Propelled by the 2016 Paris Agreement there is global impetus towards clean renewable energy. The need now is to invest in ‘paradigm shifting technology’ to fuel clean development,and with the help of think tank reports and energy expert analysis we have clearer understanding of what the harbingers of this endeavour are: biomass, geothermal, wind power, solar, ocean energy, biofuel, and hydro*.
An asterisk (or parentheses) after hydropower alerts one about the numerous caveats surrounding this technology. Hydropower (other than small hydro) is not considered new or paradigm shifting. Indeed, the parentheses for small hydro being the lack of consensus of what it means; reports define it to be anywhere from <10 to <50 MW. Yet, it is this caveat that determines the future of investments into hydropower — and the future of the countries who rely on them–in our climate conscious world.
The investments into hydropower, especially in climate vulnerable developing countries, are complicated because they interlace with the Right to Development and the principle of climate justice. Radical arguments for starving investments from hydropower without consideration of historical and political complexity is a disservice against the fight to eradicate poverty and manage climate change.
In early April, a letter, addressed to the Board of Directors of the Global Climate Fund, and signed by 272 environmental organisations asked that no investments to be made on “large” hydropower. The letter highlighted three projects that were at in the GCF pipelines: Qairokkum Hydropower Rehabilitation (126 MW), Tajikistan; Tina River Hydro Project (20 MW), Solomon Islands; and Upper Trishuli-1 (216 MW), Nepal. The last of which was not up for the April review.
They argued that technology used in large hydros – regardless of whether its reservoir or run-off-the-river, as in the case of Upper Trishuli 1 – was not paradigm-shifting and its climate resilient reputation was doubtful.
GCF is the financial mechanism under the UNFCCC, which helps finance investment in climate-resilient development. The fund “helps developing countries limit or reduce their greenhouse gas (GHG) emissions and adapt to climate change. It seeks to promote a paradigm shift to low-emission…taking into account the needs of nations that are particularly vulnerable to climate change impacts.”
The question of whether hydro ought to be considered clean or not – or will continue to be considered clean – is an important one for investment starved countries like Nepal, Tajiskistan, Kyrgyzstan, and Solomon Islands (all countries either low or medium in human development). In countries with immense hydro potential, it is this sector that continues to be the most attractive for Foreign Direct Investment (FDI). The competition for access to infrastructure investment is already high. According to the Asian Development Bank (ADB), Asia needs to invest USD 26 trillion by 2030 to resolve a serious infrastructure shortage, to maintain growth and address climate change, i.e. an estimated demand of USD 1.7 trillion per year to meet its infrastructure gap. The gap is particularly wide in the power sector. Only a fraction of which is currently met, whether through international financial mechanism, through public-private investments or institutional investors. As demand for clean infrastructure increases and the supply of capital remains limited, the priority given to infrastructure investments – especially by international financial institutions — will change.
Hydropower plants, with huge political and environmental risks will be a financially treacherous.
The GCF board has given the go-ahead to Qairokkum Hydropower Rehabilitation, and Tina River Hydro Project. But the concerns about hydro are unlikely to die down. Protest against hydropower rage from Brazil to Kenya. Increasingly Green Chip investors in the developed markets are weary about the future of hydro. The climate and political risk continue to put them off as they find new and less capital intensive renewables in which to to invest. For instance, while investments in wind and solar have been rising, investments in small hydro –defined as <50 MW — has continued to decline since the 2010. It stands at USD 3.5 billion compared to USD 113.7 billion for solar and USD 112.5 billion for wind. The 48 percent decline in hydropower investment between 2015 and 2016 reflect the trend of shrinking interest.
Development Banks, a major backer of hydro, are cautious of adding large hydro to their portfolio. Compelling projects and governments to be more creative with capital generation in order to stay attractive to new classes to investors. Improved investments require a stable and conducive policy and an environment which ensures payment security. None of which is facilitated by environmental fear mongering over hydropower, making the task of these countries more difficult.
Case against hydro
To be certain, the case against certain hydropower projects, especially the reservoir type, is unflattering. Studies show that reservoirs emit methane, which the Intergovernmental Panel on Climate Change (IPPC) estimates has a Global Warming Potential (GWP) of 34 – it has 34 times the impact of carbon dioxide on the atmosphere over a 100-year period. The GWP for a 20 year period is estimated to be more devastating at 84, before it decays into CO2. Further, hydro projects endanger fish from migrating, alter ecosystems, and destroy carbon sinks. Additionally, there is the problem that climate change itself is altering river flows and making it harder to sustain hydro projects. A 2012 study, in the journal Nature Climate Change, concluded that emissions from hydropower, especially in tropical regions, were often underestimated and could exceed those of fossil fuel for decades. The study also makes the case that Clean Development Mechanism should stop helping fund large dams without considering their carbon footprints.
Even notwithstanding the debate about the exactitude of climate changes impact on hydropower generation (or hydropower generation’s impact on climate change) consider a list of other climate findings: Nepal’s contribution, for instance, to global climate change is negligible, its CO2 emissions (metric tons per capita) are at mere 0.2 versus 11.7 of Norway, 37.8 for Qatar, and 16.4 for the USA. IEA reports suggest Nepal’s per capita electricity consumption is at 128 kwh/capita versus the Asian average of 918. Yet it suffers tremendously from climate change – a problem for which it has no historic blame. The stats are similar for countries like Tajikistan with a CO2 emissions (metric tons per capita) 0.44, and Kyrgyzstan is at 1.72 metric tons.
Methane as reported in CO2 equivalent over 100 years conversion period is at 5,408 for Tajikistan, and 1,449 for Solomon Island versus 499,809 for the US, and 106,847 for Canada. Then there is a question of atmospheric trade offs. Studies of life cycle assessments show that majority of life cycle greenhouse gas (GHG) emission estimates for hydropower – run off the river- cluster between about 4 and 14 g CO2eq/kWh, whereas the figures for coal, across all technologies, was at 979 g CO2e/kWh. Natural gas weighed in at 450g CO2e/kWh. The figures of coal and natural gas are important. In the lack of stable renewable sources much electricity being produced or imported into these growing economies comes from these energy sources.
For instance, Nepal is economically burdened by the import of petroleum and LPG, choked by the haze of black carbon, and reduced to buying coal-fuelled electricity from India. This despite having the potential to produce and export enough hydroelectricity for its own needs and then some for a growing economy like India. Lack of institutional investments and continued obstructionism intensely harms economic and environmental health of this climate vulnerable country. How environmentalists can recommend obstructing international investments to develop hydropower in Nepal seems incomprehensible. As historian and environmentalist Martin W Lewis writes, “Environmental opposition to such plans and projects is understandable, as they all come at a big cost to nature. But the huge atmospheric trade offs must also be acknowledged.”
If the argument of right to develop, climate justice and the principle of common but differentiated responsibility are to have any validity then rants against investing in countries in need of capital must stop. This is not to argue that countries that have been historic non-polluters should have a pass to develop irresponsibly. Reform in the hydropower sector, and investing criterion calls for intense environmental and social impact assessments into project feasibility. And governments and international institution that stand as guarantees are increasingly responsive and open to such consideration. Risk screening for project financing include an increased emphasis on climate change impacts and natural disaster risk, with both the World bank and IFC working to make projects climate smart and resilient.
Then there is the issues of human rights. Land, often belonging to indigenous people is allocated and flooded with little consultation or just compensation. And even when there is stakeholder engagement it is often limited, not particularly inclusive and alienating. The issue of resettlement is an important one, and is of intense consideration during project impact studies. Hydro sector has come a long way to acknowledge and systematically address many complex issues. Stakeholder engagement, consultation, impact assessment and resettlement programs are legally mandatory. Any project that damages human settlement without stakeholder consultation, timely and just compensation or grievance redress mechanisms is a non-starter. Could project developers, funders and governments do more when these protocols are violated? Of course. But to suggest that they haven’t tried or regardless of attempts to move towards implementing ever rigorous standards hydro is inherently as condemnable as fossil fuels is disingenuous.
Any argument that seeks to limit access to finance for hydro in countries with untapped potential must be accompanied by an argument for transfer of technology, increased finance for improved grid connectivity, and other renewables. For now other forms of renewables cannot meet the growing demand — regardless of how carefully the demand side is managed. Without any acknowledgment of trade-offs or the potential of these investments to lift millions out of poverty, limiting access to finance in hydropower rich but energy poor countries is fighting the wrong fight.
Indonesia’s ‘Superheroines’ Empowered with Renewables
About a third of Indonesians, roughly 80 million people, live without electricity and many more with only unreliable access. In the country’s eastern Solor archipelago, a programme is looking to tackle this issue with an innovative approach, by empowering women with renewable solutions for rural and remote communities.
“In rural Indonesia, energy poverty affects men and women differently and there is a clear and important intersection between energy access and gender equality,” says Sergina Loncle, the Communications Manager at Kopernik, a non-profit organisation headquartered in Indonesia. “Although women have been traditionally restricted from access to information, assets and resources, in many cases they generally are the decision makers on energy issues at the household level, which makes the inter-linkages between energy and gender more pronounced.”
Kopernik believes that empowering women to become micro-social-entrepreneurs will help boost incomes and make clean energy technologies available in off-grid communities. To support this, the organisation launched Wonder Women, or in Indonesian, Ibu Inspirasi, which literally means inspirational women and mothers, says Loncle. The Wonder Women programme gives Indonesian women solar technologies on consignment and shares a margin on every sale — boosting the ability of women to support their families, helping to reduce the problems associated with inadequate and dangerous energy technologies, and improving the quality of life within the community.
A Kopernik survey suggests the programme is working. Reports show that after 12 months 26% of ‘Wonder Women’ know how to run a business and 21% become more empowered within their families — taking on a greater role in household decision making. Almost half of the survey’s respondents perceived an improvement in their self-status and 19% have increased their empowerment within the community.
Women in the programme are inspirational figures in their villages as they help make clean energy technology available to friends, relatives and neighbours, explains Loncle. Wonder women often become a pillar of support and inspiration for other women in the village, encouraging them to join the programme or support other business ventures.
“I am grateful because people in my community now use affordable, clean energy technologies,” says Maria Nogo, a Wonder Woman in Larantuka, East Flores who has been a part of the programme since March 2015. “By becoming a Wonder Woman, besides saving money, I also have opportunities to introduce these technologies to the people in my community, so I can support them to have a better life.”
A better life with renewables
In its market analysis for Southeast Asia, IRENA supports the Wonder Women programme and advocates for the host of socioeconomic benefits renewables bring to Indonesia and the countries in its region. IRENA shows that renewable energy solutions can reduce fuel expenditures — which drains the limited resources of the poor — and decentralised renewable energy access can substantially reduce poverty by empowering individuals and communities to gain control over their energy supply and reduce their energy spending.
“Over 206,000 Indonesians are directly employed in the renewable energy sector, but there is growing body of evidence that renewable energy solutions support income generation and job creation beyond the energy supply chain,” says Rabia Ferroukhi, Head of IRENA’s Policy Unit and Deputy Director of its Knowledge, Policy and Finance Centre. She says renewables enable technologies that contribute to improved health, access to education, clean water and good nutrition, and can increase economic productivity.
To better assess the economic benefits of decentralised renewable energy in rural areas, poor urban communities, and remote islands of South East Asia, IRENA advises policy makers to look beyond the consumptive uses of energy (e.g. household lighting, cooking) and to also consider its productive uses.
“In remote and rural areas, like those found in Indonesia, renewables are not only the most cost-effective way to provide energy access, they’re a reliable way to support social services and economic development, and that’s a strong reason for governments in the region to support programmes like Wonder Women,” Ferroukhi adds.
Economic value of energy efficiency can drive reductions in global CO2 emissions
Ambitious energy efficiency policies can keep global energy demand and energy-related carbon-dioxide (CO₂) emissions steady until 2050, according to a new report by the International Energy Agency. Perspectives for the Energy Transition: The Role of Energy Efficiency shows that despite a near-tripling of the world economy and a global population that increases by nearly 2.3 billion, end-use energy efficiency alone can deliver 35% of the cumulative CO₂ savings through 2050 required to meet global climate goals.
Global energy demand grew by 2.1% in 2017 according to IEA estimates, more than twice the growth rate in 2016. At the same time, global energy-related CO₂ emissions increased for the first time in three years, as improvements in global energy efficiency slowed down dramatically to 1.7%.
“Among all energy trends in 2017, the one that worries me the most is the slowdown in energy efficiency improvements,” said Dr Fatih Birol, Executive Director of the International Energy Agency. “The rate of improvement that we saw is around half of the rate that is required to meet clean energy transition goals.”
IEA analysis in Perspectives for the Energy Transition: The Role of Energy Efficiency demonstrates that on top of a wide range of benefits including cleaner air, energy security, productivity and trade balance improvements, there is a compelling economic case for energy efficiency. But, without further policy efforts, these benefits are unlikely to be realised as less than a third of global final energy demand is covered by efficiency standards today.
Realising the full potential of energy efficiency will require a step-change in investments on the demand side of the energy equation, rising to USD 1.7 trillion per year through 2050, the majority of which is for energy efficiency and the electrification of transport. On the supply side, the focus is on reallocating investments towards renewables and other low-carbon technologies such as nuclear and carbon capture, utilisation and storage.
While the scale of the demand-side investment required may appear challenging, fuel cost savings over the lifetime of most technologies are larger than the investment required, which implies a strong economic benefit that arises from energy efficiency investment. Although there are still many low-hanging fruits that can pay back their initial investment quickly, payback periods are often too long to attract investment from consumers and businesses. Effective policy frameworks are needed to overcome economic and non-economic barriers to energy efficiency and to incentivise adoption of more efficient technologies.
Perspectives for the Energy Transition: The Role of Energy Efficiency demonstrates a compelling economic case for energy efficiency as being essential to make the energy transition affordable, faster and more beneficial to all. The IEA recommends that governments adopt a strategic approach to energy efficiency, supported by well-designed efficiency policies and a strong focus on implementation and enforcement.
Report: Powerful New Policy Options to Scale Up Renewables
A new report by the International Renewable Energy Agency (IRENA), the International Energy Agency (IEA), and the Renewable Energy Policy Network for the 21st Century (REN21), Renewable Energy Policies in a Time of Transition, is an unprecedented collaboration that sheds new light on the policy barriers to increased deployment of renewables and provides a range of options for policymakers to scale-up their ambitions.
Since 2012, renewable energy has accounted for more than half of capacity additions in the global power sector. In 2017 alone a record-breaking 167 GW of renewables capacity was added worldwide. 146 million people are now served by off-grid renewable power, and many small island developing states are advancing rapidly towards targets of 100% renewables.
One of the main rationales behind the call for a higher share of renewables in the energy mix is the urgent threat posed by climate change. Of the 194 parties to the United Nations Framework Convention on Climate Change 145 referred to renewable energy in their nationally determined contributions (NDCs), and 109 included quantified renewable energy targets. Air pollution is also a pressing issue, with an estimated 7.3 million premature deaths per year attributable to household and outdoor air pollution. Energy security is another influencing factor, with small island states particularly affected by security issues and resilience in the face of natural disasters. Finally, countries looking to expand energy access in rural areas are increasingly turning to renewables as the most cost-effective, cleanest and most secure option.
But the pace of the energy transition needs to be substantially accelerated to meet decarbonisation and sustainable development objectives. As outlined in IRENA’s recently-released Global Energy Transformation: A Roadmap to 2050, to achieve the two-degree goal of the Paris target, the share of renewables in the primary global energy supply must increase from 15% today to 65% by 2050. Gains in the electricity sector must be matched in end-use sectors such as heating and transportation, which together account for 80% of global energy consumption.
Renewable Energy Policies in a Time of Transition provides policymakers with a comprehensive understanding of the diverse policy options to support an accelerated development of renewables across sectors, technologies, country contexts, energy market structures, and policy objectives, to scale up renewable energy deployment. An updated joint classification of renewable energy policies to illustrate the latest policy developments around the world.
Key areas of focus:
Heating and Cooling
Heating accounted for over 50% of total final energy consumption in 2015, with over 70% of that met by fossil fuels. To increase the use of renewables, a range of policy instruments are required. These include mandates and obligations, which can offer greater certainty of increased deployment; building codes, which implicitly support renewable heating and cooling from renewables by setting energy performance requirements; renewable heat and energy efficiency policies that are closely aligned to leverage synergies and accelerate the pace of transition; fiscal and financial incentives, which reduce the capital costs of renewables; and carbon or energy taxes, which provide important price signals and reduce externalities.
Transport is the second largest energy end‑use sector, accounting for 29% of total final energy consumption in 2015, and 64.7% of world oil consumption. With the exception of biofuels, there is little practical experience of fostering renewables in transport. Policies and planning should help overcome the immaturity or high cost of certain technologies, inadequate energy infrastructure, sustainability considerations and slow acceptance among users as new technologies and systems are introduced. They should also build improved understanding between decision makers in the energy and transport sectors, so as to enable integrated planning and policy design. Removal of fossil fuel subsidies is also essential, especially in shipping and aviation.
Although the power sector consumed only about a fifth of total final energy consumption in 2015, it has received the most attention in terms of renewable energy support policy. Investments in the sector are largely driven by regulatory policies such as quotas and obligations and pricing instruments, supported by fiscal and financial incentives. Quotas and mandates cascade targets down to electricity producers and consumers, but require a robust framework to monitor and penalize non-compliance. Administratively set pricing policies (like feed-in tariffs and premiums) need to continuously adapt to changing market conditions and the falling cost of technology. Auctions are being increasingly adopted, given their ability for real-price discovery, and have resulted in a five-fold price reduction between 2010 and 2016, though auction design is crucial.
A number of countries and regions are reaching high penetrations of VRE in their power systems, and implementing policies to facilitate their system integration. Strategies for system integration of renewables are crucial to minimise negative impacts, maximize benefits and improve the cost effectiveness of the power system. As VRE shares grow in the power system, so do the challenges of system integration.
A wide range of policies have been adopted to support the growth of renewable energy around the world. The nature of those policies in a given country depends on the maturity of the sector, the particularities of the market segment, and wider socio-economic conditions. As this report shows, as deployment of renewable energy has grown and the sector has matured, policies must adapt and become more sophisticated to ensure the smooth integration of renewables into the wider energy system – including the end-use sectors – and a cost-effective and sustainable energy transition.
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