THERE IS a moment in every English Christmas pantomime when a character stands centre stage and pretends not to hear when the audience screams “behind you”. Then, with camp theatricality, the character looks slowly to left and right while still not seeing the blindingly obvious.
In the battle against two of the greatest problems of our age, global poverty and climate change, governments, financial institutions and aid agencies are standing centre stage and looking left and right while the solution – renewable energy – sits quietly right behind them. Why are they missing the blindingly obvious?
From where we are sitting now, the future seems dominated by oil and coal. Fossil fuels account for four-fifths of the global energy supply, renewables just over 13 per cent. The International Energy Agency, an intergovernmental body within the OECD, looking forward to 2030, predicts “a future in which energy use continues to grow inexorably, fossil fuels continue to dominate the energy mix and developing countries fast approach OECD countries as the largest consumers of commercial energy”.
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Such a future, dominated by fossil fuels, will lead to disaster. In western economies, dwindling supplies of oil and the rising costs of climate change will have a serious impact. In poorer countries the effects will be even worse, crippling developing economies and severely hampering efforts to reduce poverty in the third world. Any long-term attempt to improve human development will fail unless we shift the bulk of our energy supply from fossil fuels to renewables.
To do so is not a pipe dream. A fossil fuel future is neither inevitable nor a natural outcome of energy markets. Towards the end of the 1990s, the rich OECD countries were subsidising their fossil fuel industries by about $73 billion annually. Meanwhile, only between 1 and 3 per cent of the $40 billion spent annually on energy investment in developing countries goes towards renewables, according to the G8 nations’ renewable energy task force. Moreover, the proportion of energy research and development investment spent globally on renewables has actually fallen over the past three decades from just over 8 per cent to just over 7 per cent, despite increased awareness of climate change.
In some areas, renewable energy makes up a significant proportion of overall supply – as much as half in Africa, for example, because of the use of wood and other biomass fuels. But in almost all parts of the world the cleanest forms of renewable energy such as solar, wind, geothermal and tidal energy account for 3 per cent of energy supply or less.
That figure could be so much greater. The theoretical potential power from solar, wind, geothermal, hydro, biomass, tidal and wave energy, which could never be captured in its entirety, is a staggering 2.3 million times our current use (see Table). Even with present technology, we could still increase our use by a factor of at least 120 – enough to cover all our current energy needs.
José Goldemberg, former minister for science and technology in Brazil, was unequivocal in his speech at last month’s International Conference for Renewable Energies in Bonn, Germany. “Renewable energy is inexhaustible and abundant,” he said. “It is clear therefore that in due time renewable energies will dominate the world’s energy system, due to their inherent advantages such as mitigation of climate change, generation of employment and reduction of poverty, as well as increased energy security and supply.” How long that takes could simply come down to how quickly governments and financial institutions are prepared to switch subsidies and investment in favour of renewables.
For developing countries, it could not come too soon. Small-scale renewable energy projects can contribute enormously to poverty reduction (something that has been shamefully overlooked for too long). There are several reasons for this. First, they are more flexible and adaptable and can easily be used in remote areas that big grids, powered by fossil fuels or nuclear, either cannot or do not reach.
Second, there is the massive economic shock that dependence on coal, oil and gas will inevitably lead to. This will kick in soon when we reach the so-called Hubbert peak for oil production, when half of all the recoverable oil reserves on the planet will have been used up. Along with endlessly rising demand, this will send energy prices on a sky-high trip that most developing countries may never recover from.
Third is the climatic shock, also inevitable. Every one of the tortuously negotiated Millennium Development Goals for poverty reduction, adopted by the United Nations in 2000 for implementation by 2015, will be blown off-course if global warming, driven by rising fossil fuel use, continues on its current trajectory.
In any fair comparison of conventional and renewable energy systems – taking all these human, environmental and economic costs into account – there really is no competition. Renewables win hands down. Yet even in an energy market that does not account for these realities and is hugely distorted by fossil fuel subsidies, renewables still frequently manage to provide energy that is cheaper and environmentally sustainable, and helps reduce poverty in cities and rural communities alike.
This may surprise analysts who frequently criticise renewable energy projects as too expensive to set up. Cost is still an issue on the large scale, but in rural communities at least, the economic benefits are evident. The African Energy Policy Research Network, which brings together energy researchers and policy makers from African countries, points out that “the capital requirements of renewables are generally lower than those of conventional and centralised investments”, partly because centralised systems entail expensive distribution networks. What’s clear is that local renewable energy schemes often succeed in places where national grid systems are inefficient or fail to reach people.
A classic example is Sagar Island, 6 kilometres off the coast of West Bengal. The island is developing solar electricity delivered through small-scale grids. The West Bengal Renewable Energy Development Agency and local cooperatives have set up nine stand-alone solar photovoltaic power plants that provide electricity to the grids for six hours a day. The solar costs have been falling to the point where per unit of energy they are starting to undercut the cost of producing electricity from diesel generators.
There are other examples. The Barefoot College, based in the Indian state of Rajasthan, has supplied solar-powered generators to more than 15,000 people in 130 remote villages in the Himalayas. Formerly, to get enough kerosene to light their homes for a month, people had to walk for two days with a 20-litre jerrycan. There are other benefits, too: 200 women found jobs working with new solar-powered spinning wheels. And each village saves an estimated 40 tonnes in carbon emissions each year. Around 100,000 villages in India lack conventional electricity and could meet their energy needs with renewables. Worldwide, 1.6 billion people lack access to electricity, most of them in the rural areas of developing countries. The potential is enormous.
Already renewables are being used throughout the developing world to generate electricity for myriad uses – not only for meeting domestic needs such as cooking and lighting, but also for powering schools and clinics, and creating employment. There are many examples. On the slopes of Mount Kenya, the development group ITDG East Africa has introduced “pico-hydro” schemes that are cheaper and safer than the kerosene lamps and lead-based dry battery cells that people normally use. One of these units can provide light and electricity for devices such as radios to more than 50 homes.
In Mongolia, small household-scale wind turbines have increased average incomes in some villages by $30 to $150 per month by opening up new opportunities for work. In Bangladesh, community solar-powered cell phones pioneered by Grameen Shakti, of the Grameen micro-credit bank, are earning local women up to $200 per month in revenue – the women charge people to use the phones from their homes.
We are at a global energy crossroads. The renewables route will lead to clean and cost-effective energy and the alleviation of poverty; the fossil fuels route to high economic costs, conflict and global warming.
But the message is still not sinking in. In April, Asia Energy plc listed its shares on the London Stock Exchange, raising £11 million on the first day. The attraction to investors was the company’s exclusive licence to the Phulbari Energy Project in north-west Bangladesh to mine and burn 370 million tonnes of coal over the next 40 years. Climate change didn’t get a mention in the listing documents, which is a shame because in 40 years’ time much of Bangladesh could be under water.