Renewable energy commercialization

Renewable energy commercialization involves the diffusion of three generations of technologies dating back more than 100 years. First-generation technologies, which are already mature and economically competitive, include biomass, hydroelectricity, geothermal power and heat. Second-generation technologies are market-ready and are being deployed at the present time; they include solar heating, photovoltaics, wind power, solar thermal power stations, and modern forms of bioenergy. Third-generation technologies require continued R&D efforts in order to make large contributions on a global scale and include advanced biomass gasification, biorefinery technologies, hot-dry-rock geothermal power, and ocean energy.

The wind, Sun, and biomass are three renewable energy sources

Global renewable energy investment growth (1995–2007)

While there are many non-technical barriers to the widespread use of renewables, some 73 countries now have targets for their own renewable energy futures, and have enacted wide-ranging public policies to promote renewables. Climate change concerns are driving increasing growth in the renewable energy industries. Leading renewable energy companies include: Enercon, Gamesa, GE Energy, Q-Cells, Sharp Solar, SunOpta, and Vestas.

Global revenues for solar photovoltaics, wind power, and biofuels expanded from $76 billion in 2007 to $115 billion in 2008. New global investments in clean energy technologies — including venture capital, project finance, public markets, and research and development — expanded by 4.7 percent from $148 billion in 2007 to $155 billion in 2008. Continued growth for the renewable energy sector is expected in the mid- to long-term, but 2009 will be a year of refocus, consolidation, or retrenchment for some companies. At the same time, new government spending, regulation, and policies should help the industry weather the current economic crisis better than many other sectors. Most notably, U.S. President Barack Obama's American Recovery and Reinvestment Act of 2009 includes more than $70 billion in direct spending and tax credits for clean energy and associated transportation programs. Clean Edge suggests that the commercialization of clean energy will help countries around the world pull out of the current economic malaise.

Overview

Rationale for renewables

Renewable energy technologies are essential contributors to the energy supply portfolio, as they contribute to world energy security, reduce dependency on fossil fuels, and provide opportunities for mitigating greenhouse gases. Climate-disrupting fossil fuels are being replaced by clean, climate-stabilizing, non-depletable sources of energy:

...the transition from coal, oil, and gas to wind, solar, and geothermal energy is well under way. In the old economy, energy was produced by burning something — oil, coal, or natural gas — leading to the carbon emissions that have come to define our economy. The new energy economy harnesses the energy in wind, the energy coming from the sun, and heat from within the earth itself.

The International Energy Agency estimates that nearly 50% of global electricity supplies will need to come from renewable energy sources in order to halve carbon dioxide emissions by 2050 and minimise significant, irreversible climate change impacts.

Three generations of technologies

The term renewable energy covers a number of sources and technologies at different stages of commercialization. The International Energy Agency (IEA) has defined three generations of renewable energy technologies, reaching back over 100 years:

• First-generation technologies emerged from the industrial revolution at the end of the 19th century and include hydropower, biomass combustion, geothermal power and heat. These technologies are quite widely used.

• Second-generation technologies include solar heating and cooling, wind power, modern forms of bioenergy, and solar photovoltaics. These are now entering markets as a result of research, development and demonstration (RD&D) investments since the 1980s. Initial investment was prompted by energy security concerns linked to the oil crises of the 1970s but the enduring appeal of these technologies is due, at least in part, to environmental benefits. Many of the technologies reflect significant advancements in materials.

• Third-generation technologies are still under development and include advanced biomass gasification, biorefinery technologies, concentrating solar thermal power, hot-dry-rock geothermal power, and ocean energy. Advances in nanotechnology may also play a major role.

First-generation technologies are well established, second-generation technologies are entering markets, and third-generation technologies heavily depend on long-term RD&D commitments, where the public sector has a role to play.

Recent growth of renewables

From the end of 2004 to the end of 2008, solar photovoltaic (PV) capacity increased sixfold to more than 16 gigawatts (GW), wind power capacity increased 250 percent to 121 GW, and total power capacity from new renewables increased 75 percent to 280 GW. During the same period, solar heating capacity doubled to 145 gigawatts-thermal (GWth), while biodiesel production increased sixfold to 12 billion liters per year and ethanol production doubled to 67 billion liters per year.

Selected renewable energy indicators

Selected global indicators	2006	2007	2008
Investment in new renewable capacity (annual)	63	104	120 billion USD
Existing renewables power capacity, including large-scale hydro	1,020	1,070	1,140 GWe
Existing renewables power capacity, excluding large hydro	207	240	280 GWe
Wind power capacity (existing)	74	94	121 GWe
Biomass heating			~250 GWth
Solar hot water/ Space heating		126	145 GWth
Geothermal heating			~50 GWth
Ethanol production (annual)	39	50	67 billion liters
Countries with policy targets for renewable energy use		66	73

Annual percentage growth for 2008 was significant. Wind power grew by 29 percent and grid-connected solar PV by 70 percent. The capacity of utility-scale solar PV plants (larger than 200 kilowatts) tripled during 2008, to 3 GW. Solar hot water grew by 15 percent, and annual ethanol and biodiesel production both grew by 34 percent. Heat and power from biomass and geothermal sources continued to grow, and small hydro increased by about 8 percent.

In 2008 for the first time, more renewable energy than conventional power capacity was added in both the European Union and United States, demonstrating a "fundamental transition" of the world's energy markets towards renewables, according to a report released by REN21, a global renewable energy policy network based in Paris.

First-generation technologies

First-generation technologies are widely used in locations with abundant resources. Their future use depends on the exploration of the remaining resource potential, particularly in developing countries, and on overcoming challenges related to the environment and social acceptance.

Biomass

Biomass for heat and power is a fully mature technology which offers a ready disposal mechanism for municipal, agricultural, and industrial organic wastes. However, the industry has remained relatively stagnant over the decade to 2007, even though demand for biomass (mostly wood) continues to grow in many developing countries. One of the problems of biomass is that material directly combusted in cook stoves produces pollutants, leading to severe health and environmental consequences, although improved cook stove programmes are alleviating some of these effects. First-generation biomass technologies can be economically competitive, but may still require deployment support to overcome public acceptance and small-scale issues.

Hydroelectricity

Hydroelectric dam in cross section

Hydroelectric plants have the advantage of being long-lived and many existing plants have operated for more than 100 years. Hydropower is also an extremely flexible technology from the perspective of power grid operation. Large hydropower provides one of the lowest cost options in today’s energy market, even compared to fossil fuels and there are no harmful emissions associated with plant operation. China is the world's largest producer of hydroelectricity in the world, followed by Canada.

However, there are several significant social and environmental disadvantages of large-scale hydroelectric power systems: dislocation of people living where the reservoirs are planned, release of significant amounts of carbon dioxide and methane during construction and flooding of the reservoir, and disruption of aquatic ecosystems and birdlife. Hydroelectric power is now more difficult to site in developed nations because most major sites within these nations are either already being exploited or may be unavailable for these environmental reasons. The areas of greatest hydroelectric growth are the growing economies of Asia. India and China are the development leaders; however, other Asian nations are also expanding hydropower.

There is a strong consensus now that countries should adopt an integrated approach towards managing water resources, which would involve planning hydropower development in co-operation with other water-using sectors.

Geothermal power and heat

One of many power plants at The Geysers, a geothermal power field in northern California, with a total output of over 750 MW

Geothermal power plants can operate 24 hours per day, providing baseload capacity, and the world potential capacity for geothermal power generation is estimated at 85 GW over the next 30 years.

Geothermal power capacity surpassed 10 GW in 2008. The United States is the world leader, with some 120 projects under development in early 2009, representing at least 5 GW. Other countries with significant recent growth in geothermal include Australia, El Salvador, Guatemala, Iceland, Indonesia, Kenya, Mexico, Nicaragua, Papua New Guinea, and Turkey. As of 2008, geothermal power development was under way in more than 40 countries.

Geothermal (ground source) heat pumps represented an estimated 30 GWth of installed capacity at the end of 2008, with other direct uses of geothermal heat (i.e., for space heating, agricultural drying and other uses) reaching an estimated 15 GWth. As of 2008, at least 76 countries use direct geothermal energy in some form.

Second-generation technologies

Markets for second-generation technologies have been strong and growing over the past decade, and these technologies have gone from being a passion for the dedicated few to a major economic sector in countries such as Germany, Spain, the United States, and Japan. Many large industrial companies and financial institutions are involved and the challenge is to broaden the market base for continued growth worldwide.

Solar Heating

See also: Solar hot water

Solar heating systems are a well known second-generation technology and generally consist of solar thermal collectors, a fluid system to move the heat from the collector to its point of usage, and a reservoir or tank for heat storage. The systems may be used to heat domestic hot water, swimming pools, or homes and businesses. The heat can also be used for industrial process applications or as an energy input for other uses such as cooling equipment. In many warmer climates, a solar heating system can provide a very high percentage (50 to 75%) of domestic hot water energy. An early solar heating boom took place during the 1940s in the United States, during which period institutional support for solar research and energy conservation measures imposed during World War II fueled significant advances in solar technology, which went as far as the development of a prototype prefabricated solar-heated home. A few proponents of this technology saw it as a clean alternative to polluting fuels, but the great majority of advocates, researchers, and investors saw it as a solution to high energy costs during the war; when those conditions changed and the 1950s ushered in a period of record low energy prices, interest rapidly waned, and the commercial development of solar heating systems was postponed to a later decade. As of 2009, China has 27 million rooftop solar water heaters.

Photovoltaics

Main article: Photovoltaics

Solar array at Nellis Air Force Base. These panels track the sun in one axis. Credit: U.S. Air Force photo by Senior Airman Larry E. Reid Jr.

Photovoltaic (PV) cells, also called solar cells, convert light into electricity. In the 1980s and early 1990s, most photovoltaic modules were used to provide Remote Area Power Supply, but from around 1995, industry efforts have focused increasingly on developing building integrated photovoltaics and photovoltaic power stations for grid connected applications.

As of October 2009, the largest photovoltaic (PV) power plants in the world are the Olmedilla Photovoltaic Park (Spain, 60 MW), the Puertollano Photovoltaic Park (Spain, 50 MW), the Moura photovoltaic power station (Portugal, 46 MW), and the Waldpolenz Solar Park (Germany, 40 MW). As of 2009, the largest photovoltaic power plant in North America is the Nellis Solar Power Plant (15 MW).

At the end of 2008, the cumulative global PV installations reached 15,200 MW. Photovoltaic production has been doubling every two years, increasing by an average of 48 percent each year since 2002, making it the world’s fastest-growing energy technology. The top five photovoltaic producing countries are Japan, China, Germany, Taiwan, and the USA.

Wind power

See also: List of onshore wind farms and List of offshore wind farms

Worldwide installed capacity 1996-2008

Some of the second-generation renewables, such as wind power, have high potential and have already realised relatively low production costs. At the end of 2008, worldwide wind farm capacity was 120,791 MW, representing an increase of 28.8 percent during the year, and wind power produced some 1.3% of global electricity consumption. Wind power is widely used in European countries and the United States. Wind power accounts for approximately 19% of electricity generation in Denmark, 11% in Spain and Portugal, and 9% in the Republic of Ireland. However, it may be difficult to site wind turbines in some areas for aesthetic or environmental reasons.

The United States is an important growth area and installed U.S. wind power capacity reached 25,170 MW at the end of 2008. These are some of the largest wind farms in the United States, as of October 2009:

Wind farm	Installed capacity (MW)	State
Altamont Pass Wind Farm	576	California
Capricorn Ridge Wind Farm	662	Texas
Fowler Ridge Wind Farm	750	Indiana
Horse Hollow Wind Energy Center	736	Texas
Roscoe Wind Farm	781	Texas
San Gorgonio Pass Wind Farm	619	California
Sweetwater Wind Farm	585	Texas
Tehachapi Pass Wind Farm	690	California

Solar thermal power stations

See also: Solar power plants in the Mojave Desert and List of solar thermal power stations

Sketch of a Parabolic trough collector

Solar thermal power stations include the 354 MW Solar Energy Generating Systems power complex in the USA, Nevada Solar One (USA, 64 MW), Andasol 1 (Spain, 50 MW) and the PS10 solar power tower (Spain, 11 MW). Many other plants are under construction or planned, mainly in Spain and the USA. In developing countries, three World Bank projects for integrated solar thermal/combined-cycle gas-turbine power plants in Egypt, Mexico, and Morocco have been approved.

Modern forms of Bioenergy

See also: Biofuels

Neat ethanol on the left (A), gasoline on the right (G) at a filling station in Brazil.

Brazil has one of the largest renewable energy programs in the world, involving production of ethanol fuel from sugar cane, and ethanol now provides 18 percent of the country's automotive fuel. As a result of this and the exploitation of domestic deep water oil sources, Brazil, which for years had to import a large share of the petroleum needed for domestic consumption, recently reached complete self-sufficiency in liquid fuels.

Production and use of ethanol has been stimulated through: (1) low-interest loans for the construction of ethanol distilleries; (2) guaranteed purchase of ethanol by the state-owned oil company at a reasonable price; (3) retail pricing of neat ethanol so it is competitive if not slightly favorable to the gasoline-ethanol blend; and (4) tax incentives provided during the 1980s to stimulate the purchase of neat ethanol vehicles. Guaranteed purchase and price regulation were ended some years ago, with relatively positive results. In addition to these other policies, ethanol producers in the state of São Paulo established a research and technology transfer center that has been effective in improving sugar cane and ethanol yields.

Information on pump, California

Most cars on the road today in the U.S. can run on blends of up to 10% ethanol, and motor vehicle manufacturers already produce vehicles designed to run on much higher ethanol blends. Ford, DaimlerChrysler, and GM are among the automobile companies that sell flexible-fuel cars, trucks, and minivans that can use gasoline and ethanol blends ranging from pure gasoline up to 85% ethanol (E85). By mid-2006, there were approximately six million E85-compatible vehicles on U.S. roads. The challenge is to expand the market for biofuels beyond the farm states where they have been most popular to date. Flex-fuel vehicles are assisting in this transition because they allow drivers to choose different fuels based on price and availability. The Energy Policy Act of 2005, which calls for 7.5 billion gallons of biofuels to be used annually by 2012, will also help to expand the market.

The growing ethanol and biodiesel industries are providing jobs in plant construction, operations, and maintenance, mostly in rural communities. According to the Renewable Fuels Association, the ethanol industry created almost 154,000 U.S. jobs in 2005 alone, boosting household income by $5.7 billion. It also contributed about $3.5 billion in tax revenues at the local, state, and federal levels.

Third-generation technologies

Third-generation renewable energy technologies are still under development and include advanced biomass gasification, biorefinery technologies, solar thermal power stations, hot-dry-rock geothermal power, and ocean energy. Third-generation technologies are not yet widely demonstrated or have limited commercialization. Many are on the horizon and may have potential comparable to other renewable energy technologies, but still depend on attracting sufficient attention and RD&D funding.

New bioenergy technologies

See also: Cellulosic ethanol commercialization

According to the International Energy Agency, cellulosic ethanol biorefineries could allow biofuels to play a much bigger role in the future than organizations such as the IEA previously thought. Cellulosic ethanol can be made from plant matter composed primarily of inedible cellulose fibers that form the stems and branches of most plants. Crop residues (such as corn stalks, wheat straw and rice straw), wood waste, and municipal solid waste are potential sources of cellulosic biomass. Dedicated energy crops, such as switchgrass, are also promising cellulose sources that can be sustainably produced in many regions of the United States.

Commercial Cellulosic Ethanol Plants in the U.S.
(Operational or under construction)

Company	Location	Feedstock
Abengoa Bioenergy	Hugoton, KS	Wheat straw
BlueFire Ethanol	Irvine, CA	Multiple sources
Colusa Biomass Energy Corporation	Sacramento, CA	Waste rice straw
Fulcrum BioEnergy	Reno, NV	Municipal solid waste
Gulf Coast Energy	Mossy Head, FL	Wood waste
KL Energy Corp.	Upton, WY	Wood
Mascoma	Lansing, MI	Wood
POET LLC	Emmetsburg, IA	Corn cobs
Range Fuels	Treutlen County, GA	Wood waste
SunOpta	Little Falls, MN	Wood chips
US Envirofuels	Highlands County, FL	Sweet sorghum
Xethanol	Auburndale, FL	Citrus peels

Ocean energy

In terms of ocean energy, another third-generation technology, the world's first commercial tidal power station was installed in 2007 in the narrows of Strangford Lough in Ireland. The 1.2 megawatt underwater tidal electricity generator, part of Northern Ireland's Environment & Renewable Energy Fund scheme, takes advantage of the fast tidal flow (up to 4 metres per second) in the lough. Although the generator is powerful enough to power a thousand homes, the turbine has minimal environmental impact, as it is almost entirely submerged, and the rotors pose no danger to wildlife as they turn quite slowly.

Funding for a wave farm in Scotland was announced in February 2007 by the Scottish Executive, at a cost of over 4 million pounds, as part of a £13 million funding packages for ocean power in Scotland. The farm will be the world's largest with a capacity of 3 MW generated by four Pelamis machines.

Enhanced geothermal systems

Enhanced geothermal systems, also known as hot dry rock geothermal, utilise new techniques to exploit resources that would have been uneconomical in the past. These systems are still in the research phase, and require additional R&D for new and improved approaches, as well as to develop smaller modular units that will allow economies of scale at the manufacturing level. Further government-funded research and close collaboration with industry will help to make exploitation of geothermal resources more economically attractive for investors.

Nanotechnology thin-film solar panels

Solar power panels that use nanotechnology, which can create circuits out of individual silicon molecules, may cost half as much as traditional photovoltaic cells, according to executives and investors involved in developing the products. Nanosolar has secured more than $100 million from investors to build a factory for nanotechnology thin-film solar panels. The company expects the factory to open in 2010 and produce enough solar cells each year to generate 430 megawatts of power.

Renewable energy industry

Main article: Renewable energy industry

Global revenues for solar photovoltaics, wind power, and biofuels expanded from $76 billion in 2007 to $115 billion in 2008. New global investments in clean energy technologies — including venture capital, project finance, public markets, and research and development — expanded by 4.7 percent from $148 billion in 2007 to $155 billion in 2008.

Wind power companies

See also: Wind power industry

A Vestas wind turbine

Gamesa Wind Turbine Installed at Bald Mountain in Bear Creek Township, PA

Currently three quarters of global wind turbine sales come from only four turbine manufacturing companies: Vestas, Gamesa, Enercon, and GE Energy. Vestas is the largest wind turbine manufacturer in the world with a 28% market share. The company operates plants in Denmark, Germany, India, Italy, Britain, Spain, Sweden, Norway, Australia and China, and employs more than 20,000 people globally. After a sales slump in 2005, Vestas recovered and was voted Top Green Company of 2006. Vestas announced a major expansion of its North American headquarters in Portland, Oregon in December, 2008.

Gamesa, founded in 1976 with headquarters in Vitoria, Spain, is currently the world's second largest wind turbine manufacturer, after Vestas, and it is also a major builder of wind farms. Gamesa’s main markets are within Europe, the US and China. In 2006, Europe accounted for 65 percent of Gamesa’s sales, of which 40 percent were in Spain.

In 2004, German company Enercon installed a total of 1,288 MW of wind power and had around 16% of the global market share. Enercon constructed production facilities in Brazil in 2006, and has extended its presence there, as well as in the more traditional markets of Germany, India, Austria, UK, Canada and the Netherlands.

GE Energy has installed over 5,500 wind turbines and 3,600 hydro turbines, and its installed capacity of renewable energy worldwide exceeds 160,000 MW. GE Energy bought out Enron Wind in 2002 and also has nuclear energy operations in its portfolio.

Photovoltaic companies

Q-Cells became the world's largest solar cell maker in 2007, producing nearly 400 MW of product. Longtime market leader Sharp Corporation found itself in second place with production of 370 MW in 2007, which the company blamed on a constrained supply of silicon. China's Suntech was close behind the leaders with more than 300 MW of output. Kyocera and its 200 MW output was a distant fourth in 2007.

Four new companies entered the top ranks in 2007. CdTe-cell maker First Solar was at fifth place, the only US-based and only thin-film supplier in the Top 10 companies. Asian players Motech Solar (Taiwan), Yingli Green Energy (China), and JA Solar Holdings (China/Australia) rounded out the Top 10 ranking, pushing aside some established players like Mitsubishi Electric, Schott, and BP Solar.

Other companies

SunOpta is located in Canada and was founded in 1973. Its operations are divided between SunOpta Food (organics), Opta Minerals, and SunOpta BioProcess (bioethanol). SunOpta's fastest growing business segment is the BioProcess Group, which is a leading developer of technology in the cellulosic ethanol market. SunOpta's BioProcess Group specializes in the design, construction and optimization of biomass conversion equipment and facilities. They have over 30 years experience delivering biomass solutions worldwide and use innovative technologies to produce cellulosic ethanol and cellulosic butanol. Raw materials include wheat straw, corn stover, grasses, oat hulls and wood chips.

Non-technical barriers to acceptance

There have been several recent reports which have identified a range of "non-technical barriers" to renewable energy use. These barriers are impediments which put renewable energy at a marketing, institutional, or policy disadvantage relative to other forms of energy. Key barriers include:

• Lack of government policy support, which includes the lack of policies and regulations supporting deployment of renewable energy technologies and the presence of policies and regulations hindering renewable energy development and supporting conventional energy development. Examples include subsidies for fossil-fuels, insufficient consumer-based renewable energy incentives, government underwriting for nuclear plant accidents, and complex zoning and permitting processes for renewable energy.
• Lack of information dissemination and consumer awareness.
• Higher capital cost of renewable energy technologies compared with conventional energy technologies.
• Difficulty overcoming established energy systems, which includes difficulty introducing innovative energy systems, particularly for distributed generation such as photovoltaics, because of technological lock-in, electricity markets designed for centralized power plants, and market control by established operators. As the Stern Review on the Economics of Climate Change points out:

National grids are usually tailored towards the operation of centralised power plants and thus favour their performance. Technologies that do not easily fit into these networks may struggle to enter the market, even if the technology itself is commercially viable. This applies to distributed generation as most grids are not suited to receive electricity from many small sources. Large-scale renewables may also encounter problems if they are sited in areas far from existing grids.

• Inadequate financing options for renewable energy projects, including insufficient access to affordable financing for project developers, entrepreneurs and consumers.
• Imperfect capital markets, which includes failure to internalize all costs of conventional energy (e.g., effects of air pollution, risk of supply disruption) By and failure to internalize all benefits of renewable energy (e.g., cleaner air, energy security).
• Inadequate workforce skills and training, which includes lack of adequate scientific, technical, and manufacturing skills required for renewable energy production; lack of reliable installation, maintenance, and inspection services; and failure of the educational system to provide adequate training in new technologies.
• Lack of adequate codes, standards, utility interconnection, and net-metering guidelines.
• Poor public perception of renewable energy system aesthetics.
• Lack of stakeholder/community participation and co-operation in energy choices and renewable energy projects.

With such a wide range of non-technical barriers, there is no "silver bullet" solution to drive the transition to renewable energy. So ideally there is a need for several different types of policy instruments to complement each other and overcome different types of barriers.

A policy framework must be created that will level the playing field and redress the imbalance of traditional approaches associated with fossil fuels. The policy landscape must keep pace with broad trends within the energy sector, as well as reflecting specific social, economic and environmental priorities.

Public policy landscape

See also: Renewable energy policy

Public policy has a role to play in renewable energy commercialization because the free market system has some fundamental limitations. As the Stern Review points out:

In a liberalised energy market, investors, operators and consumers should face the full cost of their decisions. But this is not the case in many economies or energy sectors. Many policies distort the market in favour of existing fossil fuel technologies.

Lester Brown goes further and suggests that the market "does not incorporate the indirect costs of providing goods or services into prices, it does not value nature’s services adequately, and it does not respect the sustainable-yield thresholds of natural systems". It also favors the near term over the long term, thereby showing limited concern for future generations. Tax and subsidy shifting can help overcome these problems.

Shifting taxes

Tax shifting involves lowering income taxes while raising levies on environmentally destructive activities, in order to create a more responsive market. It has been widely discussed and endorsed by economists. For example, a tax on coal that included the increased health care costs associated with breathing polluted air, the costs of acid rain damage, and the costs of climate disruption would encourage investment in renewable technologies. Several Western European countries are already shifting taxes in a process known there as environmental tax reform, to achieve environmental goals.

A four-year plan adopted in Germany in 1999 gradually shifted taxes from labor to energy and, by 2001, this plan had lowered fuel use by 5 percent. It had also increased growth in the renewable energy sector, creating some 45,400 jobs by 2003 in the wind industry alone, a number that is projected to rise to 103,000 by 2010. In 2001, Sweden launched a new 10-year environmental tax shift designed to convert 30 billion kroner ($3.9 billion) of taxes on income to taxes on environmentally destructive activities. Other European countries with significant tax reform efforts are France, Italy, Norway, Spain, and the United Kingdom. Asia’s two leading economies, Japan and China, are considering the adoption of carbon taxes.

Shifting subsidies

See also: Energy subsidies

Subsidies are not inherently bad as many technologies and industries emerged through government subsidy schemes. The Stern Review explains that of 20 key innovations from the past 30 years, only one of the 14 they could source was funded entirely by the private sector and nine were totally funded by the public sector. In terms of specific examples, the Internet was the result of publicly funded links among computers in government laboratories and research institutes. And the combination of the federal tax deduction and a robust state tax deduction in California helped to create the modern wind power industry.

But just as there is a need for tax shifting, there is also a need for subsidy shifting. Lester Brown has argued that "a world facing the prospect of economically disruptive climate change can no longer justify subsidies to expand the burning of coal and oil. Shifting these subsidies to the development of climate-benign energy sources such as wind, solar, biomass, and geothermal power is the key to stabilizing the earth’s climate."

Some countries are eliminating or reducing climate disrupting subsidies and Belgium, France, and Japan have phased out all subsidies for coal. Germany reduced its coal subsidy from $5.4 billion in 1989 to $2.8 billion in 2002, and in the process lowered its coal use by 46 percent. Germany plans to phase out this support entirely by 2010. China cut its coal subsidy from $750 million in 1993 to $240 million in 1995 and more recently has imposed a tax on high-sulfur coals.

While some leading industrial countries have been reducing subsidies to fossil fuels, most notably coal, the United States has been increasing its support for the fossil fuel and nuclear industries.

Renewable energy targets

Setting national renewable energy targets can be an important part of a renewable energy policy and these targets are usually defined as a percentage of the primary energy and/or electricity generation mix. For example, the European Union has prescribed an indicative renewable energy target of 12 per cent of the total EU energy mix and 22 per cent of electricity consumption by 2010. National targets for individual EU Member States have also been set to meet the overall target. Other developed countries with defined national or regional targets include Australia, Canada, Japan, New Zealand, Norway, Switzerland, and some US States.

National targets are also an important component of renewable energy strategies in some developing countries. Developing countries with renewable energy targets include China, India, Korea, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brazil, Israel, Egypt, Mali, and South Africa. The targets set by many developing countries are quite modest when compared with those in some industrialized countries.

Renewable energy targets in most countries are indicative and nonbinding but they have assisted government actions and regulatory frameworks. The United Nations Environment Program has suggested that making renewable energy targets legally binding could be an important policy tool to achieve higher renewable energy market penetration.

Employment

Current employment in the renewable energy sector and supplier industries is estimated at 2.3 million worldwide. The wind power industry employs some 300,000 people, the photovoltaics sector an estimated 170,000, and the solar thermal industry more than 600,000. Over 1 million jobs are found in the biofuels industry, associated with growing and processing a variety of feedstocks into ethanol and biodiesel.

Recent developments

Projected renewable energy investment growth globally (2007-2017)

A number of events in 2006 pushed renewable energy up the political agenda, including the US mid-term elections in November, which confirmed clean energy as a mainstream issue. Also in 2006, the Stern Review made a strong economic case for investing in low carbon technologies now, and argued that economic growth need not be incompatible with cutting energy consumption. According to a trend analysis from the United Nations Environment Programme, climate change concerns coupled with recent high oil prices and increasing government support are driving increasing rates of investment in the renewable energy and energy efficiency industries.

Investment capital flowing into renewable energy reached a record US$77 billion in 2007, with the upward trend continuing in 2008. The OECD still dominates, but there is now increasing activity from companies in China, India and Brazil. Chinese companies were the second largest recipient of venture capital in 2006 after the United States. In the same year, India was the largest net buyer of companies abroad, mainly in the more established European markets.

Global revenues for solar photovoltaics, wind power, and biofuels expanded from $75.8 billion in 2007 to $115.9 billion in 2008. For the first time, one sector alone, wind, had revenues exceeding $50 billion. New global investments in clean energy technologies — including venture capital, project finance, public markets, and research and development — expanded by 4.7 percent from $148.4 billion in 2007 to $155.4 billion in 2008.

Continued growth for the renewable energy sector is expected in the mid- to long-term, but 2009 will be a year of refocus, consolidation, or retrenchment for many companies. At the same time, new government spending, regulation, and policies should help the industry weather the current economic crisis better than many other sectors. Most notably, U.S. President Barack Obama's American Recovery and Reinvestment Act of 2009 includes more than $70 billion in direct spending and tax credits for clean energy and associated transportation programs. This policy-stimulus combination represents the largest federal commitment in U.S. history for renewables, advanced transportation, and energy conservation initiatives. Based on these new rules, many more utilities are expected to strengthen their clean-energy programs.

Clean Edge suggests that the commercialization of clean energy will help countries around the world pull out of the current economic malaise.

Sustainable energy

Main article: Sustainable energy

Moving towards energy sustainability will require changes not only in the way energy is supplied, but in the way it is used, and reducing the amount of energy required to deliver various goods or services is essential. Opportunities for improvement on the demand side of the energy equation are as rich and diverse as those on the supply side, and often offer significant economic benefits.

Renewable energy and energy efficiency are said to be the “twin pillars” of sustainable energy policy. Any serious vision of a sustainable energy economy requires commitments to both renewables and efficiency. The American Council for an Energy-Efficient Economy has explained that both resources must be developed in order to stabilize and reduce carbon dioxide emissions:

Efficiency is essential to slowing the energy demand growth so that rising clean energy supplies can make deep cuts in fossil fuel use. If energy use grows too fast, renewable energy development will chase a receding target. Likewise, unless clean energy supplies come online rapidly, slowing demand growth will only begin to reduce total emissions; reducing the carbon content of energy sources is also needed.

The IEA has stated that renewable energy and energy efficiency policies should be viewed as complementary tools for the development of a sustainable energy future, instead of being developed in isolation.

See also

Lists

• List of large wind farms
• List of notable renewable energy organizations
• List of renewable energy topics by country

Articles

• Clean Energy Trends
• Ecotax
• Energy security and renewable technology
• Feed-in Tariff
• International Renewable Energy Agency
• PV financial incentives
• Rocky Mountain Institute
• The Clean Tech Revolution
• World Council for Renewable Energy

Categories

• Category:Renewable energy by country
• Category:Renewable energy commercialization

Bibliography

• HM Treasury (2006). Stern Review on the Economics of Climate Change, 575 pages.
• International Council for Science (c2006). Discussion Paper by the Scientific and Technological Community for the 14th session of the United Nations Commission on Sustainable Development, 17 pages.
• International Energy Agency (2006). World Energy Outlook 2006: Summary and Conclusions, OECD, 11 pages.
• International Energy Agency (2007). Renewables in global energy supply: An IEA facts sheet, OECD, 34 pages.
• International Energy Agency (2008). Deploying Renewables: Principles for Effective Policies, OECD, 8 pages.
• Makower, Joel, and Ron Pernick and Clint Wilder (2009). Clean Energy Trends 2009, Clean Edge.
• National Renewable Energy Laboratory (2006). Non-technical Barriers to Solar Energy Use: Review of Recent Literature, Technical Report, NREL/TP-520-40116, September, 30 pages.
• REN21 (2008). Renewables 2007 Global Status Report, Paris: REN21 Secretariat, 51 pages.
• REN21 (2009). Renewables Global Status Report: 2009 Update, Paris: REN21 Secretariat.
• United Nations Environment Programme and New Energy Finance Ltd. (2007). Global Trends in Sustainable Energy Investment 2007: Analysis of Trends and Issues in the Financing of Renewable Energy and Energy Efficiency in OECD and Developing Countries, 52 pages.
• Worldwatch Institute and Center for American Progress (2006). American energy: The renewable path to energy security, 40 pages.

External links

• Global Renewable Energy: Policies and Measures
• Missing the Market Meltdown
• Renewable Energy Tops 10% of U.S. Energy Production
• Offshore wind to take EU by storm?
• Half of Global Electricity To Come From Renewables IEA Says
• Renewable Energy Potentials
• Renewable Energy, Energy Efficiency Will Be Key to Economic Recovery
• U.S. stimulus bill likely to revive green power
• Optimism Abounds Throughout Renewable Energy Industry
• GE Energy turbine sales to grow fivefold in Europe
• New renewables to power 40 percent of global electricity demand by 2050