Salzburg Renewable Energy

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Clean and affordable energy for development
Salzburg Renewable Energy Summer
School Giulio Volpi, WWF International gvolpi_at_wwf
epo.org www.panda.org/climate
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Content
1. Provide energy to developing countries without
destroying the climate2. The role of
renewables3. Barriers to renewables4.
Emerging policies to support renewables5.
Conclusions what needs to be done
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WWFWorldwide Fund for Nature

• Scope
• Largest independent member-based conservation
  organization in the world, 5 million supporters
• Conservation of biological diversity worldwide
• Over 35 years old with 10 years of climate and
  energy experience
• Reach
• Presence in 100 countries
• Web site reaches 3 million people per month
• Worlds most recognized conservation logo - the
  panda!

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WWFMission and Action
WWFs mission is to stop the degradation of the
planets natural environment and to build a
future in which humans can live in harmony with
nature, by - conserving the worlds biological
diversity - ensuring that the use of renewable
resources is sustainable - promoting the
reduction of pollution and wasteful consumption

• Historical nature conservation action
• wildlife species
• freshwaters
• forests
• seas and fisheries

• Consumption-based action on
• climate change
• toxic
• trade and investment

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WWFClimate Change Programme

• Climate change programme
• 40 staff in 4 continents working on climate
  impacts, causes and solution (including private
  sector initiatives)
• Increase awareness of climate change and ways to
  address it
• Assess the environmental and economic impacts of
  proposed climate mitigation measures
• Propose and advocate energy efficient
  technologies and policies
• Encourage the supply of renewable forms of energy
• Propose policies and measures - national and
  international levels
• Develop innovative solutions with businesses

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1. The challenge
Provide energy services without additional local
and global pollution
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Definitions

• Basic energy services access to power for
  lighting, refrigeration, telephone, radio and TV
• Renewable energies biomass, green hydropower,
  wind, solar PV and thermal, geothermal, wave
  power
• Traditional biomass wood-fuel, agriculture
  residues, animal waste, characol, etc.
• Energy markets
• On grid (with access to the power grid - urban
  areas)
• Off-grid (without access to the power grid -
  peri-urban and rural areas)

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Energy and Human Development
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Energy is priority for development, but...
UNDPs 1997 Poverty has received scant
attention from an energy perspective. This is
remarkable given that energy is central to the
satisfaction of basic nutrition and health needs,
and that energy services constitute a sizeable
share of total household expenditure in
developing countries. Commission on Sustainable
Development (CSD) 2001 To implement the goal
accepted by the international community to halve
the proportion of people living on less than US1
per day by 2015, access to affordable energy
services is a prerequisite.
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22 billion energy poors

• 2000 2 Billion energy poors, mostly in the
  South, and in rural areas
• Roughly the same as in the 70s, as population
  growth in the last 30 years has offset energy
  access for a billion people (mainly in China)
• 2.4 billion people use biomass - largely
  unsustainably, mainly for firewood for cooking
• Largest rural challenge is household cooking and
  electricity supply

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22 billion energy poors

• By 2020, 2 additional billion energy poors,
• mostly in the South, and in cities
• Developing countries will account for 75 of
  energy growth (largely in Asia)
• Biggest growth of energy demand in the South is
  in industry/power sector
• Energy inequalities per capita power consumption
  varying within South, in Africa it will stagnate
• Competion for energy between sectors industry in
  Asia consumes almost 2/3 of energy with a growth
  of 6 p.a.

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Current trends will increase global climate
pollution...

• ? Energy demand is going to double in the South
• According to IPCC, coal in the power sector is
  expected to grow from 65 EJ now to 106 EJ by 2020
  (CO2 from coal are half of current global
  emissions)
• Natural gas in power sector to grow from 30 to 60
  EJ, adding another 1 billion tone CO2
• Continuing this trend will increase local and
  global climate pollution, with disastrous effects
  on developing countries

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and increase poverty!
? Corals, forests and islands in the developing
world face already today first impacts of climate
change ? Global harvests may increase, in the
developing world not ? Global water balances may
not change, in the developing world they do ?
Global GDP losses may be low - not the case for
Small Island States ? Atmospheric CO2
concentrations are the highest since 420,000
years ? In order to avoid dangerous climate
change, emissions must drop by 50 globally in
the next decades
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2. The solution
Developing renewable energies and energy
efficiency technologies
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Renewable energy still small
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Renewable power even smaller
RES electricity capacity in developing countries
(MW, 2000)
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Benefits of renewables
Benefits of renewables

• Indigenous energy source reducing reliance on
  imported energy, especially oil and gas. A 5
  barell upward cost would increase energy bill by
  90 billion/year, higher than present and future
  ODA
• Renewables often are the only cost-effective
  option for off-grid applications
• Decentralised supply possible- small scale and
  lower operation and maintenance costs
• No air pollution and greenhouse gases emissions
• But limitations regarding costs, base load,
  storage, upfront costs

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Development basic needs and RES

• DEVELOPMENT NEEDS Wh/day
  kWh/yr
• WATER electric pump providing 5 liters
  day/capita 5 2
• LIGHTING 5 hours _at_ 20W per day/household
  20 7
• MUSIC 5 hours _at_ 5W per day/household
  5 2
• HEALTH 2.5 kWh per day (lighting and
  refrigeration X100) 5 2
• EDUCATION 2.5 kWh per day (lighting/heating/comp.
  X100) 5 2
• PRODUCTION 5 kWh per day (equipment X 10)
  100 36
• Total 140
• SOLAR PANEL 40-50 W

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Example PV solar for residential use
Battery
PV panel
Converter
Minigrid system
Solar home system
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Energy efficiency improvements
COOKING STOVES

• More than 2 billion people use biomass for
  cooking, through a traditional three-stones stove
• Severe health and productive impacts indoor
  pollution (1 million death/year), women power
  wasted (3 hours/day), deforestation (in some
  areas)
• 60 of population could switch to more efficient
  cooking stoves (more than 1 billion)
• Costs varies between 1 (Africa) and 10 (China)
• Improved biomass cook stoves for 200 million
  people is feasible from a cultural, financial,
  and logistical (G8 Renewable Energy Task Force)

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Renewables and productive uses

• General cathegories
• Agriculture water pumping, drip irrigation, crop
  drying
• Health drinking water, vaccine refrigeration,
  health centres
• Education distance education, school lighting,
  computed training
• Commercial services telephony, commercial
  communication, fax
• Small industry craft tools, retail lighting,
  sewing, grinding, freezing

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PV solar for productive use
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Renewable energy installations (2000)

• Rural residential and community lighting, TV,
  radio, and telephony
• Over 50 million households served by small-hydro
  village scale mini-grids, and 10 million lighting
  from biogas
• 1 million households have solar PV home systems
  or solar lathers
• 10,000 households served by solar/wind/diesel
  hybrid mini-grids
• Rural small industry, agriculture, and other
  productive uses
• Up to 1 million water pumps driven by wind
  turbines and over 25,000 water pumps powered by
  solar PV
• Up to 60,000 small enterprises powered by
  small-hydro village-scale mini grids
• Thousands of communities receive drinking water
  from solar PV-powered purifiers/pumps
• Grid-based bulk power
• 48,000 MW installed capacity producing 130,000
  GWh/year (mostly small hydro and biomass, with
  some geothermal and wind)
• Residential/commercial cooking and hot water
• 220 million more-efficient biomass stoves
• 10 million households with solar hot water
  systems
• 800,000 solar cookers

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What about the costs?
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Global costs setting
G8 Renewable Energy Task Force (2001) The
successful promotion of renewables over the next
30 years will prove less expensive than a
"business as usual approach" to the global energy
supply
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3. Why is this not happening?
Barriers to renewables
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Barriers to renewable energy

• To secure greater market penetration, renewables
  must overcome the following barriers
• Costs not yet competitive with conventional
  energies
• Inconsistent energy liberalisation
• Wrong economic incentives for renewables
• Lack of international finance to address high up
  front costs of renewables and difficulties in
  capital mobilisation
• Lack of technology transfer

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Costs learning curve

• Wind - 60 of worlds wind turbines are located
  in G8 countries
• Solar - US, Japan and Germany drive the demand
  for solar panels

Need for action in G8/OECD countries
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Energy liberalisation risks and opportunities
1. Competitive supply markets positive
renewables appears only after IPP framework
exist negative lower prices and shorter-term
power contracts 2. Unbundling of generation,
transmission and distribution positive greater
consumers incentives to self generate negative
transmission pricing penalties for intermittent
RES 3. Privatisation and/commercialisation of
utilities positive more commercial financing
available for renewables negative private
utilities focus on cost, less on public benefits
(environmental and social services)
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CASE STUDY 1 WIND POWER IN INDIA

• Positive investment tax policy resulted in more
  than 1000 MW of wind power installed
• Dozen of domestic wind turbine manufactures
  emerged, many joint ventures with foreign firms
• Awareness raising activities among investors and
  banks of viability of wind power technology
  (financing is now offered)
• Political priority national target of installing
  10,000 MW by 2010 (10 of new power capacity)
• However.

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CASE STUDY 2 SMALL HYDRO IN SRI LANKA

• Established a private independent power producers
  and non-negotiable transparent power tariffs
• Tariffs were set at 5 cents/kWh in 1997-98 and
  industry flourished 25MW installed with
  international financing
• But tariffs were based on short-run avoided
  costs, so with decline in oil prices in 1998-99,
  tariffs went to 3.5 cents/kWh in 1999 and
  installations stopped (and industry confidence
  collapsed)
• Power purchase tariffs lack capacity credits,
  only provide for energy production, so small
  hydro is unfairly penalised

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Wrong economic incentives
Subsidies range from "direct" subsidies, that is
government spending (eg tax reductions and
research and development funding) to "hidden"
subsidies (eg favourable tax rates for oil and
gas exploration). Hidden subsidies are
represented by pollution costs and historical
support. While some governments are starting to
reduce selected fossil fuel or nuclear subsidy
programmes, there is still a significant bias
against renewable and efficient energy
technologies.
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Massive subsidies to bad energy
Renewables
Fossil Fuels
G8 Subsidies
EU (year)
90 billion
4 billion
US (1948-1998)
125 billion
5 billion
World (year)
250 -300 Billions
Over 1996-2000, China reduced subsidies to its
coal industries, which resulted in carbon dioxide
emission cuts by 7.3, while its GPD increase by
39.
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Lack of international finance for RES
Global, total investment but power,
manufacturing industry and transport are major
recipients
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Export Credit Agencies (ECAs)

• Export credit agencies (ECAs) are official
  government agencies that provide assistance in
  supporting or facilitating domestic exports.
• During the 1990s, ECAs provided an average of US
  100 billion per annum in loans and guarantees.
  That amount represents roughly twice the level of
  official development assistance during the same
  period (US 50 billion), and over 30 of all long
  term finance received by developing countries.
• Defaults on ECA-financed projects account for the
  approximately half of all developing country
  official debt.

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ECAs fuelling climate pollution
G8 country ECAs from 1994-1999 supported over
115 billion in fossil fuel intensive projects in
developing countries. The U.S. export credit
agencies for instance, underwrote 23.2 billion
in fossil fuels and these projects over their
lifetimes will release 29.3 billion tons of
carbon dioxide a figure greater than global
emissions for 1996. Japanese and German ECA's
surpass those figures in dollar amounts. There
are currently 25 nuclear reactors under
construction throughout the world. Of these, 14
are financially backed by an ECA from the G8.
Globally ECA support for renewable energy is
negligible comparing with perverse subsidies for
fossil fuels and nuclear projects.
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Official Development Assistance

• Energy has not played a large role in ODA since
  1990, only 5 of total European Comm ODA went to
  energy
• The share of renewable ODA has been fluctuating
  over the years and his still largely supporting
  conventional fuels

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ODA UK example

• Despite positive statements on the export of
  clean energy technologies, the UK Development
  Assistances support of energy projects tells a
  different story
• Of the 119.75 Millions pounds that was approved
  in bilateral commitments for energy, only 90,000
  went to renewable energies
• That means that only 0.07 of total UK ODA
  financing for energy goes to renewable energies
• This is much lower than the RES contribution to
  world energy supply(2)

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4. Drivers for renewables development
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The Kyoto Protocol

• The Kyoto Protocol has created the two
  project-based flexible mechanisms - the Clean
  Development Mechanism, and Joint Implementation
  with the aim to
• promote more clean investments in economies in
  transition (JI) and developing countries (CDM) ,
  and
• allow industrialised country firms to take
  advantage of low cost opportunities overseas

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CDM the Clean Development Mechanism

• The CDM allows industrialised countries (Annex 1
  Parties) and their companies to use credits from
  greenhouse gas emission reduction projects in
  Developing Countries to meet their commitments
  under the Protocol.
• These projects must be
• additional to existing planned investments, and
• contribute to sustainable development in the host
  country.

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The CDM Market
The market for carbon-reduction credits has
begun to take off over the last two years. In
2001, approximately 50-80 million tonnes of
carbon dioxide equivalent were traded, despite
their being no guarantee of the eligibility of
the allowances for Kyoto compliance. Prices
ranged from US3 to US10/tonne of
CO2. Projections of the eventual value of the
market vary widely and are subject to uncertainty
but reasonable estimates range from US500
million to US12 billion a year by 2012.
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Small projects rules

• The Marrakech accords include simplified rules
  for small projects
• Renewable energy projects up to 15 MW or
  equivalent
• Whats meant by equivalent
• What will the impact be?
• Energy efficiency up to 15 GWh/yr
• Reductions from sources that emit lt15Kt CO2/yr.
• Likely to promote gas generation volume depends
  on baseline comparison

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Risks of CDM

• Given the little to guarantee environmental
  effectiveness, there is a significant risk that
  the offset projects will
• Result in the market being swamped by
  non-additional projects, generating little new
  investment and low prices.
• Cause environmental and social damages to host
  country communities.
• Promote the continued dependence on
  unsustainable energy sources and technologies and
  do little to enhance the market for renewables
  and other long-term climate solutions.

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The WWF carbon label
In spite of this uncertainty, the widespread
introduction of climate change policies and the
emergence of a positive price for carbon means
firms have to plan their emission reduction
investments now and face a growing need for risk
management alternatives. Quality assurance - of
the credibility of projects, their environmental
effectiveness and likely compliance with
regulations is thus becoming increasingly
important. This is the aim of the international
carbon label programme being developed by WWF.
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The G8 Renewables energy task force

• Established at the July 2000 G8 Summit in
  Okinawa
• Mission to identify actions that can be taken
  to give a major boost to renewable energy in
  developing countries
• Composed of high level industry and governmental
  manager (co-chairmen former Shell CEO Sir Mark
  Moody Stuart, Mr Clini Director General of
  Italian Env Ministry, and BP, France, UK,
  Germany, WB etc.).
• Good report sinked by US and Canada opposition
  at Genova G8 Summit

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The G8 Renewables energy task force

• Good report sinked by US and Canada opposition
  at Genova G8 Summit

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The G8 task force legacy

• Barriers to massive uptake of renewable are
  only financial and political - not technological.
  Costs will be cut by expanding markets.
• RES projects should be developed "when they
  achieve protection of local and/or global
  environment at a reasonable cost.
• Remove supports for environmentally harmful
  energy technologies.
• Implement common environmental guidelines among
  the G8 Export Credit Agencies (ECAs) including
  minimum standards of energy-efficiency or carbon
  intensity for ECA-financed projects.
• Global corporations, which are large consumers of
  energy, should commit to procure and use
  renewable energy.

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The World Summit on Sustainable Development

• Focus on Poverty Eradication, but energy is high
  on the political agenda (together with water) and
  was a blocking issue in preparatory meetings
• US and allies oppose any action, EU rhetoric for
  renewables not backed by leadership and vision,
  G77 China hostage of OPEC countries interests.
• NGOs are running a campaign for a global new
  renewable energy target

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WWF vision for WSSD

• Initiate a 10 year action programme to provide
  energy from clean and affordable sources to the 2
  billion people without access to energy, and to
  improve energy services through energy efficiency
  and other measures to those with inadequate
  energy services
• Set a target to increase the share of new
  renewables globally to 10 by 2010, and to
  improve energy efficiency in OECD countries by at
  least 2/yr..

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And Action Plan for Renewables

• Double government ODA-budgets for sustainable
  energy services, including GEF replenishment by
  2003.
• Target 20 of OECD country energy sector lending
  and export credit guarantees to renewable energy
  development and energy efficiency programmes
• Phase out of subsidies to conventional energy
  sources by 2012 with reviews of progress in 2006

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Conclusions

• Energy is key for development goals
• Renewable energies can deliver energy needs where
  conventional energy fails, at a global lower cost
• The Kyoto Protocol and the G8 RES task force have
  driven political momentum for renewables, but oil
  and nuclear lobbies work against it
• Will the World Summit on Sustainable Development
  deliver a global action plan for renewable
  energies ???