The Intergovernmental Panel for Climate Change’s latest report offers a scenario where renewable energies gain the upper hand against rising emissions
Global demand for energy can be met by renewable sources, via an annual average investment of less than 1% of global GDP, according to a new IPCC report. Even more encouraging is the report’s finding that some of the main renewable energy types are already competitive with existing market energy prices.
Yet while the long-term outlook may have suddenly brightened,emissions continue to escalate. According to the report, by the end of 2010, atmospheric CO2 concentrations had increased to 39% above pre-industrial levels.
Part of the problem is that two renewable energy (RE) sources with great potential – solar and marine power – compete with fossil fuels on an uneven playing field.
Pricing power
The report flags two key market failures that are holding back broader adoption of RE technologies, which create a rationale for government intervention.
A continued absence of robust carbon markets, in which the external costs of energy is monetised (making fossil fuels more expensive than they are today), is flagged as a key factor. As long as fossil fuels remain relatively cheap, the business case for implementing RE is undermined.
The second market failure is companies’ inability to see the value of investing in clean technologies now. The report notes that unless there is an impetus for companies to do so (such as a punitive carbon price, or a substantial cleantech subsidy) the investments are unlikely to be made on the scale necessary.
So governments play a crucial role in accelerating RE deployment, by setting policy frameworks that send the right signals to investors.
But even in the absence of climate policy, RE technologies will become economically competitive over time, the report says, amid technological advances, and rising fossil fuel prices.
Offshore wind, followed by concentrated solar power (CSP) and utility-scale photovoltaic (PV) energy generation have yet to reach grid parity. However, advances in PV and CSP technologies and manufacturing processes, and novel foundation and turbine designs for offshore wind energy promise to further erode costs.
According to the report, solar energy has the highest technical potential of all the RE technologies. However, regulatory and institutional barriers threaten to impede deployment, as do integration and transmission issues.
But as Mark Twidell, executive director of the Australian Solar Institute notes, there are ways to sidestep these issues in the short term. Bolting technologies on to existing gas or coal-fired power plants can enable swifter penetration of baseload renewable energies such as CSP.
“The hybrid approach is a practical way to prove a technology’s bankability, while returns are generated from developing where infrastructure already exists,” says Twidell.
The report stresses that no single RE source will dominate; rather, a portfolio approach is needed if transmission issues related to accelerated deployment of renewable energies are to be avoided.
Global Wind Energy Association secretary-general Steve Sawyer is cheered by the report. Not only can RE decouple economic growth from rising carbon emissions, but as Sawyer notes, its “role in reducing greenhouse gas emissions will be considerably more important than that of natural gas, carbon capture and storage, or nuclear power”.