From Rio to Johannesburg: Renewable Energy for the 21st Century

World Summit Policy Brief #10


From Rio to Johannesburg:
Renewable Energy for the 21st Century
by Christopher Flavin

WASHINGTON, DC August 21, 2002 - UN Secretary-General Kofi Annan's selection of energy as one of five key themes to be addressed at the World Summit is itself an important indicator of progress over the past decade.  At the 1992 Rio Earth Summit, discussion of energy-and particularly the potential of renewable energy-was given short shrift in the Agenda 21 document that emerged from the conference.  Energy was indirectly addressed in the Framework Convention on Climate Change adopted in Rio, but renewable energy sources such as solar energy, wind power, and bio-energy received little attention.

What a difference a decade can make.  Since 1992, renewable energy markets have shifted into a new gear.  Wind power generation, for example, has gone from 2,170 megawatts at the beginning of 1992 to 24,800 megawatts at the beginning of 2002-a more than tenfold increase in 10 years.  The annual production of solar cells has risen from 55 megawatts in 1991 to 391 megawatts in 2001, a seven-fold increase.

These growth rates-averaging more than 30 percent annually in the last five years—provide early indicators that the world has entered the post-petroleum century—a century in which diminishing oil supplies, a limited capacity of the atmosphere to absorb carbon dioxide, and the burgeoning energy needs of billions of people in the developing world all indicate the need for new sources of energy to complement and replace the past-century's fossil fuels. 

The extraordinary growth of renewable energy in the past decade was driven by dynamic markets in a handful of countries.  In the case of wind power, three quarters of the global capacity is found in Germany, the United States, Spain, Denmark, and India.  In some regions of Denmark, Germany, and Spain, wind power already provides more than 20 percent of the electricity—higher than the hydro or nuclear share of world energy supplies.

The success of these five countries, plus Japan, which has dominated the solar market in recent years, stems from policies they have adopted in the last decade.  The challenge for Johannesburg is to extend the success of these five nations to the world as a whole.  It is therefore essential that the Johannesburg action plan include a clear recognition of the important role of renewable energy in powering a sustainable world, as well as practical recommendations for what national governments and the international community can do to make this vision a reality.

The renewable energy sources of today represent roughly the same share of the overall energy supply—and the same prospect for future growth—as petroleum did a century ago.  In 1902, petroleum accounted for about 2 percent of the total but was already expanding quickly in niche markets.  With wind and solar markets now doubling in size every three years, manufacturers are able to scale up production and drive down costs.  In order to find growth rates comparable to those of renewables today, you have to look at the recent history of such sectors as cell phones and the Internet.  By comparison, the market for oil is now growing at less than 1.5 percent per year.

Put simply, our current energy system is undermining global security, from the dangers of depending on the Middle East for oil to the ecological dangers of continuing to pollute the atmosphere.  Reducing world dependence on fossil fuels before a major crisis forces an unplanned transition should be considered a security priority.

Renewable energy has a particularly important role to play in developing countries.  Indeed, it is hard to think of a better setting than Johannesburg in which to get serious about renewable energy as a tool for tackling what might be called "energy apartheid."  With 4 billion people relying predominantly on unsustainable energy sources, and the remaining 2 billion lacking access to electricity or liquid fuels, the world's energy haves and have-nots are both in unsustainable positions—and could both benefit enormously from the accelerated spread of renewable energy.  For developing countries, providing energy is essential to education, health care, and the development of new industries.

The potential for renewable energy is increasingly recognized both in the worlds of government and of business.  This is seen in a growing flow of capital into renewables by large oil and power companies, as well as from the venture capital sector.  Renewable energy legislation is beginning to proliferate at the national and state levels.  Brazil, China, and India are among the countries that have recently strengthened their renewable energy laws, with the aim of accelerating market growth.  And in the United States, nearly half the members of Congress belong to the renewable energy caucus.

The G8 club of industrial country leaders set up a special government/industry Task Force on Renewable Energy that issued a report in July 2001, which concluded, " . . . renewable energy resources can now sharply reduce local, regional, and global environmental impacts as well as energy security risks, and they can, in some circumstances lower costs for consumers."  The leader of that Task Force, Mark Moody Stuart, the former Chief Executive Officer of Royal Dutch Shell, has called on governments " to expand renewable energy targets, removing inappropriate subsidies and switching some to renewable energy to provide a level playing field in the energy sector."

The main responsibility for accelerating the use of renewable energy lies with national governments (and in some cases state or provincial governments) that regulate the energy sector, dictate taxes, allocate subsidies, and otherwise influence energy trends.  However, the international community can provide assistance in a number of important ways, and the Johannesburg Summit offers important opportunities for progress:


1. Goal Setting

Ambitious, specific goals for increasing the share of renewables in the total energy supply are proven tools for galvanizing government action.  The success of renewable energy goals can be seen in Germany, where a national target on renewables passed in 1991 spurred market and policy development, allowing the country to greatly exceed its initial goal.  More recently, the European Union has established a goal of doubling the contribution of renewables to its electricity supply renewables by 2010.

In the course of preparations for the World Summit, various renewable energy goals for the world have been proposed.  The most widely cited figure is that contained in the "Brazilian Energy Initiative" and adopted at a meeting Environment Ministers from Latin America and the Caribbean, meeting in Sao Paulo in May 3002.  It calls for 10 percent of world energy to come from renewables by 2010.


2. Providing Information on Policies that Work

Since it is the policies of just a few countries that have successfully expanded renewable energy markets so dramatically in the past decade, it is important that the policies of these nations be widely introduced to government and industry leaders around the world.  Particular focus should be on providing access to the grid under a system of standardized contracts at just and reasonable prices; and on providing limited, cost-effective subsidies at the minimum level needed to spur market development.

There is also a need for a specific institution to serve as a clearinghouse and disseminator of effective new energy policies, and to provide active policy advice and human capacity building for countries around the world, with a particular focus on developing nations.


3. Financing Renewable Energy

International institutions and bilateral government agencies have generously subsidized the export and development of fossil fuel and nuclear technologies over the past five decades.  Even today, the bulk of such financing goes to well established and in many cases unsustainable energy sources. Funding agencies such as the Global Environment Facility are devoted to supporting renewables, but at a much lower level.

A shift in energy funding priorities at the international level is essential to accelerating market growth in developing nations.  GLOBE, an organization of parliamentarians from around the world has proposed a target of shifting 10 percent of the energy export financing support from industrial country governments to renewable energy by 2010.  Organizations such as the World Bank and the regional development banks should also boost their commitment to renewables.