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.

Later in the week, Deputy Secretary Poneman made another appearance as the keynote speaker at an event entitled “Transatlantic Energy Futures: The Changing Energy Mix and Implications for Transatlantic Partnership,” hosted by the Center for Transatlantic Relations at Johns Hopkins University. Here again, the focus of the energy supply discussion centered largely on coal and carbon capture and storage (CCS), shale gas, and nuclear energy.

The role of shale gas arose as an area of particular interest at both events. Deputy Secretary Poneman highlighted the rapid expansion of shale gas in the United States, where it now accounts for about 30 percent of total natural gas consumption. Europe remains divided on the issue of unconventional gas, with France having banned shale gas extraction through hydraulic fracturing, while others including Poland are eager to exploit their newfound resources. It will also be several years before European countries develop the infrastructure necessary for commercial-scale shale gas production.

In particular, participants emphasized that Europe should aim to avoid the significant controversy and public outcry over shale gas extraction that occurred in the United States. Poneman cited a recent Advisory Board Report commissioned by U.S. Secretary of Energy Stephen Chu, which determined that shale gas can be developed safely as long as activities are transparent, there is clear communication with the public, and industry works with government. An industry representative from Chevron presented the latest in technology safeguards to protect water supplies near hydraulic fracturing well sites. However, despite these declarations from industry and the federal government about the potential to safely extract shale gas, much of the public distrust remains in the absence of federal regulations to protect water supplies from this process.

With regard to renewable energy policy, Deputy Secretary Poneman referred to the recent difficulties of some European countries to maintain feed-in tariffs in the midst of the economic crisis. Dismissing feed-in tariffs as “excessively expensive subsidies” that are unsuitable in the U.S. context, Poneman described the U.S. approach of investing in innovation to reduce renewable energy costs. This approach, however, seems to ignore the crucial need for financial incentives that encourage commercial-scale renewable energy investment that is necessary to achieve the experience and economies of scale required to make renewable energy technologies competitive with conventional sources. Poneman’s statement also disregards the tens of billions of dollars of U.S. subsidies that go to the fossil fuel industry each year, even though the industry has existed for decades. Subsidies should be reserved for fledgling industries, such as most forms of renewable energy, that need initial support to become commercially viable.

U.S. reluctance to reliably incentivize renewable energy is particularly baffling when compared to its sustained subsidy support system for nuclear energy. Speakers at last month’s events highlighted U.S. eagerness to win contracts to build nuclear energy capacity in both India and Europe.

Representatives from the United States, India, and Europe at both events stressed the difficulty of promoting renewable energy policies in a democratic context where consumers are unwilling to pay higher energy prices and where, in some cases, coal plays an important role in the economy. However, fossil fuel consumption disproportionately affects low-income communities, which are more vulnerable to air pollution and associated public health impacts. These communities are often politically disenfranchised, and the negative effects of dirty energy consumption that they experience are therefore more easily ignored in democratic systems, especially where fossil fuel lobbies wield heavy political influence.

In India, the national coal company engages in land grabs from poor tribal communities for coal mining operations with the consent of the national government. Peaceful democratic protests against coal mines and power plants are often violently suppressed by the Indian police, calling into question government and industry claims of the need to develop coal power due to political pressures of democracy.

Serious discussion of the urgent need for a rapid global transition to renewable energy in order to avoid catastrophic climate change impacts was surprisingly spare at both events. Consideration of the respective roles of fossil fuel and renewable energy sources was mostly guided by business investment opportunities and energy supply security.

For me, these events demonstrated the need for a new kind of international dialogue on sustainable energy. While elite government and business interests were well-represented on panels at both events, grassroots civil society interests were noticeably absent (with the exception of praise for TERI’s solar lantern campaign). International collaborations on energy issues must be guided by a clear scientific understanding of the needs for climate change mitigation, as well as a stronger people’s perspective on development paths and energy futures.

Shakuntala Makhijani is a Climate and Energy Research Associate at the Worldwatch Institute.

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.

And finally, fossil fuels are causing what many prominent commentators—presidents, prime ministers, and secretary-generals—have called this century’s greatest problem: climate change. Nearly 70 percent of global carbon dioxide emissions come from the burning of fossil fuels. With energy use expected to double over the next two decades, it is clear we will run into an environmental, economic, and social crisis of unknown proportions if we continue to develop based on the current unsustainable energy system. In response, many, such as German Chancellor Angela Merkel, believe “renewable energy should become the central pillar of our future energy supply.”

Just as the advent of 18th-century breakthrough technologies harnessing the power of coal fueled the Industrial Revolution, the development of new technologies powered by renewable resources is contributing to a modern energy paradigm shift. Renewable energy technologies offer the opportunity to power the societies of today without jeopardizing those of the future.

Falling costs is just one of many factors that should position these technologies to play an even greater role in current and future development. The high upfront costs that have long slowed renewable deployment are quickly becoming a thing of the past. Solar photovoltaic prices, for example, are predicted to further decrease by up to 40 percent by 2015 for typical commercial systems, resulting in $1 per watt systems being distributed widely by 2020, making solar PV cost competitive with energy sources such as nuclear and coal.

Sustainable energy is a driver not only of economic growth but of social development as well. The UN General Assembly has stated that “…access to modern affordable energy services in developing countries is essential for the achievement of the internationally agreed development goals, including the Millennium Development Goals, and sustainable development, which would help to reduce poverty and to improve the conditions and standard of living for the majority of the world’s population.”

With these guiding principles, the UN Secretary-General’s Sustainable Energy for All Initiative (SE4ALL) has highlighted 2012 as the International Year of Sustainable Energy for All, and will promote the development and deployment of renewable energy technologies as one of the key focus areas of the upcoming Rio+20 UN Conference on Sustainable Development.

The reliance on traditional fuels has left 1.3 billion people worldwide without access to electricity (with an additional billion people having unreliable access) and 3 billion people dependent on traditional biomass to meet their energy needs. To solve these challenges the Secretary-General’s SE4ALL group has committed itself to achieving three significant goals by 2030:

1. Ensuring universal access to modern energy services
2. Reducing global energy intensity by 40 percent
3. Increasing renewables’ share of global energy use to 30 percent.

With the international community’s goals for renewable energy deployment being matched by falling technology prices, the world appears to be on the precipice of a systemic shift toward a sustainable future. The Worldwatch Institute’s work with the International Renewable Energy Agency (IRENA) looks to facilitate this necessary transformation. Stay tuned for Part Two of this blog post, where we discuss the proposed Renewable Development Index and Worldwatch’s contribution to the creation of this critical metric.

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

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.

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.

Although Central America has come a long way in introducing programs to promote renewable energy, much more can be done. While the region is developing important utility-scale renewable energy projects that will increase energy supply, including a 102 megawatt (MW) wind farm in Cerro de Hula, Honduras; a 20 MW geothermal power plant in Amatitlan, Guatemala; and a 49.5 MW wind farm called Planta Eólica Guanacastein Costa Rica. But the effort to expand electrification in rural areas has received less investment.

Energy poverty and rural electrification in Central America vary greatly by country. According to the International Energy Agency, more than 7.7 million people in the region live without electricity, limiting their health care, education, and livelihood opportunities. Off-grid electrification projects offer great promise for these energy-poor communities, as they can be more cost-competitive, reliable, and rapidly built than grid-extension efforts or fossil fuel energy projects. Off-grid renewable energy can be a catalyst to dramatically improve the livelihoods of millions.

The food manufacturer Alimentos Campestres, based in Guatemala, demonstrates the opportunities that can come with increased access to affordable renewable energy. A 50-percent increase in the cost of propane prompted the company, which processes dried native fruits and vegetables, to implement a sustainability program that uses solar technology to power its drying plant.

The facility is located in a rural, arid region with poor agricultural opportunities. It relies on passive solar energy, using 400 square meters of solar thermal modules to capture heat for two dehydrators. In addition, two innovative heat-energy storage facilities, comprising 100 tons of rock each, accumulate and store thermal energy for future use. The use of solar thermal energy has displaced the plant’s fossil fuel usage, decreased its carbon dioxide emissions, and spurred job creation in the surrounding communities. The project has served as a model for the viable use of solar thermal elsewhere in Central America, and similar initiatives now exist for drying wood, flowers, and herbs.

Like many small-scale projects with direct impacts on rural communities, Alimentos Campestres’s transition to renewable energy was made possible with technical and financial support from international donors, such as Cona, the Central American Commission for Environment and Development, and the Energy and Environment Partnership with Central America. Although the costs can be high, the socioeconomic benefits of these types of projects make renewable energy an affordable option for small businesses and rural populations.

Although international financial institutions play key roles in supporting renewable development in Central America, Nicaragua, with one of the region’s most robust green micro-financingmarkets boasts 10 institutions providing support for more than three thousand low-income borrowers, is spreading clean energy initiatives to low-income rural areas.

Wind turbine that powers the community of Cajiniquil in rural Nicaragua. Source: Renewable World.

In Nicaragua, with a national rural electrification rate of only 42 percent, some Nicaraguan communities remain isolated from the rest of the country, lacking both good communications capabilities and market accessibility. To address these challenges, the rural community of Cajiniquil developed an integrated hybrid wind and solar PV system, with assistance from organizations such as BlueEnergy, Asofenix, and Renewable World, and donations from the European Wind Energy Association, WPD Group, and International Power. The system comprises a 1 kilowatt locally constructed wind turbine, batteries to store energy for up to three days, and a back-up solar array that can charge the batteries. With its combined micro-grid and battery-charging station, the system will provide a regular energy supply to houses connected to the mini-grid—powering lights and a pump for clean water, improving community healthcare and education services, and enabling new small business opportunities.

The Cajiniquil project is a successful example of social investment, knowledge sharing, and technology transfer. The community was involved in all aspects of the project, from the initial design and construction to the formation of a gender-balanced committee to set up and manage the micro-enterprise that maintains the project over the long term.

Supportive policies for renewable energy continue to play a key role in extending power in regions with low rural electrification rates, such as Central America. Policies and regulations that implicitly promote off-grid clean energy are vital to the success of rural communities. At the same time, these policies should reflect the socioeconomic reality of rural and impoverished areas and create regulatory requirements and economic conditions that help, rather than hinder, electrification. Rural electrification has its own particular challenges, and to overcome them, a unique set of policies, regulations, and economic conditions must be crafted and applied.

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.

In many cases, dams fundamentally change the chemical and mineral composition of a watershed, affecting micro-organisms, plants, insects, fish, reptiles, amphibians, birds, and mammals. Habitat loss is the leading cause of species extinction worldwide, and in some cases, dams have been responsible. The human caused sixth mass extinction that is now expected to be underway is among the most critical environmental concerns of our era. Conservative estimates are that globally, at least 10,000 species go extinct each year. The protection of ecosystems, including river systems, is a critical challenge facing biodiverse tropical regions such as Central America.

Hydroelectric dams can also result in the displacement of people who occupy land in the flood zone of a reservoir, and can affect the lives of those living downstream by fundamentally changing a river’s natural cycles. In China, dams have displaced millions of people. The world’s largest hydroelectric project, the Three Gorges Dam, displaced 1.2 million people—the residents of three cities, 140 towns, and 1,350 villages.

Opposition to dams in Central America

In Central America, the concerns are similar on a smaller scale. Costa Rica’s El Diquís project has been in the spotlight of controversy since 2006. The proposed 631 MW hydroelectric plant would displace more than 1,500 people and submerge hundreds of kilometers of mangroves and other fragile ecosystems. In March 2011, with legal support from human rights groups, the Terraba indigenous community filed a lawsuit against the Costa Rican state utility, ICE, to protest the project. Concerns and recommendations have also been expressed by the UN Special Rapporteur on indigenous rights.

Also controversial is the proposed 100 MW dam on the Patuca River in Honduras, which has been on the table since 2006. Here too, opponents—including the indigenous Tawahka, Pech, and Miskitu peoples; the Afro-Honduran Garifuna; and human rights organizations such as Cultural Survival— have formed a movement to prevent what would be a series of three dams in the Mesoamerican Biological Corridor, one of Central America’s most diverse expanses of wilderness.

In both instances, opponents to the dams have cited the International Labor Organization’s Convention on the Rights of Indigenous Peoples, as well as potential environmental impacts. If these projects continue as planned, Costa Rica’s El Diquis dam, the largest hydro facility in Central America, could break ground as soon as 2013 and be commissioned in 2016. Meanwhile, the effects on Honduras’s previously undammed Patuca River are only beginning to be understood through science and by learning from people who have lived along the river for thousands of years.

Small hydropower alternatives

Not all forms of hydroelectricity are as controversial as conventional large dams. For example, some types of small-scale power stations—typically less than 10 MW in capacity—provide an uninterrupted branch of the river that bypasses the dam to enable fish, insects, and other species to navigate the river for spawning and other purposes. Also, some dams are required to turn off their turbines during fish migration. Other dam efforts try to mimic seasonal flow variations that trigger the spawning in fish and natural environmental processes, or they take into account the silt and mineral composition of a healthy flowing river and try to release the same amounts. However, this often proves difficult.

Public opposition has successfully averted proposed hydroelectric dam projects in Central America in the past. In 2001, indigenous and local community protests, as well as assessments of the river’s recreational value, prevented development of a 40 MW facility on the Cangrejal River in Honduras, and plans for the project have been put on hold.

Community activism, legal support, and international attention are pushing countries to look toward alternatives to large hydropower. But the success of other renewable energy options depends on a stable and consistent political framework, effective policy administration, and a financial climate that encourages investment in renewables and the appropriate infrastructure. In Central America, alternatives are gaining ground, and the region is in the position to add up to 130 MW of geothermal energy in 2012. Significant wind power installations also exist in four of the seven countries, although much more could be done to embrace sustainable energy options.

The Worldwatch Institute is currently prioritizing energy planning in Central America that incorporates new and sustainable energy sources such as wind, solar, geothermal, and biomass. The Institute’s Climate & Energy initiative in Central America is spearheading these efforts in collaboration with the Energy and Environment Partnership of Central America as well as policy and energy experts from the Central American Institute for Business Administration, based in Costa Rica and Nicaragua.

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.]

One goal of Oil Change International is to reduce fossil fuel subsidies in order to make renewable energy resources more competitive, based on the belief that climate change is best tackled through structural change rather than by focusing simply on emissions output. The International Energy Agency (IEA) estimates that if global fossil fuel consumption subsidies were phased out by 2020, carbon dioxide emissions could be reduced by as much as 4.7 percent.

The World Trade Organization (WTO) has defined subsidies as any financial contribution from a government or public body that confers a benefit, but the G20 and other organizations have yet to use the WTO’s definition for fossil fuel subsidies, choosing a more narrow definition. Most of the focus on fossil fuel subsidies has been on consumption subsidies, which reduce the cost to consumers, rather than production subsidies, which either lower costs or raise revenue for producers. Kretzmann and Oil Change International are seeking to move the focus to production subsidies, which they view as the greater problem.

The Organisation for Economic Co-operation and Development (OECD) estimates that global consumption subsidies for fossil fuels were $409 billion in 2010, up roughly $100 billion from the previous year. This change, however, is mostly explained by fluctuations in oil prices. Officially, the Global Subsidies Initiative (GSI) estimates that global production subsidies were roughly $100 billion per year. But production subsidies are very difficult to calculate due to a lack of governmental transparency.

Moreover, there is disagreement about whether to define production subsidies as the amount received by corporations or as the cost to taxpayers. Kretzmann suggests that production subsides may exceed $150 billion and argues that, on a per capita basis, they are higher in developed countries than consumption subsidies are in developing countries. Moreover, production subsidies in developing countries are growing rapidly and are largely invisible due to a lack of transparency.

Yet “official” statistics on fossil fuel subsidies tend to be narrowly focused and fail to take into account other costs to society. According to the National Academy of Sciences, U.S. fossil fuel use has led to $120 billion in health care and pollution costs annually. One study suggests that the United States spends at least $1.6 trillion annually on maintaining infrastructure for its current fossil fuel transportation regime, money that could otherwise be invested in cleaner transportation options such as high-speed rail.

Independent sources estimate that the U.S. federal government provides roughly $10 billion in subsidies to fossil fuel producers annually, with two-thirds to three-quarters of this going to extraction. The OECD found that the governments of Alaska, Texas, and West Virginia provide an additional $5 billion in production subsidies annually. Doug Koplow of Earth Track estimates that annual U.S. production subsidies to fossil fuels are between $52 billion and $100 billion.

So far, there has been little progress in reducing these subsidies in the United States, as this has become a partisan issue. President Obama has advocated for a $4 billion cut in fossil fuel subsidies, and Senator Robert Menendez of New Jersey recently proposed a bill seeking to end $2.4 billion in subsidies to the five largest U.S. oil companies, but the measure was voted down in Congress. So far, the only subsidy that has been reduced successfully is the Low Income Home Energy Assistance Program, one of the few U.S. consumption subsidies, and one that benefits low-income consumers rather than oil companies.

Kretzmann notes that many prominent Republicans receive major contributions from fossil fuel producers, contributing to the highly partisan nature of subsidy reduction. To bring attention to this issue, Kretzmann helped create the Dirty Energy Money campaign, which aims to expose the amount of money that members of Congress receive from fossil fuel interests. He hopes this information will help to turn U.S. public opinion against fossil fuel subsidies.

Worldwide, subsidy reduction efforts have experienced minimal success as well. In 2009, the G20 agreed to reduce global fossil fuel subsidies, a commitment that also was adopted by the Asia-Pacific Economic Cooperation (APEC). However, as of 2010, Earth Track found that no country had reduced subsidies in response to the agreement. The language of the G20 statement remains weak, and many participating countries have under-reported the amount of subsidies they provide.

Nevertheless, some countries have demonstrated success in reducing consumption subsidies. Iran, which until 2009 spent the most on consumption subsidies of any individual nation, reduced subsidies significantly and used the money it saved to distribute cash handouts to the poorest 80 percent of the population, significantly reducing the national income gap. Nigeria also successfully reduced subsidies, although in a more controversial manner. The government completely eliminated subsidies, which resulted in widespread protests and violence, and then re-implemented two-thirds of the supports. Kretzmann suggests that this method of complete elimination, followed by widespread protest and then concession, may have been the government’s strategy from the beginning.

Oil Change International is pushing for stronger language of reform in the draft agreement developed for the upcoming United Nations Conference on Sustainable Development (UNCSD, also known as Rio+20), including a firm date and the creation of an intergovernmental support center for coordination of subsidy reform between UNCSD forums. Kretzmann suggests that the U.N. Framework Convention on Climate Change could help with subsidy reporting and providing incentives for subsidy reform. Production subsidy reform remains difficult because of a perceived first-mover disadvantage.

Fossil fuel subsidy reform faces many challenges both in the United States and globally. Kretzmann stresses that the best way to bring about reform is to increase transparency in terms of both what subsidies exist and who benefits from these subsidies. In the long term, fossil fuel subsidy reduction could play a significant role in reducing greenhouse gas emissions, helping to limit both climate change and health costs from pollution.

Eric Anderson is a member of the Climate and Energy team at the Worldwatch Institute.

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.

The EIA further predicts that only another 0.9 GW of coal capacity (in addition to what is currently planned by 2015) would have been built by 2020 absent the new regulation, and just 0.3 GW more by 2035. Some of this new projected capacity will likely be avoided due to the EPA standard – the rest will, again, need to include CCS.

The total 10.5 GW of planned and unplanned coal capacity additions projected by the EIA is a relatively small fraction of the 178.2 GW of total projected capacity additions that will come online by 2035. The 10.5 GW of additional capacity is also much less than the 33.1 GW of coal capacity retirements estimated by 2035, most of which will occur before 2015. Projected coal capacity additions account for only about one percent of U.S. current installed capacity of 1,000 GW (including more than 300 GW from coal).

A Barclays study found that the proposed carbon standard would reduce future coal capacity additions from 6.6 GW to 2.2 GW – the equivalent of adding about ten fewer coal power plants of nearly 500 MW each. While ten fewer coal plants is certainly a positive step, this number is small when compared to the more than 700 coal power plants already operating in the U.S. which will remain unaffected by the standard.

Jim Rogers, president of Duke Energy, one of the largest utilities and coal electricity producers in the U.S., echoed these projections saying that over “the next two decades, we do not plan to build another coal plant,” adding that as a result, “the regulations are not relevant.”

As I wrote last week, the proposed regulation is a historic step, as it marks the first time CO₂ emissions have been regulated in the U.S. However, by most accounts, the energy choices mandated by the standard would have taken place even in the absence of the EPA regulation. In order for the EPA CO₂ regulation to be meaningful, it is essential that the current proposed standard be strengthened over time and expanded to cover existing power plants.

Shakuntala Makhijani is a Climate and Energy Research Associate at the Worldwatch Institute.

EPA promotes the clean air and health benefits of carbon regulation on the agency homepage. Image source: epa.gov

The carbon emission standard – which limits emissions to 1,000 pounds of CO₂ per megawatt-hour (MWh) of electricity produced – will apply to future fossil fuel-fired power plants with an installed capacity greater than 25 megawatts (MW); plants that are currently operating or that will begin construction in the next 12 months are exempt.

The average natural gas plant in the U.S. emits between 800 and 850 pounds of CO₂ per MWh, safely within the proposed standard. The average coal plant, on the other hand, emits 1,768 pounds of CO₂ per MWh, which would exceed the standard. However, these existing plants will not be affected by the regulation, and EPA Administrator Lisa Jackson further emphasized that there are currently “no plans” to place standards on CO₂ emissions from existing plants, including future modifications that could increase their emissions. However it is likely that the EPA will regulate carbon emissions from existing power plants at some point down the road, and the proposed standard for new sources is a vital step to ensuring that this will occur.

The regulation comes in response to the 2007 Massachusetts v. Environmental Protection Agency Supreme Court ruling which mandated the EPA to determine whether greenhouse gas (GHG) emissions “endanger public health or welfare.” In response, the EPA released its “endangerment finding” in 2009, which determined that GHG emissions are harmful to humans and the environment because they are the main driver of human-caused climate change. Based on the Supreme Court ruling, the endangerment finding legally required the EPA, under the Clean Air Act, to regulate GHG emissions from vehicles and stationary sources – including power plants.

The EPA statement released Tuesday to announce the proposed power plant standards focused heavily on the standard’s limited impact on the power sector. The news release claimed that the standard merely reflects “the ongoing trend in the power sector to build cleaner plants.” The announcement went further to say that the “proposed standards can be met by a range of power facilities burning different fossil fuels,” including coal. While the announcement highlighted new natural gas generation and coal with carbon capture and storage (CCS) as examples of energy sources that would be promoted under the proposed rule, it made no mention of renewable energy or energy efficiency technologies.

The energy industry’s transition from coal to natural gas is already underway due to abundant new reserves of relatively cheap shale gas extracted through hydraulic fracturing. The proposed EPA regulation guarantees that this shift will continue even if gas prices rise dramatically. While natural gas does emit only about half the amount of CO₂ as coal, a transition to a natural gas energy system is still not enough to reduce U.S. emissions to a level consistent with avoiding catastrophic climate change.

An important risk of the proposed EPA carbon standard is that it will lock the U.S. into a natural gas economy. Large-scale investments in new natural gas power plants made over the next few years under the proposed regulation will continue to operate and emit fossil fuels over the next few decades – a crucial time for achieving dramatic carbon emission reductions.

The EPA’s statement goes on to in essence acknowledge that the regulations will not result in significant carbon emission reductions compared to business-as-usual, stating that EPA, Department of Energy, and industry projections indicate that “new power plants that are built in over the next decade or more would be expected to meet this proposed standard even in the absence of the rule.” Therefore, the EPA does not anticipate any additional cost to industry in order to comply with the standard. (I will examine other projections of future coal power capacity in Part 2 of this blog series).

In my opinion it is safe to say that the careful EPA language regarding the carbon regulations was aimed largely at minimizing backlash from the coal energy industry and opposition from Republicans and coal-state Democrats. Notably, President Obama did not offer a statement on the regulations, and they were released during a time when political attention was diverted by the arguments on health care legislation before the Supreme Court.

Despite the relatively mild expected effects on industry, there was an immediate backlash to the EPA proposal, with several Republican members of Congress speaking out against the agency’s overreach  even though the EPA was legally mandated by the Supreme Court to regulate GHG emissions. The American Coalition for Clean Coal Electricity, an industry group of coal electricity generators, claimed that the standard could lead to “the premature closure of coal-fired power plants operating today.” It is unclear how the group came to this conclusion however, as the regulations do not apply to existing plants.

While the recent boom in availability of cheap natural gas had already signaled the decline of significant future coal capacity in the U.S., the proposed carbon standard puts the nail in the coffin to ensure that no new coal plants will be built without CCS technologies. The future energy mix in the U.S. is unlikely to change significantly as a result of the new standard, but a guarantee of halting future conventional coal power production is a positive step nonetheless.

Placing regulatory limits on power plant CO₂ emissions is a historic step for the U.S., and could set the precedent for stronger standards down the road. However the lax proposed standards and EPA’s conciliatory tone reflect the greatly reduced ambition of the Obama Administration to enact significant limits on GHG emissions. The EPA was designed to be an expert scientific agency immune from political maneuverings and election year influences. As such, the proposed carbon standard should be strengthened over time to reflect the environmental reality that we need a rapid shift to a renewable energy system, not a piecemeal transition to natural gas generation.

Shakuntala Makhijani is a Climate and Energy Research Associate at the Worldwatch Institute.

Medellín metro system. (Source: http://www.colombia.travel/en/international-tourist/multimedia/photo-gallery/medellin)

Medellín received the 2012 Sustainable Transport Award from the Institute for Transportation and Development Policy. ITDP is a global consortium of organizations that works with cities worldwide, mainly in developing countries, to provide solutions for their public transportation systems, tackling carbon emissions, poverty, and social inequality. The previous award winners are Guangzhou, China, in 2011 and Ahmedabad, India, in 2010.

The Metro de Medellín system was funded by a public/private partnership led by the city and took 10 years to complete, with the last major expansion finishing in 2006. The Metro serves as the core of the city’s public transportation system, and its network of clean and efficient cars carries 553,000 passengers daily. It is estimated that the Metro system saves 175,000 tons of carbon dioxide annually, equivalent to planting 380,000 trees on 11 percent of the city’s land. The system also saves the city US$1.5 billion annually in respiratory health costs due to improved air quality, and $4 billion in avoided traffic accidents and congestion.

The most important characteristic of the Metro system is that it triggers positive social and economic change by revitalizing the poorest and least-safe communities (favelas) along the city’s mountainsides. Before the implementation of the new system, residents of favelas used to travel down the mountains on foot or depend on infrequent buses to access commerce, education, healthcare, and other basic necessities. The journey could take up to a day, making it impossible for many local citizens to travel to the city and receive these services.

Now, a network of nine cable cars takes passengers up and down the steep mountainsides via the Valley of Medellín line. The line was completed in 2010 with plans for future expansion. A passenger pays 1,800 pesos (about $0.60) for a 25-minute ride down the mountain and a transfer to the Metro cars below. The city’s various privately owned bus lines are also linked to this one-time fare (Metroplus), which further improves the accessibility and convenience for the citizens of Medellín.

The new Metro system not only provides easy access to public systems for the residents of the favelas, enabling them to enjoy new parks, restaurants, malls, schools and hospitals, but also motivates public and private investment in infrastructure, services, and amenities for the city.

Medellín metro cable system (Source: ECPA Urban Planning Initiative).

Additional strategies have been implemented to improve the environmental sustainability of Medellín’s public transit system. The Urbano Integral project provides people with easy access to 320,000 square meters of green space. A website, Miaportemetro.com, was designed to help users estimate their carbon savings, commute time, and monetary savings from using the new Metro system. The city developed a public bike-sharing program, EnCicla, that connects universities to mass transit, along with other key destinations in the city. A growing carpooling program, comparte tu carro, was initiated that currently includes 171 institutions. Also, the city plans to improve vehicle exhaust and sulfur emission control and to transition the taxi fleet to a natural gas fuel base.

Medellín’s public transit successes have taught a valuable lesson: that the new Metro system is not just a vehicle for sustainable transportation, but also a beneficial tool for social and economic development in the city.

Chenxiao Yang is a member of the Climate and Energy team at the Worldwatch Institute.