Renewable energy advantages
In the current decarbonization scenario, with the commitment to keep global warming below +2°C, renewables are expected to play a key role within an energy sector that is the largest contributor to GHG emissions. Renewable energy has proven to be a competitive source of energy, with a strong contribution to GDP growth while on top of mitigating the potential impacts in the economy that climate change would bring.
A. AN IMMEDIATE PATH TO DECARBONISE THE GLOBAL ENERGY MIX
Ramping renewables is essential to meet climate goals without decelerating economic growth and reducing welfare. In the submitted INDCs prior to COP 21, the growth of the renewable energy capacity (including hydro) is expected to go from 29% in 2013 to a 44% in 2040, about 34% of the generation.
However, the fully implementation of the submitted INDCs and policies of similar strength after 2030, probably will still lead to a warming of around 2.4-2.7°C by 2100.
To achieve the 2°C target scenario, it would require emissions to be close to zero in 2100, while the 1.5° would even require negative emissions from 2080 onwards, which could be achieved with CO2 removal technologies.
According to “IRENA” (International Renewable Energy Agency), doubling the share of renewable energy by 2030 could deliver around half of the required emissions reductions and, coupled with energy efficiency, keep the average rise in temperatures below 2°C, preventing, ultimately, the worst impacts of climate change. Most precisely, doubling the share of renewable energy by 2030 would allow to reduce 8.6 Gt of energy-related CO2 every year until 2030.
B. BRINGING ECONOMIC GROWTH & IMPROVING ENERGY SECURITY
Today, renewable energy technologies are viewed not only as tools for mitigating climate change, but are also increasingly recognised as investments that can provide direct and indirect economic advantages by reducing dependence on imported fuels (and hence, improving trade balances), enhancing local air quality and safety, advancing energy access and security, propelling economic development and creating jobs.
- GDP growth is one of the outputs of the large deployment of renewables worldwide, thanks to the development of a new industry, which has been representing an increasingly share of the global economy.
- Job creation has been asserted by several studies as one of the benefits of renewables, as they recognize this industry is more labour-intensive compared to fossil fuel technologies which are more mechanized and capital intensive. This means that, on average, more jobs are created for each unit of electricity generated from renewable than from fossil fuels. According to IRENA, the sector employed 7.7 million people in 2014, directly and indirectly, around the world (excluding large hydropower), an 18% increase from 2013. Wind energy, is responsible for more than 1 million, 31% of them in Europe.
- Reducing country energy dependency is possible because wind, solar and hydro technologies use endogenous resources. Countries enhance their security of energy supply and minimize their exposure to potential increases in fuel prices. Fuel resources are scarce and concentrated in some geographies which explains its high and volatile price.
- Reduce wholesale prices, thus, energy-consumers’ bills, because renewable generation is bid its output in wholesale markets at zero cost as wind or solar energy has no marginal cost. Power prices are determined by the intersection of power supply and demand, bids at zero displace more expensive technologies shifting, consequently, the supply curve. For a same level of demand, when wind production is available, the market price goes down (the so-called “merit order effect”).
Wind effect in Spain pool price
It´s a fact that wind power reduces the price of electricity: the more the wind blows, the lower the pool or wholesale electricity market price is, which benefits consumers and companies in their electricity bills. This fact is easily observed in the Spanish market, for instance, in the first two weeks of 2015. At that time, the average daily market price, which is the basis for calculating the energy term of the electricity bill, reached 55.66 €/MWh, representing an increase of more than 67% over the same period of the previous year. What was the reason behind this? Low wind generation. According to data released by the Spanish Transmission System Operator (REE) on January 15th, wind production was 1,494 GWh that is 50% lower than in the early days of 2014.
C. RENEWABLES ARE FEASIBLE AND ECONOMICALLY VIABLE
Plummeting costs for renewable energy technologies are making a global energy transition not only possible, but actually, less expensive than the alternative. This is the reason why an increasingly number of private companies are opting for renewables to provide their energy needs, including some of the biggest worldwide as Apple, Ikea, Amazon, Wal-Mart and Lego.
- Onshore wind is the least expensive in many regions of the world, mainly due to the drop in wind turbines prices (almost a third in the last 6 years). Its increasingly competitiveness is therefore expected to drive future deployment. Bloomberg expects wind capacity worldwide to reach more than 2,000 GW in 2040 (compared to ~370 GW at the end of 2014).
- Solar PV has also experienced dramatic costs reductions that have boost its competitiveness. Solar PV modules prices have dropped 75% since 2009, and this trend is expected to continue. According to Bloomberg, solar PV is expected to dominate new build around the world with almost 5,000 GW of installed capacity by 2040 (from 177 GW in 2014YE).
D. THE COSTS OF ADDRESSING CLIMATE CHANGE MAY BE LOWER THAN THE COSTS ASSOCIATED TO INACTION
Many studies have also analysed the costs of addressing climate change compared to the costs of “inaction” (business as usual). Most of the studies agree on the fact that, if we don’t act now, the overall costs and risks of climate change would outweigh the costs of current mitigation options. Most of the studies conclude that, potential impacts of climate change on water resources, food production, health and the environment among others, will provoke important losses for the economies. Instead, the costs of mitigation options (mainly renewables’ deployment) will have a negligible impact on aggregate terms.
Focusing on the energy sector, Citi has conducted a study (“Energy Darwinism II”), in which it concludes that the expenditure on energy over the next quarter century, on an undiscounted basis, is remarkably similar in a lowcarbon scenario compared to business-as-usual one. More precisely, the cost of following a low-carbon route in the next 25 years would be of US$190.2 trillion which is even cheaper than the cost in an “inaction” scenario (US$192.0 trillion). This is due to the rapid drop of renewables’ costs, which, combined with lower fuel usage from energy efficiency investments, result in significantly lower long-term fuel bill.
Therefore, from an economic perspective, the transition towards a low-carbon economy would have positive effects, not only in aggregate terms, but even in the energy sector.
YES TO WIND POWER
The successful “Yes to Wind Power” campaign was launched in Spain in early 2015, and will be rolled out to several other markets in 2016 such as Poland, Romania and Italy.
“Yes to Wind Power” works to spread the word that renewable energy is now one of the least expensive generation technologies in the world, even beating out traditional sources like gas and coal. In addition to the economic benefits, the campaign also emphasizes that promoting a shift from conventional fossil fuels to renewable energy is one of the most effective and feasible near-term ways of mitigating climate change. Wind power’s scalability, speed of deployment and falling costs make it the best choice to achieve emissions reductions.
The end goal of the campaign is to create more advocates for renewables, and increase societal support for the continued development of wind power and other renewable methods of energy generation.
Through “energetic hipster”, a character created to reach the younger public, the campaign has already reached more than 5 million people, offering scientific data in an easy to read and access format. EDPR created a viral video and a web site full of well-researched and credible information including scientific articles and reports about the benefits of wind power and other types of renewable energy. This is made available to the press, opinion leaders and the general public.
“Yes to Wind Power” also has a social media component that aims to build an online community around it. The campaign has been featured in thousands of news reports and blogs, including an article in The Wall Street Journal.