture of blessing and burden to many in the industry — a distraction, if nothing else, from the hard work of carving out a profitable patch in the world energy mix.
But with last month’s recent launch of the UN’s Decade of Sustainable Energy for All (SE4A) initiative, running from 2014-24, there is no longer any escaping it: renewable energy has been thrust unequivocally to the centre of the global development agenda, with all the attendant benefits and baggage.
The SE4A scheme comes with three formal targets, all with a 2030 deadline: access to modern energy services for all of humanity; a doubling in the uptake of energy-efficiency measures; and a doubling of the share of renewables in the global energy mix, from about 18% at present.
Few people in the renewables business would argue with such goals — and least of all the last one. Nevertheless, scepticism about their impact is understandable.
For starters, there is the UN’s decidedly mixed track record with such initiatives. Of the 21 specific targets baked into the UN’s Millennium Development Goals — set in place for the 2000-15 period — just a handful have been achieved unambiguously.
Then there is the unseemly fact that some of the SE4A initiative’s corporate backers, such as Bank of America, also happen to be big investors in coal.
Yet there are good reasons to take the SE4A targets seriously, and perhaps especially the one for renewables.
If nothing else, the targets represent an important symbolic shift. The formal championing of renewables over other energy sources within the UN is a relatively new thing.
Indeed, one common criticism of the Millennium Development Goals was the lack of emphasis placed on sustainable development. It was only last year that the World Bank — part of the UN system — stopped funding coal plants, which until then were deemed useful to economic development in many poor countries.
The shift speaks to the growing appreciation among policymakers that renewables are a viable solution to many of the world’s energy problems. “There is now a real sense of possibility in the public sector and in the private sector that this is doable,” Adnan Amin, director-general of the International Renewable Energy Agency (Irena), tells Recharge.
Then there is the fact that installing wind turbines and solar panels in poor countries — once the province of charity groups — is an increasingly profitable pursuit.
Vestas, the world’s largest maker of wind turbines, launched its Wind for Prosperity business model last year, and is now selling refurbished turbines to communities in developing countries, starting with Kenya and Jordan.
“When you start proving that you can take these high-tech technologies to the most remote areas on the planet... and you’re getting 10-12% risk-adjusted returns, there’s really no excuse for just talking and not doing,” says Vestas senior vice-president Morten Albæk.
In other cases, it is local companies making waves. Take Econet, a South Africa-based telecommunications firm, which several years ago began installing PV systems for poor customers and charging them about $0.25 per day for electricity — less than what they had previously been paying — in something like a micro-PPA (power-purchase agreement) model.
Econet didn’t diversify into PV for charitable reasons; it did so because consumers with electricity are more likely to buy mobile phones, explains Luc Tanoh, head of Econet’s fast-growing renewables arm. The company intends to install 125,000 PV systems across Africa this year.
José Entrecanales, chairman of Spanish wind-turbine maker Acciona, and a veteran of the telecoms industry, believes renewables will “leapfrog” past the modern fossil-fuels sector in many developing countries, as has happened with mobile phones. “They’ll go straight onto Energy 3.0, without needing to go through Energy 2.0,” he says.
Importantly, the UN seems to fully grasp that only the private sector can deliver these renewables targets — no amount of initiatives and press conferences can do so.
“My organisation cannot be in the business of philanthropic giveaway of [energy] systems to poor people,” admits Martin Krause, who heads the UN Development Programme’s climate and energy team in Eastern Europe and Central Asia.
Having spent the past 15 years trying to bring renewables to places like Pakistan and Kazakhstan, Krause says the only thing that will work is the establishment of a “profitable” renewables industry. “There will never be enough money to go around to give away wind, solar, biomass and hydro to all the poor 1.2 billion [people currently without electricity].”
Another reason for optimism is simply that the SE4A renewables target is a bit of a stretch but achievable — and measuring its progress will be fairly straightforward (not always the case for such UN goals).
One early beneficiary of the UN’s renewables embrace is Irena, which was named the renewables “hub” for the entire SE4A initiative. In that role, Irena has published what is perhaps its most important contribution to the energy debate thus far — a clear-eyed analysis of what it would take for the world to double its share of renewables to 36% within the next 15 years.
That target is perhaps even more difficult than it looks, considering that half of all renewables output today comes from the burning of wood and animal waste for heating and cooking purposes — practices the development community is keen to curb.
Irena’s analysis — known as REmap 2030 — is realistic, acknowledging the challenges and sacrifices meeting such a target would take. But it concludes that such a doubling is “possible, affordable, and will keep the world on a trajectory consistent [with its climate objectives]”.
REmap 2030 sketches out a world 15 years from now, with 1,635GW of installed wind capacity (compared to 289GW at the end of 2012), and 1,250GW of PV (up from 100GW).
Francesco Starace, chief executive of Italian energy giant Enel, is convinced, saying the chances are “high” of hitting the 2030 renewables target.
But at the end of the day, he says, the renewables revolution will not come on the back of an ideological victory, but simple “mathematics and accounting”.
“It will become a simple question of economics. And we know that when it comes down to economics, decisions are taken very, very quickly.”