An Institutional Analysis Of the Transition to Renewable Energy

Transcription

1 NTRES 431 Environmental Strategies An Institutional Analysis Of the Transition to Renewable Energy Sinon Bamidaaye, Nora Lovell, Paswell Marenya, Isaiah Sutton Jim Goetz Grant MacIntyre Jong O Sun

2 Contents Introduction Institutional Actors NGOs The Market The Government Conclusion

3 Contents Introduction Institutional Actors NGOs The Market The Government Conclusion

4 Introduction 370 ppm 12% increase in 30 years 320 ppm

5 Source: IEA Introduction

6 Source: IEA Introduction

7 Source: BP Proved oil reserves (2003)

8 Proved natural gas reserves (2003) Source: BP

9 Source: BP Proved coal reserves (2003)

10 Source: BP Major oil trade movements

11 Source: BP Crude oil prices since 1861

12 Fossil fuel reserves-to-production (R/P) ratios (2003) Source: BP

13 Primary energy consumption per capita Source: BP

14 Source: BP Peak Oil Production

15 Contents Introduction Institutional Actors NGOs The Market The Government Conclusion

16 Developed Nations In the U.S. 6% energy = renewable (IEA 2003) Predominately Nonrenewable Energy (Nuclear, Fossil Fuels) Centralized distribution Capital Intensive Environmentally Destructive Shift to Renewable Energy unlikely Existing infrastructure High Initial Investment Path dependency Entrenched capitalism

17 Developing Nations 2 Billion people live without Electricity (NGO Renewable Energy Initiative) Best Option = Renewable Energy (Wind, hydro, solar, efficient biomass) Easily Distributable Labor Intensive Naturally sustainable Shift to Renewable Energy Sources likely with Institutional Reform

18 Role of NGOs NGO= Organizing Institutional Structure in Developing Nations Underdeveloped markets Unrepresentative / Corrupt Governments The Goal of many NGOs is to improve quality of life via Infrastructure Human Capital Financial Capital Natural Capital

19 Source: CIA Case Studies - Togo

20 Case Studies - Togo Mainly use biomass as a energy source Cut down trees (tragedy of the commons ) Great possibility of using RE Solar, water, wind etc. Government Corruption is main obstacle of shift NGO can important role

21 Case Studies - Light Up The World Source: Light Up The World Foundation

22 Case Studies - Phillips Lighting Source: Philips

23 Micro Economic Reform NGOs promote Renewable Energy Sources via Micro Economic Reform Lending groups (LUTW) Installment Plans for consumer goods (purchase of cook stoves in Togo) reasonable interest rates Individual Crediting policies

24 Macro Economic Reform Macroeconomic Reform as a Result of Renewable Energy Renewable Energy = Labor Intensive Shift from agriculture to sustainable industry Increased worker productivity Increase Gross Domestic Product 90% of export earnings in pay for imported oil (LUTW) less National Debt renewable energy = economic sovereignty reduced imports = government funds available for national investment Education/ infrastructure/ health care

25 Future of RE in Developing Nations the bottom of the Pyramid (Philips) 4 billion people (2/3) of the world populations live with out adequate energy provision Success of NGO = market and profit opportunity

26 Contents Introduction Institutional Actors NGOs The Market The Government Conclusion

27 Shifts for renewable energy Increasing energy costs and environmental degradation will make conventional energy sources less attractive. Fossil Fuel scarcity Increased production costs Pollution Deteriorating health The threat of global warming General environmental destruction

28 Catalysts for changes in the market Energy resource scarcity oil gone within a century gas possibly gone as soon as 2025 New technology Social and personal priorities

29 The Future of the Market (1) Will the shift be an orderly sweeping transition or a series of incremental changes over time? What innovative technologies will lead the market? Will incumbent industries lead the transformation or will new market entrants gain consumer favor? How quickly will the market transform as an institution?

30 The Future of the Market (2) Where will the pressure to change originate? Will industries shift to renewable energy systems to avoid government regulation? Will profit motives drive corporations to seek new markets? Will consumer demand lead the transition to safer, greener, cleaner, more efficient energy?

31 Source: Shell Case Studies - Shell

32 The Market Incentives for the Shell Group Governments raising the bar New more efficient technologies and firms A global call for sustainability, corporate accountability, and safe energy The most powerful catalyst will be social and political pressure

33 Contents Introduction Institutional Actors NGOs The Market The Government Conclusion

34 Benefits Policy Makers View Source: IEA

35 Policy Makers View Weakness Still not competitive Small portion of energy mix Government Policy is Important Source: IEA

36 Policy Instrument Object of Policy Classification Reduce Costs Policy Instrument R & D, Market Development/ Project support, Feed-in Tariffs Transition Portfolio Targets, RE Certificates/ Green Power Market Rule Tax Treatment, Environment Programs, Distributed Generation, Regulatory Reform, Empowering Customer Choice Policy Process & Outreach Education, Information Program etc.

37 Policy Instrument Object of Policy Classification Policy Instrument Supply and Capacity Investment Tax Credit, Property Tax Exemptions, Capital Grants, Government Purchases, Third-party Finance Supply and Generation Bidding Systems, Production Tax Credits, Guaranteed Prices, Feed-in Tariffs, Obligations, Tradable Certificates Demand and Capacity Customer Grants/Rebates, Tax Credits, Sales Tax Rebates, Third-Party Finance Demand and Generation Net Metering, Green Pricing, Voluntary Programs, Government Purchases, Exercise Tax Exemption Etc Regulatory and Administrative Rules, Public Awareness Programs

38 Evolution of Policy (IEA countries) Source: IEA

39 Case Study Tax Shifting United Kingdom Exempt Climate Change Levy for RE(2001.4) Netherlands energy tax exemption, deregulation, and marketing campaigns number of customers: tripled in just one year Germany comprehensive ecological tax reform law (1999.3) renewable energies law (2000.2)

40 Case Study Obligation & Trading Portfolio Targets Guarantee minimum market size & implementation schedule Reduce regulatory uncertainty & attract private sector investment EU: 12% share of overall energy by 2010 Australia: mandatory portfolio target coupled with a TRC market

41 Case Study Obligation & Trading Tradable Renewable Energy Certificates (TRCs) Liable entities are mandated to generate or use a certain percentage of renewable electricity Certificates are issued by the generators and must be surrendered by liable entities to prove compliance Certificates are traded separately from the electricity Reduce technology costs and to increase efficiency in production

42 Main Factors for Successful Policy Constant and predictable governmental support Policies should be developed and applied uniquely Proper combination of policy instruments is needed Policy assessment based on a full-cost accounting analysis

43 The Bush Energy Plan Heavily anchored in market-based incentives Focused on protecting financial institutions such as corporations and farms Increase in funding for renewables of 39 million dollars Total spent importing oil each year: 20 billion dollars Does not provide sustainable future, more renewable focus is necessary.

44 Contents Introduction Institutional Actors NGOs The Market The Government Conclusion

45 Conclusions Worldwide need for a shift towards renewable and sustainable energy Government policy is the best means to achieve the shift in developed nations NGOs are institutionally positioned to bring about renewable energy in developing nations Market Institutions will adapt to changing social demands

46 Discussion