Here at the Asia Clean Energy Forum in the Philippines, President Obama’s speech on climate change has been greeted with enthusiasm.  In particular, his decision to redirect U.S. financing of coal fired power plants to expanding the use of clean energy in developing countries is seen as a signal that the U.S. understands that coal is risky and expensive—at a time when the costs of biomass, geothermal, solar, and wind power are declining rapidly.

The positive reaction to Obama’s initiative is hardly surprising: many Asian countries share the U.S. President’s concern about climate change: recent fires, droughts, and typhoons have devastated large areas, stirred public concern, and spurred governments to act.

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coal, energy policy, renewable energy, renewable energy finance, Southeast Asia, United States

“I refuse to condemn your generation and future generations to a planet that’s beyond fixing. And that’s why today I’m announcing a new national climate action plan, and I’m here to enlist your generation’s help in keeping the United States of America a leader, a global leader in the fight against climate change.”

- President Barack Obama, 6/25/2013

President Obama presented his Climate Action Plan at Georgetown University yesterday. (image source: whitehouse.gov)

President Obama presented his Climate Action Plan at Georgetown University yesterday. (image source: whitehouse.gov)

Climate change policy is back on the political agenda.  In a powerful speech at Georgetown University yesterday, President Barack Obama found the right words for the scale and urgency of the climate problem. He announced a Climate Action Plan outlining a wide array of actions his administration will take to reduce harmful greenhouse gas (GHG) emissions, expand renewable energy, increase energy efficiency, and strengthen America’s resilience to climate impacts. Throughout the speech, President Obama struck down critics’ claims, which have been bolstered by wealthy special interest groups, that climate protection poses a threat to the country’s economy. If implemented promptly, the plan can lead to much needed reductions of greenhouse gas emissions and re-engage the United States with other climate leaders in the international community.

However, the plan also reinforces the President’s “all-of-the-above” energy strategy, which is at odds with the necessity for swift and significant emission reductions to avoid catastrophic climate impacts. President Obama yesterday restated his pledge to reduce U.S. GHG emissions by 17 percent below 2005 levels by 2020 – an insufficient target given the urgency of the climate crisis and the scale of the U.S. contribution to global emissions on an absolute, historical, and per capita basis.

Perhaps the most important policy announcement in the President’s climate action plan is a memorandum directing the Environmental Protection Agency to set standards by 2015 to reduce carbon pollution from existing power plants. The U.S. Environmental Protection Agency first proposed carbon standards for new power plants over a year ago that would effectively halt the construction of new coal plants without carbon capture and storage (CCS) technology. Although the shale gas boom has already made it unlikely that new coal plants would be built anyway, the proposed regulation would nevertheless be an important step toward passing carbon standards for existing power plants that could accelerate the phase-out of coal power.

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carbon standard, CCS, Climate Change, Climate Policy, coal, greenhouse gas emissions, Keystone XL, nuclear power, President Obama, renewable energy, shale gas

In Berlin on Wednesday, President Obama emphasized America’s moral obligation to do more to avert a future of “more severe storms, more famine and floods, new waves of refugees, coastlines that vanish, oceans that rise.” Speaking from Washington, D.C., the top White House climate change adviser, Heather Zichal, followed this statement of intention with hints at more concrete actions, suggesting that President Obama will be implementing carbon dioxide regulations for existing power plants when he reveals his climate change strategy either on Tuesday or in the upcoming weeks.

President Obama, speaking in Berlin last week, reaffirmed commitment to action on climate change. (Source: Flickr user, Matthias Winkelmann)

The regulations on carbon emissions emitted by power plants, the largest individual point sources of carbon pollution in the United States, will be a conscientious step forward. However, with the carbon pollution standard for new power plants still under review, having been delayed past its original intended ruling date in April, the anticipated proposal for existing power plants will not only be even more costly and time consuming, but will likely be met with stronger resistance from Republicans, Democrats, and industries who are worried about the future of coal, slower job growth, and higher energy costs.

These power plant standards come at a time when concerns over climate change impacts are rising significantly.  In order to meet the 2°C Scenario – the official target of the United Nations Framework Convention on Climate Change (UNFCCC) to avoid serious climate change and irreversible damage – the United States would need to at least halve its current emissions (total 6.7 billion metric tons CO2 in 2011 and 5.3 billion metric tons CO2 in 2012), of which power plants accounted for 2.2 billion tons in 2011 and around a third in 2012.

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carbon standard, Climate Change, coal, emissions reductions, EPA, Germany, low-carbon, power plant, United States

The U.S. power grid is a modern engineering marvel, but it’s overdue for an overhaul. Participants at the recent Transactive Energy Conference in Portland, Oregon, came together to discuss the changing system and to develop the concept of transactive energy as the future of the grid.

Transactive Energy seeks to engage all devices and resources in the electrical grid in a market-based system. (Source: Edward Cazalet, "Transactive Energy: Public Policy and Market Design." May 2013)

As the first such conference of its kind, the gathering was initiated by defining exactly what transactive energy is. In an interview with Sustainable Business Oregon, Carl Imhoff, manager of the electricity infrastructure sector for Pacific Northwest National Laboratory and a moderator at the conference, provided a succinct definition: “Transactive energy is a means of using economic signals or incentives to engage all the intelligent devices in the power grid—from the consumer to the transmission system—to get a more optimal allocation of resources and engage demand in ways we haven’t been able to before.”

If consumers need proof of what a smarter grid could do for them, transactive energy is a concept that can provide it. Transactive energy systems integrate both utility-owned and third-party-owned resources—including power generation, ancillary services, and load management services, among others—in order to utilize the lowest-cost electricity in real time. The key driver of transactive energy systems is the market-based approach, which allows every service provided to the grid, even those by consumers, to be valued.

This way, those providing the services, whether they are generating power or providing load reduction services or something else, can be compensated, thus splitting the benefits and savings of the increased efficiency of the electricity system between the customer and the utility. This system is a long way from the traditional unidirectional flow of power (from utility companies to consumers) and supply side-focused mindset of the historical electricity sector.

Employing the increasingly prevalent two-way information and communications technology deployed as part of smart grid development efforts, consumers can begin to interact within the electricity system in ways that were not possible in the past. A transactive energy system utilizes smart grid infrastructure to send signals back and forth between utilities, grid operators, and individual assets in the grid system, communicating the real-time flow and cost of power.

These assets can include everything from large centralized power plants to residential solar photovoltaic arrays to demand-response programs. Signals can even be sent to and from electric vehicles (EV), integrating EVs into the electrical grid.  In a transactive energy system, instead of being passive energy consumers, you and I could become what are being referred to as “prosumers,” not only receiving electricity from the grid, but providing our own services to the grid system and getting paid for it. 

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electricity, energy, energy efficiency, grid, Innovation, renewable energy, transactive energy, United States, utilities

So, it seems like I owe the Polish government an apology.

Last month I wrote a first blog about Poland and its future role as host of the UN climate talks, insisting on its ambiguities towards the diplomatic process and pointing out, for instance, that it had made the rather unconventional decision to host the negotiations in a football stadium.

Polish Environment Minister Marcin Korolec (pictured) has made the Polish leadership's position on the climate negotiations clear, but Polish civil society and environmental groups are optimistic that COP19 will see some successes. (Source: www.um.warszawa.pl)

Well, after a “field trip” in Warsaw, I’ve learned that the National Stadium is one of the things that the country holds dearest, and that this venue choice is actually a sign that Poland is taking its role as President of the UNFCCC 19th Conference of the Parties (COP19) quite seriously. So, please accept my deepest apologies, or as I should say, przepraszam.

This correction, sadly, does not apply to most of the other points I have made about Poland’s stance on climate and energy issues. Since my last blog, Environment Minister Martin Korolec, in recent comments to a news agency, bluntly closed the door on European climate policy-making before 2015 (the deadline year that countries have set for themselves to come up with a global, binding agreement for climate action within the UN framework). This is a notable difference with the pre-Copenhagen situation, when the European Union managed to put together the “20-20-20” package before the 2009 climate talks, as a way to lead by example and encourage other countries to step up their ambitions.

But Poland has its own ideas on how the EU should approach climate change leadership from now on. Not, of course, by interfering with sovereign domestic energy choices (ahem), but rather backing the production of electric cars, setting a target for reducing fossil fuel imports, and finally ending energy subsidies. Though these suggestions may seem like good common sense, it’s not too difficult to imagine the rationale behind them: insisting on reducing fossil fuel imports would effectively reduce the EU’s economic dependence on Russia, a country with which Poland has a long, often conflict-ridden past; while opposing clean-energy funding and carbon pricing helps protect Poland’s own coal industry development.

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Climate Change, COP19, Copenhagen, Europe, European Union, negotiations, Poland, UNFCCC

China is putting effort into developing its electric vehicle industry, but industry reports say it is falling behind other countries in terms of "EV readiness." (Source: Treehugger.com)

In 2010, A123 Systems, a leading advanced lithium-ion battery manufacturer, opened the first and largest U.S. manufacturing facility to produce batteries for electric vehicles (EVs). The project was supported by a $249 million grant from the U.S. Department of Energy. But when President Barack Obama called to congratulate A123 Systems on the milestone, which he said foreshadowed “the birth of an entire new industry in America,” he never would have imagined the subsequent bankruptcy of this rising star and its acquisition by China’s Wanxiang Group in 2012.

Although this overseas acquisition is one of Wanxiang Group’s highest profile actions, the company has long been quietly acquiring and investing in dozens of auto parts manufacturers. Wanxiang has expressed interest in supporting the struggling Fisker Automotive, a manufacturer of luxury plug-in hybrid electric vehicles (PHEV) and a previous client of A123 Systems. Wanxiang chairman Guanqiu Lu’s strategic ambitions to be an electric vehicle manufacturer are becoming closer to reality than ever before. According to the global consulting firm McKinsey, in 2010 China ranked third (together with Germany) in financial support for clean-vehicle technology development, just behind the United States and France.

As early as 2001, China’s Ministry of Science and Technology (MOST) had included electric vehicle technologies as a key project in the National High Technology Research and Development Program (863 Program). In order to reduce dependence on oil, compete with more developed foreign automobile industries, and reduce air pollutants, MOST proposed focusing on three types of vehicles: hybrid-electric vehicles (HEV), electric vehicles, and fuel cell vehicles (FCVs), as well as three key components: battery/fuel cells, electric motors, and power controls, with an investment of 880 million RMB (US$106 million) within five years.

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automobiles, China, electric vehicles, Green Technology, hybrid vehicles, low-carbon, transportation

Sino-Singapore Tianjin Eco-city (SSTEC), China’s latest and largest eco-city project, saw its first residents earlier this year. The city is built on a blend of non-arable saline and alkaline land that was virtually uninhabitable five years ago. While this is an accomplishment in and of itself, SSTEC is trying to go even greener in terms of the energy efficiency of its buildings.

Sino-Singapore Tianjin Eco-city in 2012 (Source: http://www.tianjinecocity.gov.sg/)

SSTEC aims to offer green building certification based on more stringent standards than anywhere else in the country, including the national standards. It has already set up a Green Building Evaluation Committee (GBEC) to supervise building quality.

But in terms of energy efficiency, SSTEC’s GBEC still lacks the clearly defined requirements found in comprehensive international standards like the Leadership in Energy and Environmental Design (LEED) certification. According to a World Bank report, the GBEC provides standards only for the building envelope and central heating, unlike LEED, which covers a broad range of energy systems including lighting, air conditioning, water heating, and appliances. While the ambition in this eco-city project is commendable, the oversights in SSTEC’s efficiency standards reflect a lack of comprehensiveness in green building standards across China, as the GBEC is already the country’s most advanced and comprehensive building standard.

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12th Five-Year Plan, China, emissions trading, energy efficiency, energy policy, Green Buildings, greenhouse gas emissions, LEED

The European Union (EU) has undoubtedly been one of the global leaders in spurring the advanced development and deployment of renewable energies worldwide. The vision set forth by the Renewable Energy Directive 2009/28/EC – a directive setting continent-wide targets for all EU-27 member states to increase their share of renewable energy in the national energy mix – continues to stand out as the primary example of a coordinated effort to lead a large-scale energy transformation. While renewable energy targets now exist in 118 countries worldwide, few regional commitments to renewable energy deployment exist, though this trend is beginning to change.

In recent years, certain EU member states have gone beyond what is required under the Directive to set even more ambitious national goals. Denmark, for instance, is now targeting 100 percent renewable energy across their entire energy supply by 2050. These efforts should be applauded and their lessons replicated around the world. However, these successes should not obscure the very serious gap that is emerging between current policies and mechanisms and the significant challenges still facing the European renewable energy sector.

EU 2020 Energy Targets

Sector

Target

Final Energy

20% RE share by 2020

Transportation

10% biofuels by 2020

Energy Efficiency

20% improvement by 2020

A recent European Commission report has outlined the challenging road ahead for member states as they continue down the path towards their 2020 commitments. The Commission’s report sends a mixed message. On one hand, all but 2 countries – Latvia and Malta – met their first interim final energy targets defined under the Directive. In fact, 13 countries even outperformed the target by over 2 percent.

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emissions reductions, EU 20/20/20 policy, European Union, Germany, Greece, renewable energy, renewable energy finance, solar power, Spain, transatlantic power series, wind power

Starting and running a solar lamp retail business in a developing country like Kenya is no small feat. Kenya lacks strong transportation infrastructure for product distribution, and the bureaucratic red tape is not only tedious but can be opaque to foreigners. Meanwhile, the customers who need and want solar portable lamps most are those who can least afford it.

Solar portable lamp companies, such as Little Sun, must navigate informal economies and limited distribution infrastructure to market and sell their products to customers who benefit from the environmental, social, and health improvements that these lamps can provide. (Source: Little Sun)

But although Kenya’s economy lacks many of the market and political institutions that facilitate business operations in the industrialized world, there is significant potential for businesses to support rapid economic growth and generate social impact. A variety of successful solar portable lamp businesses have reframed Kenya’s lack of institutions (let’s call them institutional voids) as opportunities for economic growth.

In 2010, two Harvard Business School professors published the book Winning in Emerging Markets: A Roadmap for Strategy and Execution, highlighting the opportunities and challenges of operating a business in a developing country. They also released a toolkit for identifying and dealing with a country’s institutional voids, raising the following questions that are pertinent to running a solar portable lamp company in Kenya:

  1. Do large retail chains exist in the country? Do they reach all consumers or only wealthy/urban ones?
  2. Do consumers use credit cards, or does cash dominate transactions? Can consumers get credit to make purchases?
  3. Is there a deep network of suppliers? How strong are the logistics and transportation infrastructures?

Successful solar portable lamp companies in Kenya are using a variety of strategies to address these challenges and to mitigate, avoid, and leverage the institutional voids that would otherwise deter or limit business operations. 

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developing countries, distribution, green economy, infrastructure, institutional voids, Kenya, rural electrification, solar portable lamps

Having just returned from my second clean energy finance summit this year, I was relieved to find that despite the rumors, the renewable energy industries aren’t dying—indeed they’re booming.

Source: Michael Liebreich BNEF Summit Keynote, 23 April 2013

In 2012, according to Bloomberg New Energy Finance, $269 billion flowed into the clean energy sector worldwide—a big number by any standard.  Total global investment in renewable generating capacity now lags total investment in coal, oil, and gas generation combined by only 25 percent. With that much money you could purchase Google or Microsoft outright.

While clean energy investment in 2012 was down 11 percent from 2011, it is still 44 percent above the 2009 figure and 230 percent higher than it was in 2005.  Moreover, virtually all of the decline stems from the sharply falling prices for solar and wind equipment—a trend that in the long run will accelerate growth. While clean energy growth has understandably slowed from the extraordinary double-digit rates of the past decade, this remains one of the world’s largest and most dynamic industrial sectors.

The one dark cloud that hovered over both conferences (the Cleantech Investor Summit in Palm Springs and the Bloomberg New Energy Finance Summit in New York) was the United States, where declining government support and the uncertainty generated by a dysfunctional Congress led to a sharp decline in financing in 2012.  While the falling investment figures do presage a slowdown inU.S. clean energy growth in the next two years, it is still notable that theU.S. added more renewable capacity than any other single country last year.

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BNEF, energy, green economy, renewable energy, renewable energy finance, United States