Interview with IRENA Director-General Nominee Arthouros Zervos
Zervos is one of four nominees to head the new International Renewable Energy Agency (IRENA). IRENA members are meeting this weekend in Sharm el-Sheikh, Egypt, to choose a headquarters and select a director-general. Worldwatch staff writer Ben Block is interviewing candidates this week for Eye on Earth.
What lessons have you learned from your experiences in Europe and China about how to help emerging economies develop renewable energy?
For me, the critical issue is setting up the right framework. Germany, for example, is not the country with the most potential in terms of renewable energy-it's one of the most cloudy countries in Europe. But big solar development is happening in Germany, which means that the potential is really based on whether a country has significant policies that help the development of renewables. We have a lot of experience in Europe with different systems, different ways of approaching renewables. I'm not saying one is better than another. What we have learned is what we have to pay attention to.
What is IRENA's role in establishing these frameworks? Should the agency decide which mechanisms are best?
We should advise on how to set up the framework, but I don't believe that there is one framework that has to be [used]. The feed-in price has been the most effective support mechanism. Also, the [renewable energy portfolio] target system in different U.S. states has been very effective if appropriately applied. If you [are just starting to develop renewables], the feed-in system is probably most appropriate. But once you reach a certain stage of development, [it is best to] move to other means of support. The right support is not only economic. You have other issues that are critical-for example, in the electricity sector, the grid issue. How do you develop your grids, what are your grids, how do you develop them to absorb large amounts of renewables?... An advisor would not want to go to a country and tell them what to do. An advisor has to discuss and give quality advice.
Why is the feed-in tariff, a policy that guarantees a market and fixed payment for renewable energy producers to sell their power to the grid, the most efficient?
From our experiences in Europe, where we have a support system based on a feed-in price, it has been more effective in developing renewables, especially at the beginning stages, because it's a very simple mechanism. You have a price, which can be very easily seen by the banks. So you can have much easier financing, because once you know your potential and you know your price, you know that it's fixed for the next 15 or 20 years.
Could feed-in tariffs succeed in developing-country markets?
That is a question mark. If you have a very weak economy and have very low energy prices, then it is a problem. You have to find some other ways. That's why I'm saying I don't consider [the feed-in tariff] as a silver bullet for everything. If a country has very low prices, it means energy prices are subsidized. You have to compete with subsidized energy prices. The feed-in price that you'd have to put [in place] for the investments to be appropriate will probably be too high for the situation. One has to analyze each situation and see what is the most appropriate way to move forward.
Under what conditions, and to what extent, should renewable energy be subsidized?
The basic question is [whether we can] create a level playing field [for renewables] with other energy sources, which does not exist right now. It does not exist because you have a certain level of costs that are not included in energy prices today, mainly the environmental costs. I would propose that one way or another, we include environmental costs in the energy price-then you don't need anything else. The question is whether these [price adjustments] should pass through international agreements in that direction-though it is not evident that this will or can happen in the near future.
Then you have the second-best option, which is support-support in order to compensate for the fact that you have not internalized the external costs. I do not consider support to renewables as a subsidy. I consider it as a compensation for the environmental and social costs which are not internalized in the energy price.... [T]here is a lot of talk about the subsidies given to renewables-why and how much, and for how long you would give them. I would say we don't have to give subsidies from the moment we have the right playing field-the polluter pays, and we include the environmental costs. As long as we don't do that, we have to compensate.
Are you suggesting that if there is a price on carbon, additional subsidies for the renewable energy sector would become unnecessary?
Hypothetically, yes-if the price functions well, which takes time. Also, you need a price on an international level. It's not enough [to set prices at the] national or regional level. It's very critical that we have an international agreement, which we are discussing now....
How this is reflected in the energy market is another story. It is a very big step forward, the carbon price, but this is not enough.
In addition to financing, renewable energy must overcome a general lack of respect compared to traditional energy sources. How do you suggest elevating IRENA to a level so that renewables gains wider recognition?
An important development of an organization is to have a vision and to be serious in the analysis that it is doing. That's a very critical point-how we look into the future. Other existing international organizations, especially the International Energy Agency, have their own visions of the future, which I wouldn't say that I would agree [with]. IRENA has to realize and [have the perspective] that renewables have to play a major role in the world's energy future, which is not always evident from other international organizations. This needs to be broadened through IRENA's work and analysis.
How should IRENA address controversial sources of energy such as biofuels? Do you consider them to be "renewable?"
We should develop all sources of renewable energy. All have their difficulties, especially biofuels. The biofuels or biomass sector is quite different from all the others, in the sense that you have an energy source you're producing. Water, fuel, it's completely different.... The way [biofuels have] been treated in the European Union with the recent directive, where the EU [sets] a certain level of sustainability criteria for renewable energy-that is the way forward.... Also, [the issue of biofuels] has to do with availability of water, the kind of cultivation you use, etc. These are very complicated stories, much more complicated than other [renewable energy sources] because the others are mainly a technology you want to develop.... Still, [biofuels] have their importance, and it is very important to develop them for the future, but in a sustainable way.
New Energy Finance predicts that 2009 investments in the clean energy sector will be 26-39 percent less than last year's total of $155 billion. How will the renewable energy sector fare by the end of the year?
It's very difficult to foresee the future. It's clear that the financial crisis has affected the wind energy sector and renewable energy in general, mainly through financing difficulties. It's positive that we have not seen projects being abandoned. We have seen projects that have been delayed. It's clear that, for me, in 2009 we are not going to have the development growth rate we had in previous years. I still am confident that it will not be lower than last year.... I believe [the sector] will, more or less, at the end of this year be equal to new installations of last year-maybe a 15-percent increase.
It depends on a few markets. It depends on the United States, which is a very big market this year. It looks like it's going to go down with respect to last year but hopefully not very much. Developments in China continue to be quite strong. It looks like they are going to have a big increase this year with respect to last year. Europe is going to be down a little bit.... The U.S., Europe, and China define global installations. If we speak specific countries, for sure countries will have fewer installations than last year....
I expect renewable energy to be one of the sectors that leads the [global economic] recovery. It will catch up very quickly when the economy recovers and will continue to develop with growth rates you have seen in the past. But for a couple of years, it is not going to be the same.
What role will IRENA play in renewable energy's recovery?
The creation of IRENA is very important. It can really be a catalyst of development of renewable energy globally. If the organization is set up correctly-which is not evident yet, we'll have to see if it works-and if everything goes well, it's going to help accelerate the development of renewable energy. Because the development of renewable energy is coming. It's there. The question is: What is the rate of development? How fast do we go? There, IRENA can play a really critical role.
Ben Block is a staff writer with the Worldwatch
Institute. He can be reached at email@example.com.
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