iCSC's Ballesteros on surging Asian energy revolution

RP needs to catch up as UN reports global growth in renewable energy
by Imelda V. Abaño, BusinessMirror
17 JULY 2010 20:06

GLOBAL growth in power capacity from new renewable energy sources has continued to outstrip fossil-fuel power plants in 2009, according to twin reports released by the United Nations Environment Program and the Renewable Energy Policy Network for the 21st Century (REN21).

The Global Trends in Sustainable Energy Investment 2010 report and the Renewables 2010 Global Status Report, which were released on July 15, paint an encouraging picture of rapidly expanding renewable-energy markets, policies, industries, and rural applications around the world.

Athena Ballesteros, senior associate of the Washington-based World Resource Institute, told the BusinessMirror that the reports confirm the fact that renewable energy and energy-efficiency technologies coupled with strong policies and financing support can help countries like the Philippines transition toward a low-carbon economy.

“The growth of the renewable-energy (RE) industry has been phenomenal.  That Asian economies are catching up reflect the huge opportunity to have the world’s future energy supply be met significantly by cleaner, safer, reliable technologies that could help address global climate change,” Ballesteros said.

Renewables accounted for 60 percent of newly installed capacity in Europe and more than 50 percent in the USA in 2009. This year or next, the reports predict, the world as a whole will add more capacity to the electricity supply from renewable than nonrenewable sources.

“The major hurdle is the lack of political will,” Ballesteros said. “If we are truly serious about making the Philippines a leader in renewables, then big bold ambitious changes need to be made in terms of tipping the balance in favor of cleaner, renewable technologies instead of coal, oil and gas.”

In 2009, China produced 40 percent of the world’s solar photovoltaic (PV) supply, 30 percent of the world’s wind turbines, up from 10 percent in 2007. While China is making great strides in renewable-energy deployment, its carbon emissions also accelerated in 2009—placing it further ahead as the world’s top emitter of the main greenhouse gas blamed for climate change, the reports said.

The reports said investment in core clean energy decreased by 7 percent in 2009 to $162 billion, with many subsectors declining significantly in money invested, including large-scale solar power and biofuels. But there was also a record investment in wind power and if spending on solar water heaters, as well as total installation costs for rooftop solar PV, were included, total investment actually increased in 2009, bucking the economic trend.

Globally, nearly 80 gigaWatts (gW) of renewable power capacity was added in 2009, including 31 gW of hydro and 48 gW of nonhydro capacity. This combined renewables figure is now closing in on the 83 gW of fossil-fuel, thermal capacity installed in the same year. If the trend continues, then 2010 or 2011 could be the first year that new capacity added in low carbon power exceeds that in fossil-fuel stations.

Europe maintained its position as the world region with the largest share of global financial investment in clean energy, but not by that greater margin. Its total came in at $43.7billion, down from $48.4billion in 2008.

Meanwhile, Asia and Oceania produced a sharp increase in financial investment in 2009, to $40.8billion from $31.3 billion.

“It demonstrates resilience of the industry even in the face of a financial crisis because renewable resources are not prone to major fluctuations in prices and changes in markets compared to coal and oil,” Ballesteros explained. “This is an important lesson for a country like the Philippines that is heavily dependent on overseas fossil-fuel resources.”

As demonstrated in the report, progressive renewable energy policies contributed to the growth of the industry globally. There has been a 100-percent increase from 2005 in the number of countries that have adopted renewable energy policies, including the Philippines, Ballesterossaid.

Financing RP’s future energy sector

Ballesteros said the country needs to  “harness our myriad domestic renewable energy resources and combined with huge energy efficiency opportunities in both the supply side (production and generation) and demand-side (end-use efficiency, consumers engagement with things like

energy efficiency appliance labeling, building retrofits, compact fluorescent lighting)—we can attract investments domestically and internationally.”

The progress the Philippines have on biofuels and blending is another policy highlighted in the reports.

An attractive investment climate in the Philippines with the RE law, and fair and equitable pricing mechanisms for RE technologies always stimulate financing so the right set of policies will attract investment, Ballesteros said.

“Domestic resources need to be shifted towards harnessing of renewable energy and energy efficiency resources and completion of maps, resource assessments so as to establish clear baseline of the Philippines renewable energy potential,” she added.

Private sector and international players like the World Bank and the ADB could work with the country in identifying and prioritizing wind, solar and biomass investments in the country, Ballesteros, adding that with a combination of grants, concessional finance and commercial loans with fair repayment terms, the Philippines can start with a major initiative in tapping wind energy source.

According to the report, wind was even more dominant as a destination for investment in 2009 than 2008. In 2008, it accounted for $59 billion or 45 percent of all financial investment in sustainable energy; in 2009, it accounted for $67 billion and its share rose to 56 percent.

The international community is looking to multilateral development banks (MDBs) to help developing countries balance energy security and climate change imperatives, Ballesteros said.

Historically, she said, developing countries have drawn on the public financial resources of MDBs to develop electricity infrastructure.While the MDBs’ investments in RE and energy efficiency projects have increased over the past five years, much more could be done.

“Their attention to underlying policy, regulatory, and institutional elements that will, in the long term, align both public and private investment in the electricity sector with sustainable low-carbon development has been uneven in the MDBs support for policy reform,” she said.

The WRI in a recent report, Investing in Sustainable Energy Futures, outlined some of the elements of policy and institutional capacity that should help the MDBs invest in the energy services that developing countries need to reduce poverty and support economic growth while at the same time reducing the impact of the electricity sector on climate change.

These elements are long-term integrated energy planning, policies and regulations encouraging and promoting renewable energy and energy efficiency; and subsidy reforms to reveal true costs of fossil fuels and promote the viability of sustainable energy options. #