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

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

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

Globally, new investment in renewable energy fell 11 percent in 2012. But in Latin America and the Caribbean (not including Brazil), it grew at a remarkable rate of 127 percent, totaling US$4.6 billion. This was the opening context for the 3rd Annual Renewable Energy Finance Forum for Latin America and the Caribbean (REFF-LAC), held this week in Miami, Florida. The yearly event, coordinated by Euromoney Energy Events, the American Council on Renewable Energy (ACORE) and the Latin America and Caribbean Council on Renewable Energy (LAC-CORE), aims to connect developers and investors who can continue fostering the strong investment climate for renewables that is happening in the region.

LAC-CORE president, Carlos St. James, speaking at the 3rd Annual REFF-LAC conference. (Photo credit: Mark Konold)

Presenters included project developers, financiers, and government officials, all of whom had experiences to share about what’s working in the region. In some places, like Chile and Peru, project tendering is working to advance renewable energy deployment. In the Caribbean, mechanisms such as net metering and feed-in tariffs are still the preferred approach to fostering renewables development. Many presenters stressed that the key to continued success in the region is the political will that creates an environment conducive to successful renewable energy investment. They also highlighted how projects become more attractive the less they have to rely on subsidies or other support mechanisms.

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Caribbean, Central America, developing countries, energy, energy efficiency, energy security, finance, renewable energy, renewable energy finance, sustainable development

Renewable energy technologies are quickly cementing themselves as a key pillar of energy sector development and as an economic powerhouse in their own right. In 2011, a number of forces contributed to impressive growth in renewable energy markets around the world. The most recent installment of Worldwatch’s Vital Signs Online series analyzes the investment growth witnessed across the sector in 2011.

2011 saw total new investment in renewable power and fuel (excluding large hydropower) jump 17 percent over the previous all time high set the year before, setting a new single year record with US$257.5 billion invested in the sector. Net investments in new renewable power capacity outpaced that of fossil fuel capacity over the same period, further displaying the critical importance renewables now play in the global energy mix.

Distributed geographically, both industrialized and developing countries witnessed positive growth over investment totals in the previous year. Industrialized countries accounted for 65 percent of all global investment in 2011, attracting $168 billion overall. Of the 35 percent share invested in developing countries, nearly 80 percent was channeled to renewables in China, India, and Brazil.

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energy, finance, renewable energy, renewable energy finance, renewable energy investment

Having a stable and transparent policy framework is critical to boosting a country’s “investability” from a renewable energy perspective. But how do we measure such stability? Although investors commonly evaluate certain aspects of regulatory and policy risk—such as the likelihood that a government will alter existing regulations or policies that benefit a particular industry or sector—their assessments rarely consider such variables as policy efficiency, the impact of policy instability, and the gap between existing directives and actual implementation.

Impact of PTC Expiration on Annual Wind Capacity Additions, 1999–2013 (Source: American Wind Energy Association, U.S. Energy Information Agency)

Worldwatch hopes to shed some light on these and other policy measurements through its new Renewable Energy Indicators Project, currently being developed in partnership with the International Renewable Energy Agency (IRENA).

The U.S. wind market

Policy instability is a particular threat to the U.S. wind energy market, which has experienced remarkable growth in recent decades. In 2011, the United States accounted for 17 percent of global wind power capacity additions, second only to China at 43 percent. According to figures from Navigant Consulting, China’s share of the global wind market actually declined in 2011, whereas the U.S. share increased substantially—thanks in large part to the wind Production Tax Credit (PTC).

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indicators, Policy, production tax credit, ptc, renewable energy, renewable energy finance, renewable energy policy, wind power

The development of the world’s energy sector will have an enormous role to play in achieving the sustainable future that tens of thousands are working to secure at the Rio+20 United Nations Conference on Sustainable Development this week in Brazil. Energy is an indispensable component of modern societies. However, the same sector can be extremely destructive, destroying local environments, depleting natural resources, causing sickness and premature death, and pumping record levels of carbon dioxide (C02) into our atmosphere, wreaking havoc on the earth’s climate.

Worldwatchers Ed Groark, Alexander Ochs and Evan Musolino with IRENA Director General Adnan Amin and Director of Knowledge Management Gauri Singh (source: Evan Musolino)

On June 17th, Worldwatch Climate and Energy director Alexander Ochs and I were joined in Rio by Adnan Amin, Director General of the International Renewable Energy Agency (IRENA) and over 20 top experts for a high-level consultation on Measuring for a Renewable Future. The discussion was a first step in Worldwatch’s development of renewable energy indicators in partnership with IRENA.

The event brought together public and private sector leaders in the field from Africa, the Americas, Asia, and Europe to discuss barriers to renewable energy development and deployment and the enablers that can help us to overcome them. We were excited to be joined by leading thinkers such as Michael Liebreich (Bloomberg New Energy Finance), Christine Lins (REN21), Abeeku Brew-Hammond (Ghana Energy Commission), Ari Huhtala (CDKN), Leena Srivastava (TERI), Dan Kammen (University of California, Berkely), Nebojsa Nakicenovic (IIASA), Vivien Foster (The World Bank), Sunita Narain (Center for Science and the Environment), Youba Sokona (UN Economic Commission for Africa) and many others.

Putting countries on the path to meeting their full potential for deploying renewable energy is a challenging endeavor that necessitates overcoming many myths that still exist about the technologies. Renewables are no longer the costly, fringe technologies that many still believe them to be. In many parts of the world, renewables are already cost-competitive or even a more affordable option than traditional fossil fuels. If additional costs to society that result from burning fossil fuels are taken into account, which are yet to be internalized into energy pricing, renewables quickly become an even more attractive alternative.

Participants at the event outlined a host of challenges that must be addressed. Significant barriers exist in respect to finance, cost efficiency, policy and regulation, infrastructure, knowledge management, public acceptance, and the political climate, among others. The discussion highlighted that while there are certainly many challenges facing the sector, there is also significant hope for the future if the necessary actions are identified and implemented. Governments must be extremely active in designing, implementing and monitoring policies aimed at moving these barriers.

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Climate Change, energy policy, renewable energy, renewable energy finance, sustainable development

With the United Nations “Rio+20” Conference fast approaching, the word “sustainable” is more present than ever – including in our own State of the World 2012 publication – sometimes to the point of excess. For low-lying island nations, however, “sustainability” is more than the mild, consensual definition of the United Nations: it is really about maintaining the environmental conditions necessary to sustain human life as we know it. Many countries, regions, and cities fear the potential consequences of runaway climate change, be it desertification, droughts, or increasingly frequent storms. What makes the cases of countries like Kiribati, Tuvalu, Micronesia, and the Maldives so unique is that their very existence as sovereign states is at stake, and some of their younger citizens might live to see that existence brought to an end – the IPCC (2007) has predicted 0.5 to 1.5 meters of sea-level rise before the century is over.

For low-lying island nations, climate change and sea-level rise are not really a matter for debate, but already a threatening feature of everyday life (Source: The Atlantic.com)

Whether that prediction turns out to be overly optimistic or gloomy is still to be determined, but low-lying island nations are not passively waiting to find out. Despite their remarkably low carbon-footprints, they are trying to lead by example when it comes to mitigating greenhouse gas emissions: while an international treaty would only, by the timeline set at the 2011 climate change negotiations in Durban, South Africa, come into force in 2020, the Maldives and Tuvalu (among others) have pledged to become carbon-neutral by that date. But these nations have understood that due to natural – as well as political – inertia, more emissions and increased sea-level rise are already locked in. This is the basic reasoning behind the islands’ adaptation policies, which are only as varied as they are extreme. For instance, though the President of Kiribati Anote Tong admitted it sounded “like something from science fiction”, the country seriously considered building offshore floating islands and higher seawalls last year, for a total cost of about US$ 3 billion – quite a challenge for a country with a GDP of US$ 200 million in 2011 (about US$ 6,000 per capita).

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Climate Change, COP15, developing countries, electricity, emissions reductions, energy, green economy, Kiribati, low-carbon, low-lying island states, Maldives, negotiations, renewable energy, renewable energy finance, sustainable development, Tuvalu, UNFCCC

Worldwatch is happy to announce the launch of the much anticipated 2012 REN21 Renewables Global Status Report (GSR). GSR 2012 details worldwide developments in the renewable energy sector through 2011. The report highlights a number of key developments, including market and industry trends, investment flows, the shifting policy landscape, advancements in rural renewable energy deployment, and the evolving synergy between renewable energy and energy efficiency.

REN21 Renewable 2012 Global Status Report (source: REN21)

The new GSR data highlights many remarkable worldwide trends, demonstrating that the renewable energy sector has emerged from the global finical crisis stronger than ever. In 2011, new investment and added power generation capacity for renewables broke their all-time records yet again. Global investments in renewables were estimated at US $257 billion in 2011, an increase of 17 percent over 2010. Investment in renewable energy power generation was $40 billion greater than investment in fossil fuels in 2011.

Total renewable power capacity grew by 8 percent in 2011, reaching over 1,360 gigawatts (GW) of installed capacity by year-end. Renewable energy technologies now account for 16.7 percent of total final energy consumption and over 25 percent of the world’s installed power-generating capacity. China, the United States, Germany, Spain, Italy, India, and Japan are leading in new renewable investments and now account for almost 70 percent of the world’s non-hydro renewable power generation capacity.

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electricity, energy efficiency, feed-in tariffs, green economy, renewable energy, renewable energy finance, transportation, wind power

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.

Climate Change, emissions reductions, finance, green economy, low-carbon, renewable energy, renewable energy finance, sustainable development