Europe falling behind on renewables

It is boom time for renewables, pretty much the world over. Coming from such a low base (just 3 per cent of total primary energy supply in 2004, excluding the burning of wood and other biomass), at a time when the world has at last woken up to climate change, that is hardly surprising. However, there is a huge mismatch between what climate change science is telling us and the way politicians and most energy institutions talk about renewables’ future role.

The logic of the United Nations’ Intergovernmental Panel on Climate Change is compelling: to avoid run­away climate change we have to restrict temperature increases to below 2°C by the end of this century. That means stabilising concentrations of CO2 in the atmosphere at about 450 parts per million – we are already at 380ppm today – which involves reducing CO2 emissions by about 80 per cent by 2050.

We can get more efficient in using energy – and we will. We can get smart at developing cleaner ways of burning fossil fuels and storing CO2 in exhausted oil and gas reservoirs or saline aquifers – and we will. We can even build a new generation of nuclear reactors – and many think we will. But the idea that these measures will get us anywhere near an 80 per cent cut in emissions by 2050 is ludicrous. Only renewables can fill that gap.

Governments have at last started to recognise this “inconvenient truth”, becoming suspicious of the mealy-mouthed projections from bodies such as the International Energy Agency, let alone oil companies with their less-than-objective “scenarios”. Contrary to what most Europeans may believe, it is the US that appears to be showing the greatest hunger for increasing the contribution from renewables.

For the second year running, more wind power was installed in the US in 2006 than in any other country: about 2,500MW. The American Wind Energy Association forecasts that a further 20,000MW will be installed before 2010, an investment of about $30bn, putting it well ahead of Germany and Spain which currently head the installed capacity league table. Much of this has been driven by a subsidy of 1.9 cents per kilowatt-hour for the first 10 years of any wind farm’s operation and, although there has been some doubt as to whether this production tax credit will be extended beyond 2008, most of the presidential hopefuls (in both parties) have been making warm noises about the importance of renewables.

Twenty-three states now have ambitious “renewable portfolio targets”, but it is California that has really seized hold of the challenge. Arnold Schwarz­enegger, the governor, is taking the credit (with the state well on track to generate at least 17 per cent of electricity from renewables by the end of the year), but much of California’s success goes back to the multi-billion-dollar research programmes introduced during President George W. Bush’s first term as compensation for pulling out of the Kyoto process. California has become the centre for hund­reds of start-up “clean tech” companies.

By comparison, the European renewables sector often appears stodgy, although it is fair to say that the new target adopted at the European Union summit in March (to achieve 20 per cent of all energy generation – not just electricity – by 2020) has sent shock waves through both the policy community and Europe’s energy companies. The idea of generating 12 per cent of transport fuels, 18 per cent of heat and 34 per cent of electricity from renew­ables will require every member country radically to rethink its policy mix.

Cost remains a crucial issue. Many energy experts still see any government subsidies (direct or indirect) as ideologically illegitimate. “The biggest challenge facing renewable energy technologies is to advance the state of the art to the point where more renewable options can generate energy at costs that are competitive with conventional sources,” is how the IEA puts it, missing the point that until such time as a realistic cost of carbon is internalised into the price we pay for the use of oil, gas and coal, renewables will never be given a level playing field.

As Sir Nicholas Stern put it in his report for the UK government: “Climate change is the greatest market failure the world has ever seen” – a failure that has held governments back from promoting renewables in the past and that may even now thwart the growth of the only technologies that can possibly prevent a grim descent into irreversible, runaway climate change.

The writer is founder director of Forum for the Future and chairman of the UK Sustainable Development Commission