Renewable energy projects and businesses surged in the 2010s. Yet, fossil fuel energy sources remain a big player in the energy market. What will be the consequences of the EU – through the European Investment Bank (EIB) – essentially ending funding for fossil fuel energy?

Renewable Energy In The EU

The current state of renewable energy in the EU is a highly segmented one. Neither renewable nor fossil fuel energy production makes up the majority share of the total energy market, according to data released by the European Commission. Although there is policy shift aimed at decreasing energy production using solid fuels, the three largest production sources in the EU continue to be nuclear energy, solid fuels and gas (over 60 per cent of the current total energy production).

The share of renewable energy out of total energy production in the EU is currently composed of around 13 per cent wind, 10 per cent hydro, four per cent solar and three per cent biomass energy production. Although all feature the same concept of energy production, they contribute to the growth of renewable energy production unequally.

Wind Power Surging

Wind energy has been the main growth source. By comparing the same months from 2016 and 2019, a stable 2 per cent increase can be seen. Additions of new wind energy facilities look to be the primary cause of growth. Decreasing costs associated with wind energy production are also contributing to further growth. Renewable energy market share growth also looks to be partially caused by the decline of the share of fossil fuel-based energy. Together, increasing production costs for coal energy and the end of governmental support for fossil fuel projects are working according to the EU’s 2050 Long-Term strategy.

Public Opinion On EU Support For Clean Energy

Public opinion about the direction the energy industry in the EU is developing towards could be an important factor. On one side, in Eurobarometer survey released in September 2019, 90 per cent of respondents agreed that “the EU must ensure access to clean energy”. However, the support for investments into clean energy in the next decade ranges from 29 per cent in Slovakia to 65 per cent in Sweden – clearly a substantial difference. Hence, because of intra-EU differences, public opinion could direct the development of the energy sector to a different path. Disagreements between regions with already well-developed renewable energy sectors, and those without, could emerge.

The Renewable Energy Picture Outside The EU

Outside the EU, the share of renewable energy out of the total gross electricity consumption is higher in all EU candidates (except Turkey), compared to the EU’s share. The main drivers of renewable energy are also quite different. The four candidate countries with a higher share of renewable energy sources than Turkey’s all boast ample hydroelectric and solar resources, thus taking advantage of a readily available renewable energy source.

The Asian renewable energy market presents a mixed landscape. Most Asian countries are either rich with fossil fuels or are importing fossil fuels for energy production from their neighbours. In Asian countries rich with fossil fuels – particularly West Asian countries – renewable energy projects are taking off. Increasing the share of energy generated from a readily available resource, such as solar radiation, will take time. Nevertheless, it is one of the best regions to develop this source of energy. Creating a stable source of electricity generation from a readily available resource should provide insurance against any future volatility.

In Asian countries with lower reserves, renewable energy development isn’t a top priority. Even with lower fossil fuel reserves, the countries can either import fossil fuels from their neighbours, or use their domestic resources in cases where populations are small enough.

The Economics Of Renewable Energy

The competitiveness of industries and the businesses making them up depend on several factors. According to Porter’s Analysis, factors like new entrants into the industry and bargaining powers of suppliers and buyers make an industry more or less competitive. On the business-level, businesses become more competitive through increasing market shares and most times, decreasing good or service prices.

This is why the decreasing financial supporting for fossil fuel energy projects is going to make a negative contribution to competitiveness in the short term, and a positive one in the long term.

The threat of new entrants into the energy industry is going to decrease because of decreased funding for fossil fuel energy projects. Since fossil fuel-based energy producers could see a decline in their share of the total energy output and will have to cope with higher production costs, their competitiveness will decrease. Although competitiveness will decrease in the short term, funding being redirected to renewable energy projects should eventually increase its level.

For businesses where energy is an important component of production, the decision to end funding support from the side of the EU will have a negative contribution to the production process. Renewable energy production has only been falling to the lower price range of fossil fuel energy. This means that businesses will see energy costs for production remaining the same, or even increasing with lower funding for fossil fuel energy projects.

The individual differences between energy production in the regions of EU are quite large. Household electricity prices can differ as much as two times between Western and Eastern EU members. Different energy production sources also dominate in different EU regions. Southern EU states produce energy mostly from oil, gas and coal, while other energy sources dominate in Northern EU states.

There is also strong intra-region variation. Oil, gas, and coal electricity production shares range by 15.1 percentage points in-between Northern EU neighbours Finland and Sweden, for example. Certain regions are going to be better off because of the decrease in funding from the European Investment Bank for fossil fuel energy projects. Northern and Eastern states could see even more funding for renewable energy projects. At the forefront of renewable energy production as the total share of electricity production in the EU, Northern and Eastern states could hit even higher market shares.

Western and Southern regions will be hit the hardest by this measure. These are the regions where renewable energy production is in the under 10 per cent range. Dealing with lower funding from the EIB could prove to be difficult.

The Future Of Energy In The EU

The future of the energy industry depends whose needs are ultimately put first. For businesses, choosing the still cheaper fossil fuel-based energy could be the right choice. For the public, clean energy is important, but unequally so in different member states of the EU. If the same trends will continue, a larger discussion on the demands and perspectives of the public and businesses should emerge.

Fuel costs for energy production are also going to play a role in the direction the industry will be going towards. The majority of the energy produced in the EU is made from nuclear and fossil fuel sources. The prices of the two materials could increase in the future. This could be the case because of the rising costs of new nuclear reactors and ever-volatile fossil fuel prices. However, it is possible that more efficient building of new nuclear facilities could solve the rising cost problem. If this happens, nuclear energy is likely to maintain its share out of the EU’s total, while fossil fuel’s share will decline even further.

Components for renewable energy facilities could become cheaper or more expensive in the future. On one side, technology related to renewable energy is developing. Along with it, the efficiency of renewable energy production facilities could become more affordable. On the other, storage costs pose a challenge to further decreases in costs. Even if the costs of building the facilities will rise in the future, they could be offset through predicted increases inefficiency.

The inevitable fact of energy consumption in the EU is that it will grow significantly in the coming decades. Demand for electricity will grow, and possibly at even faster rate if industries reliant on electricity use will continue to develop. Legislative initiatives by the EU have aimed to increase energy savings. These measures to decrease energy consumption have only been partially successful (for example resulting in a seven-year decrease, then increases). Increasing demand and funding being redirected to still developing energy technologies could produce new challenges in the future.

Negative consequences for businesses and certain regions of the EU could be the price paid for the ended funding for fossil fuel projects. It remains to be seen whether this step to achieve long-term energy goals will be the better choice when weighed against its negative consequences.

L'articolo As Support Ends For Fossil Fuels What’s The EU’s Next Energy Source? proviene da InsideOver.

Sino-Russian axis is expected to reach a new apogee since the two countries would be working on the deepening of their energy cooperation through the joint development of nuclear- and wind-powered projects in the Arctic.

Until recently the resource-rich region was eyed by China exclusively from the point of view of the gas exploitation and of the construction of the so-called Polar Silk Road, but things are quickly changing as shown by the moves of the State Grid Corporation of China (SGCC), that is Beijing’s electric utility company and the world-largest in the electric power industry.

Arctic Wind is the key

Ou Xiaoming, chief representative of SGCC in Russia, declared that the company is very interested in offering its expertise and know-how to Moscow in order to help the country reach the much-aspired goal of diversifying the energy industry and start the emancipation from the fossil fuel dependency – a target that China dreams to achieve as well by the mid-century.

To date, China’s involvement in the Arctic is limited to the financing of Russian-owned liquefied natural gas plants Yamal and Arctic 2, the latter is under construction, from which the Kremlin plans to extract most of the gas that will supply Eurasian markets in the coming years, but the country aims at convincing the Russian partner to open a resource sharing policy.

China aspires to satisfy all of its domestic electricity demand from wind power by 2050s and, to do so, is raising its generation capacity yearly and has started looking at North. The reason is simple: according to Russian-owned company Rosnono, the Arctic and the Far East provide the country with the world-biggest potential for wind power generation, but the sector is scarcely developed and the Ukraine-related sanctions regime affects as well the purchase of Western-made high tech which could prove useful.

Russia’s long-term energy agenda speaks clearly: fossil fuels represent the present, but renewable energy is the future. China is recognized globally as the world leader in wind power generation and, to date, is Russia’s only chance to develop the sector due to the ongoing sanctions.

Xiaoming’s claims that SGCC is already in talks to enter the Arctic are the latest proof that China’s Russian-friendly revolutionary policy is making history and re-making the world order according to Beijing wishes. The agreement that the company and the Kremlin are set to reach soon is likely to take a do ut des-modelled form: Chinese know-how and technology in exchange for percentages of energy.

What is next?

During the 2019 Saint Petersburg International Economic Forum, Russia and China agreed on deepening energy cooperation in every relevant-considered field: from trade to production chain and exploration. The Arctic was at the center of the talks and particularly important was the focus given on the joint development and exploitation of the regional resources.

Xiaoming’s claims show that China thinks that the moment has come to go further to the mere oil and gas trade to try to open new fronts of collaboration in which the country ends to play the junior part as regard to energy. China needs renewables, Russia needs know-how and money, the conditions for a win-win agreement are present.

But when the matter is energy security the risks are beyond the corner. The opening of a resource sharing policy in the medium-term may lead to dangerous misunderstandings and tries of trespassings from both parts, which are already divided by a series of still-unsolved issues. A deepened energy cooperation may be the key for a strong alliance or the cause of a traumatic divorce.

L'articolo China’s Energy Ambitions Set to Shake Up Russian Arctic proviene da InsideOver.

(Tuala, Kenya) In a strategically placed location, Caroline Anyango, a 32-year-old mother of three, runs a small business of cooking and selling chapati. She sets up her table and a rechargeable solar lamp, hanging it on the wall outside her house in a busy roadside in Tuala, 30 kilometres west of Nairobi, Kenya’s capital city.

Every day, Caroline wakes up at 5.00am, when it still dark, and lights her solar power lamp. It is peak hours for her business during this period.

This is usually the time people have breakfast. “Many people are already up and going to work, so it is timely for my business,” she says. Solar power enables Caroline to get everything ready for her customers: “I don’t have to wait until it’s dawn, I light up the lamp and start opening my business as early as possible.”

More than 2.2 billion people and millions of businesses worldwide don’t have access to reliable power. Frequent power outages undermine productivity and development. The World Bank says that African countries face regular power black outs, with outages lasting from 50 hours to 4,600 hours each, equalling up to 8,760 hours in a year.

But Caroline is already reaping the benefits from verified renewable energy technology, as well as meeting her domestic energy needs in a cost-effective, secure and environmentally sustainable manner.

“This isn’t like the kerosene lamp, which filled the house with smoke and meant that you spent a lot of money buying kerosene every day,” she notes.

Africa has an estimated population of more than 1.3 billion, and a population growth rate of two percent. Meeting the needs of the growing population means meeting the huge demand for jobs and food production. Therefore, there is also an exponential need for energy to drive these emerging economies, of which many are locally based Small Medium Enterprises (SMEs) that account for 90 % of all business in Africa.

Allen Dennis, a Senior Economist with the Development Economics Prospects Group at the World Bank, says that small and growing business contributes up to 80% of the continent’s employment.

“Access to affordable energy in rural areas accelerates the adoption of new technologies, linking markets and new value chains that allow growth of small-scalebusiness,” Dennis added.

The availability of affordable energy is a golden pillar that drives all Sustainable Development Goals, notably enabling many households in rural Africa to increase their productivity whilst also earning a sustainable livelihood. Caroline explains that with the help of solar, she can save 800 Kenyan Shillings (roughly 8 USD) a week that was previously used to buy kerosene. “I wake up very early to make an extra 200 shillings (2 USD) every morning. I also save money because now I don’t buy kerosene,” she says.

Fossil fuels are unsustainable and expensive, as well as a source of pollution to the environment. Investing in renewable energy improves energy security, on top of enhancing access and mitigating climate change.

The United Nations Development Programme’s State of Electricity Access Report of 2017 shows that the global investment in renewable energy has more than doubled the investments in conventional energy sources since 2015.

In December 2018, at the Katowice Climate Change Conference in Poland, the UK announced its support of £100 million for up to 40 renewable energy projects across Africa over the next five years. This helps improve access to clean energy, cut carbon emissions and support energy and job creation.

Juan Casla Urteaga is a policy officer at the European Commission. He notes that 35 % of the grant is being used to guarantee those keen in expanding the production of renewable energy in Africa. This reduces the continent’s carbon emissions, increasing energy efficiency. “The renewable energy sector will enable many people to access energy, develop new skills, and unlock entrepreneurship. This brings a potential of creating 12,000 new jobs,” he says.

The sudden interest in renewable energy production is largely due to its cost-effectiveness, which makes it all-the-more beneficial for those in rural Africa. Localised plans to meet energy needs at a village or community level has also created a number of job opportunities in the community.

Leonard Kiprotich is among those with a job in the renewable energy sector, and has been working in rural Kenya distributing and installing solar panels. “I didn’t have anything else to do when I finished school. I got an opportunity to work with a solar company as their distributor and technician,” he said.

In Chad, 25,000 micro entrepreneurs are being trained thanks to renewable energy. Solar-based energy systems are being set up in 40 villages in Mauritania and 309 villages in Mali, according to the UNDP.

The Kenyan government is also expanding their investment in renewable energy. The World Bank is funding a $150 million solar power project, as well as providing clean cooking stoves to roughly 1.3 million people.

Ashden is a UK based charity that champions sustainable energy solutions both in the UK and around the world. They hold the annual Ashden Awards, wherein several sustainable energy investment projects are proposed, and the winning two are invested in. Zambia and Kenya were the winners this year.

Ashden CEO, Harriet Lamb, said: “The outstanding organisations that make up our 2019 roster can give us all hope: we have the solutions to the climate emergency, solutions that are working already and just need scaling even further. In particular, financial innovation and commitment must be an integral part of ensuring these solutions are sustainable – and that is just what our 2019 winner is showcasing. Others should come and steal their model and their ideas with pride!”

L'articolo Access to Renewable Energy Transforms Lives in Africa proviene da InsideOver.