As I discussed in a previous blog, renewable energy trade disputes are becoming a particularly contentious issue between many nations. The United States and China are facing off in one of the most publicized of these disagreements. Further action was taken last week as the U.S. Department of Commerce made its second ruling of the year on this issue, placing tariffs on solar photovoltaic (PV) imports from China.

A Suntech Power Holdings employee at a Chinese solar PV manufacturing facility. The Commerce Department ruling placed a 31.22% tariff on Suntech products. (source: China Daily)

The previous Department of Commerce ruling from March 2012 placed countervailing duties on solar PV imports in order to balance what the department determined to be illegal subsidies to solar PV manufacturers from the Chinese government. The initial tariff rates, which were set between 2.9 and 4.73 percent, came in much lower than what was expected by most experts.

The new preliminary ruling comes in response to the second set of claims by the Coalition for American Solar Manufacturing (CASM) that Chinese solar companies have been dumping their products in the U.S. market at below market value. The coalition, led by SolarWorld USA, looks to level the playing field for U.S. solar manufacturers against what they see as artificially cheap imports coming from China.

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Following the devastating 2010 earthquake, much of Haiti’s infrastructure, including its already limited ability to manage its municipal solid waste (MSW), was damaged or destroyed. Due largely to lack of public waste management services and sewage treatment centers, thousands of people have died and hundreds of thousands more have suffered through outbreaks of cholera. Haiti needs improved sanitation, and improving and building infrastructure to reliably collect MSW will help achieve this goal.

Improved MSW management can also increase power generation from domestic sources in Haiti, providing some relief from its dependence on imported heavy fuel oil and helping to electrify a country where 75 percent of people do not have access to the grid.

Recent studies show that there is potential for waste-to-energy in Haiti. The metropolitan Port-au-Prince area produces between 1,400 and 1,600 tons of MSW every day. Before the 2010 earthquake, as much as 40 percent of Port-au-Prince’s MSW was collected by waste management services. If the metropolitan area can return to this collection rate and use the MSW as a fuel for power generation, Port-au-Prince could fuel a 5 MW power plant. While this may seem like a marginal addition, it would contribute significantly to Haiti’s power mix considering that the country’s entire operational installed capacity is little more than 100 MW.

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As we described last week, there is a growing consensus that the time is right for a global shift to sustainable energy solutions. The Worldwatch Institute, in partnership with the International Renewable Energy Agency (IRENA), is taking a leading role in facilitating this shift through the creation of the Renewable Development Index.

Countries enacting renewable energy support policies or targets as of 2011 (source: IPCC SRREN, 2011)

Countries worldwide are recognizing the significant role that renewable energy can play in their national development. As of early 2011, nearly 100 countries had set targets for wind, solar, biomass, and other renewable energy sources. Governments aim to utilize these technologies to meet a host of development priorities, including reducing carbon emissions, expanding energy access, enhancing energy security, and creating new jobs and industry opportunities. At both the national and sub-national levels, they are using a variety of policies and measures to support centralized and decentralized renewable energy installations and to work toward achieving wider national development goals.

Despite the many forces working in favor of renewables, growth within the sector remains constrained. Although renewable energy technologies accounted for roughly half of the newly installed power generation capacity during 2010, they were responsible for only 16 percent of global final energy consumption and close to 20 percent of electricity generation that year. Government support policies, adopted by 118 countries as of early 2011, continue to be one of the most significant forces driving renewable energy deployment.

To more efficiently harness the potential of renewables to meet national goals, decision makers must have a better understanding of the effectiveness of support policies in overcoming existing barriers. Countries continue to face challenges in the renewables sector, including gaining public acceptance and buy-in, mobilizing financing, attracting investment, building local capacity, and facilitating collaboration between the public and private sectors.

Worldwatch is partnering with IRENA to help governments develop policies aimed at best utilizing their renewable energy potential as a way to meet national growth and development goals. As a first step, the project seeks to identify barriers constraining renewable energy deployment. It will then develop strategies that can help policymakers overcome those hurdles. Finally, the project aims to develop a set of renewable energy indicators, with the goal of helping countries assess the effectiveness and efficiency of renewable support programs. Because there is no one-size-fits-all policy for promoting renewable energy, fully inclusive indicators can help to inform the policy community in a more objective manner.

In the development arena, well-designed high-level indicators, such as the United Nations Development Programme’s Human Development Index (HDI), have been influential in shifting the discourse away from one based solely on domestic economic growth, providing the basis for a deeper understanding of national progress toward overarching development goals. The Renewables Development Index aims to achieve a similar goal in the energy arena, steering the discourse away from conventional fossil fuel energy usage and toward cost-effective and more environmentally sound approaches to meeting global energy needs.

Worldwatch has actively engaged key actors from leading institutions in the international energy community on this initiative. Through a series of interviews, meetings, and workshops, the Institute’s Climate & Energy team will facilitate the development of this new and influential tool.

When completed, the analysis based on this small and concise set of renewable energy indicators will provide governments with a powerful new instrument to better inform domestic policymaking, implementation, and monitoring processes. The indicators can be used for steering investments, refining policy choices, optimizing the impact of limited financial resources, and understanding the outcome of policy results supporting renewable energy development.

This Renewables Development Index will fill an important void in the landscape of sustainability indicators and will help countries in their important transition to a sustainable energy future.

Evan Musolino is a Climate and Energy Research Associate at the Worldwatch Institute, an international environmental research organization. Alexander Ochs is Director of the Climate and Energy Program at Worldwatch.

U.S. Deputy Secretary of Energy Daniel Poneman promoted international collaboration on shale gas, CCS, and nuclear. Image source: doe.gov

Last month, I attended two events on U.S. international collaboration on energy issues, both of which involved presentations and panel discussions featuring high-level representatives from government, business, academia, and non-governmental organizations. Despite some discussion of renewable energy and climate change, U.S. government and business representatives centered the discussion largely on shale gas, “clean” coal, and nuclear power.

The first event was the third U.S.-India Energy Partnership Summit, co-convened by Yale University and The Energy Resources Institute (TERI) of India. Panelists discussed experiences and opportunities for collaboration on sustainable energy initiatives, from joint research and development of technologies to promoting policies and financial mechanisms that encourage clean energy investment. The Summit was chaired by Rajendra K. Pachauri, President of TERI North America and Chairman of the Intergovernmental Panel on Climate Change (IPCC).

A forum for sustainable energy collaboration between the United States and India is especially important in the context of stagnating international climate negotiations, where the two countries have often assumed adversarial roles. Although the Summit demonstrated the promise of mutual interests, I was disappointed by the focus of several of the high-level speakers on fossil fuels and nuclear energy.

The nature of the energy partnership described by U.S. Deputy Secretary of Energy Daniel Poneman centers largely on “clean coal” technology and shale gas exploration, as well as tighter standards for nuclear energy in India. Dr. Charles Ebinger, a Senior Fellow at the Brookings Institution, reinforced this position by highlighting the central role that the coal industry plays in the Indian economy, including as a large employer. Dr. Ebinger also took a rather pessimistic view of India’s ability to expand the share of renewable energy, claiming that renewable energy could not account for more than 20 to 25 percent of the country’s energy mix by 2030 or even 2040.

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Energy is at the very foundation of modern economies. Since the Industrial Revolution more than 200 years ago, all countries—if at a quite different pace—have developed on the back of the production and burning of fossil fuels. There is no doubt that the comfortable lives many of us live today would not be possible without the fossil-fueled development of the past. But the merits of fossil fuels now seem less and less convincing.

Renewable energy technologies, such as solar PV, offer the potential to benefit countries around the world. (source: Flickr user Magharebia)

First, take subsidies. Currently, we throw about 10–12 times more taxpayer money at fossil fuels than we put into renewables—and those are just direct subsidies. In addition, local air and water pollution and related health consequences cost trillions of dollars worldwide. The U.S. National Research Council estimates the “hidden” costs of fossil fuels in the United States (the real costs to society that are not reflected in the fuels’ market prices) at $120 billion annually. The Chinese government believes pollution and related healthcare costs amount to 10 percent of that country’s GDP.

Then there is the volatility of fossil fuel markets, which has arguably led to enormous economic instability in the recent past. Just to give an idea of what this volatility means to some nations: an increase in the world oil price of just $10 can mean a decrease in the GDP of some small nations of 2–3 percent.

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The Dow Jones Sustainability Index is the only sustainability index for investors and remains the Oscar of corporate sustainability. But does it employ an effective definition of sustainability? (Photo Source: hms.harvard.edu)

In an age where environmental awareness and climate mitigation are becoming central priorities, it’s encouraging that more than a billion people from 192 countries recently celebrated Earth Day. But what are the most effective steps we can take to reach sustainability, and how can we best track our progress in getting there?

Unfortunately, metrics and best practices for achieving a sustainable planet are failing to develop concretely. So when I discovered a webinar, “Unlocking the Mysteries of the Dow Jones Sustainability Index,” discussing the methodology behind this widely accepted tool for measuring corporate sustainability, I was intrigued to learn how the for-profit world defines and ranks businesses seeking to be more sustainable.

Launched in 1999, the Dow Jones Sustainability Index (DJSI) was the first global benchmark for sustainability. I had assumed that the Index ranked companies based on such variables as their business practices, supply chains, or some other method that would assess which companies are the most environmentally and socially responsible. But instead, the main priority of the DJSI is to rank “sustainability-driven” companies based on how viable of an investment option they are, according to their long-term fiscally sustainable growth.

The DJSI is the only sustainability index for investors, and, according to the webinar, earning a DJSI ranking remains the “Oscar” of corporate sustainability. The index looks at only the largest of the 2,500 companies in the Dow Jones Global Total Stock Market Index. Last year, of the 2,763 companies that were invited to submit an application to be considered in the DJSI, 1,443 were analyzed and approximately 320 were included in the index.

(Photo Source: "Unlocking the Mysteries of DJSI" powerpoint)

On April 10, companies were sent the requisite survey to be considered for the DJSI. Each question has a predetermined score for the answer, a weight for the question, and a weight for the overarching criteria questions are placed into. When filling out the assessment, a company does not know the point value given to different questions and criteria. This allows for every question to be answered as honestly as possible, but it also makes it difficult for companies to focus their resources in specific areas that would make them more sustainable, at least in the eyes of the DJSI.

This lack of transparency prevents an accurate and effective evaluation of the assessment tool as well. For example, it is widely accepted that one of the most effective ways to reduce energy demand while also mitigating climate change is to improve energy efficiency—yet it’s not clear how the efficiency of, say, a company’s buildings or facilities, plays a role in the DJSI rankings.

One gets a sense of the index’s priorities when looking through the DJSI guidebook. The document lists the many reasons why a company may be removed from the index even after having been awarded a ranking. The first reason is poor business practices (tax fraud, money laundering, antitrust, balance sheet fraud, corruption cases, etc.) followed by human rights abuses (discrimination, forced resettlements, child labor, etc.), layoffs or workforce conflicts, and, lastly, catastrophic events, which include ecological disasters.

Examples of companies being taken off the list are BP, following the Deepwater Horizon oil spill of 2011, and more recently Olympus due to an internal financial scandal. The fact that poor financial conduct—not careless environmental and social behavior—is the very first reason given for why a company may be removed from the DJSI shows just how relative the definition of sustainability is.

It’s been more than 20 years since the Brundtland Commission defined “sustainability” as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” The fact that, still today, the most widely regarded sustainability metric in existence is a financial investment tool that values economics more than environmental and social impacts shows that we are not yet where we need to be. Investments deemed worthwhile by the DJSI are based on expectations of long-term economic growth and expansion, which, if done irresponsibly, are largely counterproductive to what environmental sustainability is.

Despite the well-intentioned effort of the DJSI, a lack of transparency in how the index’s questions are weighted and a focus on underlying financial priorities that may be contradictory to environmental sustainability make it difficult to determine if a company is truly sustainable and if it is being labeled correctly. For investors attempting to invest intelligently and sustainably, there is a need for a clearer and more all-encompassing definition of sustainability in the DJSI.

For the seven countries of Central America—Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama—a transition to renewable energy and low-carbon technologies is imperative. In addition to reducing greenhouse gas emissions, a robust renewable energy industry can stimulate the growth of clean energy manufacturing and help address regional problems such as an energy supply deficit, low rural electrification, and poverty.

Yet despite abundant renewable energy resources—including wind, solar, biomass, and geothermal—Central America remains highly dependent on imported oil, fossil fuel-based electricity, and unsustainable large hydropower. In the 1990s, deregulation of regional electricity markets opened the power sector to private investments, but it also paved the way for a surge in fossil fuel-based capacity, as most governments did not consider policies to promote renewables during the early stages of these reforms.

Solar panels used by Alimentos Campestres to dry fruits and vegetables. Source: Alimentos Campestres.

As the region’s economies expand, led by strong growth in Panama, energy demand is expected to surge. As a result, these countries will only become more vulnerable to high and fluctuating energy costs from imported oil.

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To reduce its dependence on fossil fuel imports, Central America has embraced alternative energy in recent decades. Non-fossil fuel resources now account for 64.9 percent of electricity capacity in the region. But the largest source of this renewable energy—hydropower—cannot only be considered clean energy. Hydropower accounts for 51.6 percent of the region’s installed power capacity, supplying – with over 20,000 gigawatt-hours per year, more than all other energy sources combined. Although hydropower is “renewable” to the extent that the water resource is regenerated through hydrological and climate cycles, the damming of rivers has major social and environmental impacts.

The 134MW Pirris Hydroelectric Dam in the Southern part of San Jose province, Costa Rica

These impacts are frequently overlooked because hydropower can be one of the least expensive sources of electricity. After relatively high initial upfront costs, there are fewer recurring risks than fossil-fuel based energy. Hydropower also serves an important role in a stable energy supply because it provides baseload power that can be ramped up or down on demand, unlike more variable renewable energy sources such as wind that depend on favorable weather conditions.

Costa Rica currently derives over 90 percent of its electricity from renewable sources, 76 percent of this from hydropower. Political leaders in the country have praised large-scale hydro because of the economic development and energy security benefits it can provide. In 2011, the 134 megawatt (MW) Pirris Dam was brought online to address rising domestic electricity demand and further reduce Costa Rica’s petroleum fuel imports.

Large hydro’s heavy footprint

Proponents of large hydropower often portray the technology as “green.” The evidence, however, suggests a more mixed picture. One report indicates that dammed reservoirs in tropical regions produce as much as 4 percent of total human caused greenhouse gas emissions. The methane released from decomposing organic material in reservoirs would otherwise be stored in carbon sinks such as topsoil, forests, rivers, or oceans. Building hydroelectric facilities also requires large amounts of carbon-intense concrete, steel, and other materials.

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Global fossil fuel subsidies most likely total between US$750 billion and $1 trillion per year—significantly more than the widely publicized estimate of $500 billion, according to Steve Kretzmann, founder and Executive Director of Oil Change International.

Kretzmann, who has been an advocate for environmental, social, and corporate responsibility for 25 years, sat down with Worldwatch last week to discuss fossil fuel subsidy reform efforts in the United States and around the globe. He founded Oil Change International in 2005 to educate the public about the true impacts of fossil fuels, expose troublesome oil industry practices, change patterns of public and private finance around the energy industry, and “separate oil and state.” [Below, watch a brief interview featuring Kretzmann and Worldwatch Climate and Energy Director Alexander Ochs.]

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Last week I wrote about the Environmental Protection Agency’s (EPA) new proposed standard for carbon dioxide (CO₂) emissions from fossil fuel power plants. The long-awaited regulation would limit emissions to 1,000 pounds of CO₂per megawatt-hour (MWh) of electricity produced, essentially guaranteeing that no new coal power plants will be built in the U.S. without carbon capture and storage (CCS) technologies.

Almost 30 percent of U.S. greenhouse gas emissions come from coal power plants. Image source: epa.gov

In an effort to minimize opposition to the proposed standard, the EPA emphasized the limited negative impact on industry, as utility companies are already choosing to invest in natural gas rather than coal plants for new capacity. This is due mostly to abundant new reserves of relatively cheap shale gas extracted through hydraulic fracturing.

So just how accurate are the EPA’s claims that the proposed regulation is in line with industry business-as-usual? Other projections of future coal plant construction support the overall claim that the industry was already moving away from investing in new coal power.

The U.S. Energy Information Administration (EIA) projected there would be “virtually no new coal in [the] reference case [scenario] following several CCS demos.” The EIA reports that there are 9.3 gigawatts (GW) of new coal capacity currently planned by 2015, and none thereafter. Nearly all of this new capacity will be built within the next 12 months and will therefore be exempt from the proposed CO2 standards. Any plants scheduled to begin construction in more than a year will need to include CCS technologies in order to comply with the 1,000 pounds of CO₂ per MWh limit of the proposed EPA regulation. Power plant emissions can be averaged over a 30-year period to meet the regulations, so it is also possible for power producers to build coal plants in the near-term provided they install CCS systems in the future.

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