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Adapt or perish: global shift to renewables inevitable, says IRENA

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The global shift to a world powered predominately by decentralised renewable energy is happening, whether we are ready for it or not. This is the main takeaway message from the latest report from the International Renewable Energy Agency (IRENA), the first in a series called Rethinking Energy.

“Combined with international efforts to curb climate change, calls for universal access, and a growing demand for energy security, I believe it is no longer a matter of whether but of when a systematic switch to renewable energy takes place – and how well we manage the transition,” said IRENA director general, Adnan Amin, at the report’s release on Monday.

“The good news is that renewable energy provides a viable and affordable solution to address climate change today,” Amin added. “And while the outlook for renewable power is bright, we need to rethink the mechanisms which have, up to this point, brought renewables into the mainstream and prepare for the next stage of this global transformation.”

It’s a message that could easily be aimed directly at Australian Prime Minister Tony Abbott, whose Coalition government is doing its best to ignore the inevitable – or at least to delay it for as long as possible.

But delay is no more an option than denial, says IRENA, with the adoption of renewables also providing the world with the most feasible route to reducing carbon emissions enough to avoid catastrophic climate change.

Under current policies and national plans, the report says, “reductions in average carbon dioxide (CO2) emissions would be insufficient to keep atmospheric CO2 levels below 450 parts per million (ppm), beyond which severe climate change is expected to occur.

“A doubling in the world’s share of renewables, however, would reduce global average CO2 emissions 349 g/kWh – equivalent to a 40 per cent intensity reduction compared to 1990 levels.”

But to do this, says the report, would require stable and predictable policy framework, the development of a level playing field, and annual investment of at least $550 billion by 2030.Screen Shot 2014-09-09 at 11.03.07 AM

“(Renewables) need a level playing field, including cutting back on the substantial subsidies currently enjoyed by fossil fuels worldwide,” the report says.

“Renewable energy investors need stable and predictable policy frameworks, which recognise the system-level benefits renewable energy can bring.”

Chief among these benefits, according to IRENA, is this one: Renewables are good for a country’s economy.

“Declining costs mean the perceived economic trade-off of ‘cheap vs. clean’ is becoming less important,” the report says. “This false dichotomy becomes even more apparent as economists develop tools to measure the broader impact of power generation, such as the cost of pollution and
fuel price volatility.

“Effective analysis of the costs and benefits of different forms of energy should take into account a much wider view of economic development than is now the case, including the balance of trade, industrial development, growth in gross domestic product (GDP), employment, energy access and health.”

Screen Shot 2014-09-09 at 10.59.54 AM Screen Shot 2014-09-09 at 10.59.38 AMThe report quotes a recent Japanese study, which found that the benefits of a 2030 renewables target of 14-16 per cent were two-three times higher than the costs – including savings in fossil fuel imports, CO2 emissions reductions and economic ripple effects.

The report also notes that Spain’s renewables uptake helped the cash-strapped country avoid $US2.8 billion of fossil fuel imports in 2010, while Germany saved $US13.5 billion in 2012.

And there’s even an upside for fossil fuel-exporting countries like Australia, the report notes, where deploying renewables at home makes more resources available for sale overseas.

The world’s power grids will also have to adapt, says the report, which argues that the global energy industry needs more regional interconnections to take advantage of synergies between different forms of renewables.

“A sector once dominated by large utilities is becoming more decentralised, diverse and distributed,” IRENA says, citing the example of Germany, where only 12 per cent of the country’s growing collection of renewables assets are managed by traditional energy companies.

But this development needs annual investment of at least $550 billion by 2030, to increase the share of renewables to 36 per cent of produced energy and to contain global warming, says the report.

Investment in renewables amounted to $214 billion in 2013. Spending will come from the private sector, but governments have a role to play, mainly in emerging countries, the report adds.

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