Beijing International Renewable Energy Conference 2005 by Faircount Media Group

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Beijing International Renewable Energy Conference 2005 2005 Official Post Conference Report Published by Faircount Ltd Chinese Renewable Energy Industries Association Chinese Wind Energy Association European Headquarters 5 Ella Mews Hampstead London, NW3 2NH UK Tel: +44 (0)20 7428 7000 Fax: +44 (0)20 7284 2118 e-mail: publisher@faircount.co.uk North American Headquarters 701 North Westshore Blvd. Tampa, Florida 33609 USA Tel: 1 (813) 639 1900 Fax: 1 (813) 639 4344 e-mail: publisher@faircount.com Publishers / Peter M. Antell Ross W. Jobson Associate Publisher / David Woods Authors / Chinese Renewable Energy Industries Association Judy Siegel, UNDESA, Expert Group on Renewable Energy Policy Martin Devine, Renewable Energy & Energy Efficiency Partnership (REEEP) Michael Allen, Renewable Energy & Energy Efficiency Partnership (REEEP) Michael Eckhart, President, American Council on Renewable Energy (ACORE) Lisa Zeng Sommer Han Wenke Zhu Junsheng Li Junfeng Wang Zhongying Qin Haiyan Mu Xiongbing Translation / The ASK Group Ltd

Sales & Marketing Director / Lawrence Rosenberg Project Manager / Andrew Moss Marketing Executives / Margaret Cole Guy Hayes Stephen Idrissi Gary Tarian Design & Production Controller / Sandip Patel Production Coordinator / Colin Davidson Office Manager / Ekta Dash Picture Research / Kay Rowley Photography / Cover image courtesy of Hydro Tasmania. All other images as credited Printed in India /

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Contents / 06 Introduction 10 From Johannesburg via Bonn to Beijing 14 The Beijing declaration 18 A commentary on The Beijing declaration 20 Increasing the global renewable energy market share: Recent trends & perspectives 28 The role of policy 40 The Commercial Investment and Finance Forum 50 The standardization and certification of renewable energy products in china 58 Global energy development 63 New technology in renewable energy development – Japan’s experience 65 Are China’s targets ambitious enough? 68 The answer is blowing in the wind 70 Establishing a southern coalition on renewable energy - WWF’s approach 74 The SWERA programme: an outline SWERA 78 Policies, finance & frameworks: perspectives 86 The importance of co-operation 90 The EU’s global partnership commitment

Wind power and agriculture make natural partners at the Buffalo Ridge wind farm in SW Minnesota. Warren Gretz / NREL / Buffalo Ridge

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Introduction Zhang Guobao, Deputy Director of the National Development and Reform Commission

In addition, The National Development and Reform Committee of China has organized the drafting of a Mid-and Long-term Development Plan for Renewable Energy which sets development objectives, strategic plans, construction priorities, and guaranteed targets for renewable energy resources in China by 2020. With the approval of the State Council, the plan will serve as the blueprint for renewable energy development in China.

Zhang Guobao

1992 2002

Energy is of central importance in the survival and development of the human race. Fossil based energy sources, such as coal, petroleum, and natural gas have supported nearly 200 years of economic and social development since the nineteenth century. However, the continuous and increasing consumption of non-renewable sources of energy such as coal, petroleum, and natural gas has forced the issues of alternatives to these finite resources, and the environmental implications of their use, to the top of the international agenda. Faced with the dual problem of resource and environment, the international community began to take measures to counter the threat. In particular, the UN Environment and Development Conference in 1992, and the Heads of State Meeting on Sustainable Development in 2002, helped to bring sustainable development to the forefront of international thinking. Today, increasing energy efficiency, developing and applying renewable energy sources, protecting the environment, and implementing measures for sustainable development are common international objectives.

In June 2004, I attended the International Renewable Energy Conference in Bonn, Germany. I was deeply impressed with the meeting: firstly, the occasion was unprecedented, with 154 countries participating and more than 3,000 participants; secondly, a political declaration was made that further emphasised the importance of renewable energy in increasing the available energy supply, in environmental protection & the reduction of greenhouse gas emissions, and its potential to create jobs; thirdly, participating countries and international organizations submitted 197 action programmes to the conference, demonstrating the importance that the international community attaches to renewable energy issues. The Chinese Government submitted two action programmes at Bonn, one for the formulation of renewable energy laws, the other for the preparation of a renewable energy development plan. These two programmes have by now made great progress. In February 2005, the National Peopleâ&#x20AC;&#x2122;s Congress of China reviewed and passed the Renewable Energy Law, which defines the responsibilities and obligations of government, enterprises, and users in the development and use of renewable energy. It also provides a series of policies and measures, including systems for objective measurements, ingrid power generation, price management, cost amortization, and special funds and preferential taxes, amongst others. The Renewable Energy Law, now implemented, is playing a major role in promoting the development of renewable energy in China.

2004 6 154

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However, countries at different stages of development have different capabilities and should assume different responsibilities: developed countries have strong industrial bases, with advanced technologies, skills, and economic resources and, at the same time, consume more of the worldâ&#x20AC;&#x2122;s traditional energy resources, so they should assume more responsibility for the development and use of cleaner energy and environmental protection.

, 2005 2

2020

With growing globalization, increasingly close contact between countries all over the world, and mutual interdependence in economic and social development, no country can progress entirely independently, especially in issues such as climate change. Therefore, addressing the issues of global energy resources and the environment becomes the common responsibility of all countries.

Globally, renewable energy has entered an important stage of rapid development, full of hopes and challenges /

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Developing countries are characterised as having technological, skill base, funding, and administrative weaknesses, and by low efficiencies in energy provision, with little ability to develop renewable energy, and technologies that are outdated in terms of environmental protection. If left entirely to their own devices, developing countries will inevitably follow the traditional route, causing environmental damage and wasting energy. To promote sustainable development globally and protect our shared earth, developed countries should provide support to developing countries in the form of technology, skills, and funding, helping them to build renewable energy industries and improve their technological standards in the development

GDP 20

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and increased use of renewable energy sources. In return, the developing countries will provide huge markets for the technologically and financially advanced developed countries. The path for global development of renewable energy depends upon greater cooperation, learning from each other’s strengths and weaknesses, coordinating policies, and working to mutual benefit China is a rapidly advancing economy, with the world’s largest population and huge resources, but environmental considerations pose enormous restrictions on development.

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50 6.5 300

We urgently need to transform our energy sources for development and the Chinese Government has set out guiding principles to achieve this, at the root of which is a “humanoriented, scientific, coordinated approach to sustainable development” which will change the basis for economic growth to one that promotes circular economic development and accelerates the building of a resource-conserving and environmentally friendly society. 2020 2000

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Energy is of central importance in the survival and development of the human race / 2020

3 4000

The Chinese Government will continue to follow its policy to prioritise development through the increasing use of energy efficiency and the conservation of energy resources. Chinese energy consumption is targeted to decrease as a unit of GDP by 20% or so by the end of the 10th five year period. China has always attached great importance to the application of renewable energy in its development and has made great advances. At present, renewable energy sources such as hydropower, solar energy for heating, and methane are in large scale use and at the same time other renewable sources such as photovoltaics and biomass are being developed. By the end of 2004, the installed hydropower capacity in China had reached 108 million KW, accounting for one quarter of the total national capacity; use of solar energy for heating had reached 65 million M2; annual usage of methane had reached 5 billion M3, improving the living conditions of 14 million farming families, and solar photovoltaic power generation had reached 65,000 KW, solving the basic power supply problems of about 3 million people in more than 700 towns in the remote areas. The Chinese Government will further support the development and use of renewable energy and regards its development as an important element in increasing energy supply, regulating the supply structure, protecting the environment, eliminating poverty, and promoting sustainable development. We will accelerate the use of technologically mature renewable energy sources such as hydroelectricity, solar energy for heating, and methane. At the

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same time, we will actively develop and promote the potential of biomass liquidisation, wind, biomass, and solar power generation with large scale construction projects, enabling renewables to become competitive commercial energy sources to drive industrial development. The Mid and Long-term Development Plan for Renewable Energy sets out that, by 2020, installed hydroelectricity capacity will be 290 million KW; biomass 20 million KW; wind power 30 million KW; and solar energy 2 million KW.

2005 11

Together, these renewable energy sources are targeted to produce over 30% of the total installed capacity. We are encouraging the use of solar energy for heating in both urban and rural areas. By 2020, the total collection area for solar energy for heating will reach 300 million M3, replacing an annual consumption of about 40 million tons of standard coal. The development and use of biomass will be an important element in the development of modern agriculture and the building of a new rural society. Domestic use of methane, and poultry and livestock methane projects, will be promoted and supported and the application of biomass particle fuel will be accelerated. By 2020, the amount of methane used annually will be 24 billion m3 and of biomass particle fuel, about 50 million tons. At the same time, we will actively develop biomass liquid fuels, using cultivated crops as the main raw material, so that the quantities available can replace 10 million tons of petroleum by 2020.

Compared with some other countries that are advanced in the development and use of renewable energy technologies, China is relatively backward. We will integrate the advanced technologies available from these countries into our existing technology, continuously improve China’s own renewable energy technology, and work towards building a complete renewable energy industry infrastructure as soon as possible. We are willing to continuously strengthen cooperation in the field of renewable energy with countries all over the world on an equal and mutually beneficial basis. Enterprises throughout the world are welcome to participate in the renewable energy industry in China through development, construction of facilities, and supply. Globally, renewable energy has entered an important stage of rapid development, full of hopes and challenges. The Beijing International Renewable Energy Conference was important for increasing the common knowledge base, strengthening cooperation, and planning for future actions and joint development. We believe that, with the joint efforts of many countries, renewable energy is sure to develop faster and better and will play a major role in promoting sustainable development globally.

This text is based on a speech delivered at the Ministers Forum of the Beijing International Renewable Energy Conference Great Hall of the People, Beijing, China,7 November 2005.

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From Johannesburg via Bonn to Beijing A summary of developments At the 2002 World Summit on Sustainable Development in Johannesburg, the international community acknowledged the significance of renewable energies for sustainable development - especially for combatting poverty and for environmental and climate protection. The Johannesburg Implementation Plan calls for a rapid and substantial increase in the role of renewable energy sources in global energy supply. At the same time, the plan calls on participants to regularly review the global expansion of renewable energies.

2002

However, the text did not go into much greater detail. In Johannesburg there was particular disagreement over the call by the EU and other countries for specified global targets for the percentages of renewable energies in the total energy mix. The proposal failed, largely because of opposition from the USA and OPEC countries. There were some concrete initiatives launched at the Johannesburg summit, but these tended to be at the voluntary level. Of particular note is the “Renewable Energy and Energy Efficiency Partnership (REEEP)”. This was established by the United Kingdom, has been supported by Germany since 2003, and has initiated and financed numerous projects in developing countries. Against this background, a group of interested countries formed the “Johannesburg Renewable Energy Coalition (JREC)”, which now has 88 countries belonging to it, and at the end of WSSD, Federal Chancellor Schröder invited the international community to attend an international conference on renewable energy in Germany. The meeting that subsequently developed was the International Conference for Renewable Energies -Renewables 2004 – that took place in Bonn from 1st to 4th June, 2004. It was jointly organized by the Federal Environment Ministry (BMU) and the Federal Ministry for Economic Cooperation and Development (BMZ). Over 3,000 participants from 154 countries took part, including many ministers, and high-ranking representatives from international organizations, private industry, and NGOs.

(OPEC)

and Energy Efficiency Partnership 2003

Renewable Energy REEEP

The closing session of the World Summit on Sustainable Development in Johannesburg, September 2002. Nearly 40 states declared they wanted to go beyond the goals 40 set down in the Earth Summit's action plan. Photo courtesy of IISD/ENB-Leila Mead / 2002 9

Coalition

JREC

Johannesburg Renewable Energy 88 (WSSD)

2004 Federal Environment Ministry BMU Federal Ministry for Economic Cooperation and Development BMZ 2004 6 1 4 154 3,000

Germany’s pioneering role in supporting renewable energies, and its high profile as conference host, gave new momentum to the global expansion of renewable energies. The unanimously adopted Political Declaration demonstrated the determination to achieve a “global transformation of energy systems” with a clear vision for renewables to become significant and widely available sources of energy. At the same time two key political messages were conveyed: • Renewable energies can play an important part in overcoming global poverty. In order to achieve the Millennium Goals by 2015, one billion people should be supplied with energy from renewable sources.

• 2015

•

• Renewable energies, together with the improvement of energy efficiency, are indispensable for climate protection, and the facilitation of secure energy supplies which are more independent from oil.

(IAP)

By focusing on renewable energies and with a skilful combination of negotiated consensus and voluntary contributions by individual players, the Bonn conference was able to achieve a much clearer majority on the central issues than Johannesburg. At the heart of the conference’s success is the International Action Program (IAP) containing binding agreed actions. A photovoltaic array in Tunisia. Photo courtesy of NREL /

The IAP contains commitments to defined programmes from governments, the United Nations, and other international organizations, as well as from representatives of civilian groups, trade and industry and other stakeholders. The final version of the Action Program comprises a total of 197 specifics all over the world. Around 40% of the proposals came from Europe, 20% from Asia and Latin America and another 20% are transregional, including those of the World Bank.

197 40% 20%

20%

39% 9% 42% 29 /

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The contributions cover the entire spectrum of the conference topics: 39% of the actions deal with the political framework conditions for the expansion of renewable energies, 9% of the actions aim at strengthening private and public financing mechanisms, and 42% of the actions are aimed at capacity building. In all, 29 countries set themselves expansion goals for renewable energies and incorporated these into IAP: Argentina, Australia, Belgium, Brazil, China, Cyprus, Czech Republic, Denmark, Egypt, France, Germany, Iran, Italy, Japan, Jordan, Mexico, Morocco, New Zealand, Norway, Pakistan, Philippines, Senegal, Spain, Switzerland, South Africa, Tunisia, Uganda, United Kingdom, and the European Commission.

With the participation of 1,300 delegates from 78 countries, including high level officials such as the EU Environment Commissioner Stavros Dimas, German Federal Minister for the Environment Jurgen Trittin, Canada’s Minister for the Environment Stephane Dion, and with the British Minister for Environment, Food and Rural Affairs, Margaret Beckett representing the EU Council Presidency, the conference focused on the expansion of renewables since the Bonn conference, and reviewed scientific and technical progress and policies. Participants discussed how to implement numerous voluntary commitments. Amongst the main subjects under discussion were the political framework needed for greater cooperation in the expansion of financing, capacity building, and technology transfer.

(European Commission)

2015 163 GW 3,260 2015 CO2

CO2

12 5%

CO2

68%

An evaluation of the Action Programme found the following: Implementation of the actions and commitments will create an additional capacity of at least 163 GW of electricity through renewable energies by 2015. This will trigger investments totalling at least US$326 billion. By 2015 an estimated saving of 1.2 billion tonnes of CO2 per year is anticipated. This would be equivalent to around 5% of global CO2 emissions. The most significant effects in this regard come from the contributions of China (approximately 68% of the expected CO2 emissions), Mexico, Germany, USA, and Brazil.

(German Environment Ministry) 2005 Beijing International Renewable Energy Conference BIREC 2005 Trittin 2004 11

The Bonn conference was able to achieve a much clearer majority on the central issues than Johannesburg /

8 (NDRC)

2005

(Department of Economic and Social Affairs) 78

1,300 Stavros Dimas

The actions and commitments contained in the IAP will facilitate access to a modern and clean energy supply from renewable energies for an estimated 300 million people. To build on the momentum gained in Bonn and to launch a consistent implementation and review of the global expansion of renewable energies, and to take forward the progress made in Bonn the German Environment Ministry proposed, after consultation with the United Nations, the organization of the Beijing International Renewable Energy Conference 2005 (BIREC 2005) to the Chinese Government, which gave its consent on the occasion of Minister Trittin’s visit to Beijing in November 2004. On November 7 and 8, at the Great Hall of the People, the seat of the Chinese parliament located on Tiananmen Square, China’s National Development and Reform Commission (NDRC) hosted and organised BIREC 2005. NDRC is a Chinese ministry level commission in China with responsibility in all economic spheres, such as industry, transport, and energy. The European Commission, the United Nations Department of Economic and Social Affairs, and the German Government also gave substantial support to the conference.

Jurgen Trittin Stephane Dion Council Presidency) Margaret Beckett

(EU

In his written message, sent to the conference, Chinese president Hu Jintao stressed China’s commitment to develop renewable energy in order to sustain China’s economic growth. In addition to the main conference programme, four parallel forums were held concurrently on: Investment and finance, with substantial participation by private finance companies; renewable energy industries and entrepreneurs; renewable energy technology; and South-South cooperation. There were also four panels with leading representatives from trade and industry, dealing with wind power, project development, solar thermal energy, and photovoltaics. Side events and an exhibition augmented the conference, which offered numerous opportunities for exchanges between governments and representatives of the many different interest groups.

Engineers and technicians at the solar village outside Riyadh are visited by the late King Fahd bin Abdul Aziz. Steve Wilcox / NREL / Fahd bin Abdul Aziz

BIREC sent an important signal of support for sustainable development worldwide and for global climate protection. It discussed, in practical terms, the special needs of developing and newly industrialized countries, and addressed the options available for reviewing the global expansion of renewable energies. The conference also provided an opportunity to work towards an understanding, especially among developing countries, on how to achieve a switch to a more climate-friendly economy using existing technologies – a topic highly relevant to the International Conference on Climate Change held in early December in Montreal, which aimed to initiate a process for the further development of international measures to alleviate the effects of climate change.

12 (International Conference on Climate Change)

At the conclusion of the conference, the Beijing Declaration On Renewable Energy For Sustainable Development reaffirmed the commitment to implement the resolutions of the Johannesburg Earth Summit (WSSD), and the United Nations 2005 Millennium Review Summit and, as a matter of urgency, to substantially increase the proportion of renewable energy output in the total global energy supply, as called for in the Johannesburg Plan of Implementation. BIREC also sent a strong political signal to accelerate the deployment of renewable energy, helping to ensure that the 14th and 15th sessions of the UN Commission for Sustainable Development deliver tangible results.

(WSSD)

2005

(Commission for Sustainable Development)

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The Beijing declaration 1. We, ministers and government representatives from 78 countries, having met at the Beijing International Renewable Energy Conference 2005 (BIREC), reaffirm our commitment to implement the outcomes of the Earth Summit, the World Summit on Sustainable Development (WSSD), and the United Nations 2005 Millenium Review Summit, and to substantially increase with a sense of urgency the global share of renewable energy in the total energy supply, as called for in the Johannesburg Plan of Implementation. 2. We welcome the ongoing and future activities and commitments that have arisen from the WSSD, the Bonn International Conference for Renewable Energies, the G-8 Gleneagles Summit, and other international and regional initiatives that help promote renewable energy. 3. We emphasize the multiple benefits of increased energy efficiency and the use of renewable sources of energy for improving access to energy services, thereby contributing to the eradication of poverty as called for in the UN Millenium Development Goals (MDGs), increasing job opportunities, improving air quality and public health, reducing greenhouse gas emissions and combating climate change, enhancing energy security, and offering a new paradigm for international co-operation. 4. We note with concern that more than 2 billion people in developing countries do not have access to modern energy services and 2.4 billion people rely on traditional biomass for their basic energy needs. This energy divide entrenches poverty by limiting access to information, education, economic opportunity, and healthier livelihoods, particularly for women and children, and erodes environmental sustainability at the local, national, and global levels. 5. We also note with concern that recent trends in the world energy market, especially the doubling of oil prices in less than two years, has increased the economic risk of relying primarily on imported energy and a volatile world energy market. By developing local sources of energy such as hydro, wind, solar, geothermal and modern biomass including liquid biofuels, countries can create diversified energy portfolios that are less vulnerable to wide price fluctuations. There is considerable scope, for example, for deploying bio-fuels in support of rural development and the transport sector. 6. Despite the growing expansion in the development and use of renewable sources of energy in developed countries, the combined share of renewable sources in the global primary energy supply remains small and limited. Most developing countries have not benefited from such expansion. The international community should strengthen its commitment to the scaling up of renewable energy development and use, especially in developing countries. 7. We agree to take further actions at the national, regional, and international levels to accelerate the market uptake of renewable energy technologies and increase investment in

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research and development (R&D), especially by developed countries, in order to enhance efficiency and reduce up-front costs. We also agree on the need for strengthened support for the commercialization and transfer of technologies through North-South and South-South Cooperation. 8. We recognize that significantly increasing the use of renewable energy faces a number of challenges. Government policies have a significant impact on attracting private sector investment and the pace of expansion of renewable energy as demonstrated in several developed and developing countries. Experience has shown that successful actions for scaling up the use of renewable energy, include: (1) creating supportive policy, legal, and institutional frameworks; (2) securing public sector commitment, including for R&D and procurement policies; (3) leveling the playing field; (4) promoting private sector involvement and a stronger alignment between policy timeframes and timelines for investment; (5) supporting the establishment of national renewable energy industries including small and medium enterprises; and (6) providing access to affordable finance, including micro-finance, and consumer credit mechanisms.

The Grand Auditorium, Great Hall of the People. /

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9. 9. We also recognize the need for significant financial resources, both public and private, for investment in renewable energy and energy efficiency, including the use of innovative financing mechanisms, such as loan guarantees and the Clean Development Mechanism (CDM), and market-based instruments that can leverage scarce public funds. We are committed to creating a positive investment climate to attract private capital for renewable energy. We emphasize the catalytic role that financial incentives and higher shares of ODA can play and we urge International Financial Institutions (IFIs), including the World Bank, the Regional Development Banks, and the GEF, as well as individual governments to significantly expand their investments in renewable energy technologies. We also urge IFIs and other actors to design improved instruments and products to ensure effective blending of public and private financing which should help buying down the risks associated with renewable energy technologies.

10. 1 2

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10. We further emphasize the need for enhanced international co-operation for capacity building in developing countries for: (1) strengthening national policy frameworks and the integration of renewable energy use into national sustainable development strategies for poverty reduction, health, education, and agriculture; (2) enhancing national capacity for R&D and transfer and diffusion of renewable energy technologies; (3) establishing markets for renewable energy; (4) increasing access to finance; (5) enterprise development for sourcing, installing, operating, and maintaining renewable energy systems; and (6) combining the increased use of renewable energy, energy efficiency, and greater application of cleaner fossil fuel technologies.

3 4 5 6

11.

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11. We recognize the need for making technical assistance for renewable energy widely accessible to developing countries, especially least developing countries. The UN system can and should play a key role in this regard. Its capacity and resources should be strengthened and interagency co-operation should be enhanced in order to avoid fragmentation of effort. We also recognize the importance of disseminating information and knowledge, lessons learned, best practices, and scaling up experiences in the development and application of renewable energy and energy efficiency. Connecting multi-stakeholders through networks as well as other international and regional initiatives should facilitate such exchanges and make information more accessible to developing countries. 12. We note with appreciation the major focus on energy in the upcoming 2006/2007 cycle of the United Nations Commission on Sustainable Development (CSD). We also note that the current global situation, including a growing awareness of energy poverty in developing countries, the risk of climate change and the important role that renewable energy should play in sustainable development and energy security, the increasing number of international initiatives and commitments, and volatility of world energy markets, provides an unprecedented opportunity for addressing the strategic challenge of transforming our energy systems and closing the energy divide between poor and rich, and between developing and developed countries. We invite the Commission to consider an effective arrangement to review and assess progress towards substantially increasing the global share of renewable energy as foreseen in paragraph 20(e) of Johannesburg's Plan of Implementation. This would provide a long-term prospective and encourage prompt action. Such periodic review could offer opportunities for enhanced national, regional, and international cooperation on renewable energy for sustainable development through, for example, exchange of lessons learned and best practice and a more favourable environment for technology transfer and the rapid commercialization of innovative renewable energy technologies. The review could also be useful in addressing the linkages between energy and the commission's biannual thematic cluster, and voluntary reporting could be enhanced through inputs from relevant international organizations and networks.

Allan Wilson MSP Deputy Minister for Enterprise and Lifelong Learning

The Banqueting Hall, Great Hall of the People. /

12.

2006/2007

The people of Scotland have benefited from renewable electricity for over 120 years. Scotland is fortunate to possess renewable resources in great abundance – wind, rain & snow, waves, tides, timber, and sunshine. Since the earliest days of hydro, the value and practicality of harnessing these tremendous forces has been demonstrated. While the initial driver of hydro electricity was its very low cost, today it is environmental imperatives that demand new renewable capacity. Climate change presents the greatest threat to future generations. The devolved government for Scotland, the Scottish Executive, has pledged to increase the generation of electricity from renewable sources as a vital part of the strategy to combat the risk posed by climate change.

13.

14.

Scotland has had a hand in accelerating the industrial revolution, and early atmospheric chemistry with the discovery of “fixed air” or carbon dioxide as it came to be known. So it is entirely appropriate that we should set ourselves ambitious targets for generating electricity from renewables: that 18% of Scotland’s electricity should come from renewables by 2010, rising to 40% by 2020.

13. We welcome the participation, and contributions made, at the conference by parliamentarians, local and regional authorities, international institutions, the private sector, international industry associations, NGOs, civil society, women's groups, youth, and academia, and emphasize the importance of their continued role in increasing the development and use of renewable energy.

I believe that these targets are challenging, but achievable. The rewards are three-fold – helping to safeguard the environment by reducing harmful emissions; greater security of supply through increased diversity and new capacity; and economic benefits through developing a new industry. While some of the rewards may be for Scotland alone, if through our actions we can accelerate the commercialisation of a successful marine energy industry, the benefits will be able to be shared globally.

14. We express our deep appreciation and thanks to the people and Government of the People's Republic of China for successfully organizing this conference and for their generosity and hospitality. We kindly request the Chinese authorities to consider reporting the outcomes and declaration of the Conference to the CSD at its 14th session.

While hydro took off in the last century and now accounts for around 10% of our electricity generation, other forms of renewable energy have been slower to take root. The Scottish

Executive’s resolve to build new renewable capacity has radically changed this, however. We introduced legislation placing a requirement on electricity suppliers to source increasing amounts of their electricity from renewable sources in 2002, and have seen a dramatic upsurge in developer interest to build new renewable generation since then. Our wind resource is rightly the envy of much of the rest of Europe, thanks to our exposure to winds originating far our in the Atlantic Ocean. New wind farms are operating and bringing clean electricity to our homes and businesses. Our forestry can support new biomass generation, and we are determined that it should. To achieve this, we will introduce further support measures for biomass in 2006. Our vast and rugged coastline is pounded with enormous amounts of energy and presents us with great potential for harnessing wave and tidal energy. That is why we co-funded the European Marine Energy Centre on Orkney, and why we are considering increasing the reward given to the electricity generated by new wave and tidal generators, ensuring that this emerging technology is given every chance to thrive. Microgeneration is bringing renewables within the reach of individuals, and with our support many valuable jobs are being created in this exciting new industry. By embracing sustainable development, we also bring opportunities for economic gain. I believe we are on the cusp of a renewable energy revolution. Scotland is ideally placed to harness renewable energy: thanks to our natural resources and our commitment to protect the environment for future generations.

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A commentary on The Beijing declaration Ministers from the 78 countries attending BIREC reaffirmed their shared commitment to implement the outcomes of the World Summit on Sustainable Development (WSSD) and the United Nations 2005 World Summit, and to substantially increase, “with a sense of urgency”, the use of renewable energy as a percentage of the total energy supply, as called for in the Johannesburg Plan of Implementation.

78 (WSSD)

2005

The participants committed to creating a positive investment climate to attract private capital for renewable energy and emphasize the catalytic role played by financial incentives, and the declaration urges International Financial Institutions (IFIs), including the World Bank, the Regional Development Banks, and the GEF, as well as bilateral donors and the EU Energy Facility, to significantly expand their investments in renewable energy technologies.

The declaration calls for urgent efforts to increase the use of renewables in the total global energy supply, in order to accelerate the eradication of poverty, increase job opportunities, improve air quality and public health, reduce greenhouse gas emissions, combat climate change, and enhance energy security.

The declaration emphasizes that enhanced international cooperation is needed in developing countries to build and strengthen their national policy frameworks, as well as to promote the integration of renewable energy use into national sustainable development strategies for poverty reduction, health, education, and agriculture.

Pointing out that oil prices have doubled in less than two years, the declaration notes the increased economic risk of relying primarily on imported energy. By developing renewable energy such as wind power, hydropower and solar energy, countries can create diversified energy portfolios that are less vulnerable to wide price fluctuations. The document says that the participating countries have agreed to accelerate the research and development of renewable energy and to strengthen support for the transfer of technologies through North-South and South-South cooperation. The belief is that developing countries will enhance capacity building, including the establishment of markets for renewable energy and increasing access to finance.

While some delegates to the Beijing Renewable Energy Conference may have doubted if the declaration could be meaningful without a solid commitment to global targets and more definite pledges on technology transfer, conference facilitator, declaration drafter, and Senior UN Foundation Fellow, Dr. Mohamed El-Ashry, made a point of including a clause in the declaration that invites the U.N. Commission on Sustainable Development (CSD) to consider effective arrangements to review and assess progress towards substantially increasing the global use of renewable energy sources.

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There is no set a target for investment in the renewable sector, though the need is pointed to for funds for research and development, support for commercialisation of new technologies, and the transfer of technologies from rich nations to poor. There is growing concern that more than 2 billion people in developing countries do not have access to modern energy services and that 2.4 billion people rely on traditional biomass for their basic energy needs. This energy disparity entrenches poverty by limiting access to education, economic opportunity, and healthier livelihoods, particularly for women, and erodes environmental sustainability at the local, national, and global levels.

The conference attendees agreed that successful policies for scaling up the use of renewable energy should include: the creation of supportive policy and institutional frameworks; securing public sector commitment (including R&D and procurement policies); levelling the playing field; promoting private sector involvement; supporting the establishment of national

By developing renewable energy, countries can create diversified energy portfolios /

Mohamed El-Ashry Commission on Sustainable Development

CSD

Such review arrangements would help ensure that the targets of Johannesburg’s Plan of Implementation are met, as well as the many voluntary commitments made in Johannesburg, Bonn, and elsewhere. A review and assessment procedure should provide an effective forum for generating recommendations regarding the further development and implementation of relevant activities and the fulfilment of commitments by all actors, and for identifying omissions and obstacles, as well as ways to address them through policy reforms, capacity building, and international cooperation.

Despite the accelerating expansion in the development and use of renewable energy sources, the combined share of renewable sources in global primary energy supply remains small and limited. Most developing countries have not benefited from such expansion which has been driven by a few, mostly developed, countries. This global imbalance will worsen unless the international community strengthens its commitment to increase renewable energy development and use, especially in developing countries. Ministers agreed to take further actions at the national, regional, and international levels to accelerate the market uptake of renewable energy technologies and increase investment in research and development in order to enhance efficiency and reduce up-front costs. Energy efficiency measures were high in the declaration’s priorities

renewable energy industries (including small and medium enterprises); and providing access to affordable finance and consumer credit mechanisms.

While much in the declaration will be familiar to seasoned observers, those present at BIREC detected a definite determination to make progress, find funding to achieve that progress, and turn words into action.

International Financial Institutions IFI (World Bank) (GEF) (EU Energy Facility)

(UN Foundation)

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Increasing the global renewable energy market share: Recent trends & perspectives Judy Siegel Background Globally, energy consumption is growing at a rapid rate. The International Energy Agency (IEA) World Energy Outlook (WEO) predicts that in the next 25 years, energy consumption will increase by 60 percent with the bulk of this growth to occur in developing countries. Under a business as usual scenario, fossil fuels will continue to dominate the energy mix, with enormous environmental, health, economic, and energy security consequences. The share of renewable energy, though growing in absolute terms, will remain largely unchanged at 14 percent, of which the bulk today is traditional biomass and hydropower. Despite these growth rates, 1.4 billion people will be without electricity in 2030 and a comparable number will continue to rely on traditional biomass for heating and cooking needs. Clearly, this is an unsustainable path for the world to follow, particularly given rising fossil fuels prices that are projected to remain high into this decade and beyond.

(IEA) World Energy Outlook WEO 60%

14% 2030

2005 11 7-8 (NDRC) (BIREC 2005)

of renewable energy for development begun at the World Summit on Sustainable Development (WSSD) in the Johannesburg Plan of Implementation (JPoI). This plan calls for an increase in the global market share for renewable energy–with a sense of urgency. This work was furthered at the landmark Bonn International Renewable Energies Conference in June 2004 (Renewables 2004) that brought together participants from across the world to focus on renewable energy scale up, with an emphasis on the industrialized world. Outcomes of the Bonn Conference included a Political Declaration, a set of Policy Recommendations, and an International Action Program (IAP) that included 200 voluntary commitments on renewable energy from a range of stakeholders.

(RD&D)

The countries most in need of the positive attributes of R.E. technologies are not yet beneficiaries /

2005

BIREC 2005 On November 7-8, 2005, the National Development and Reform Commission (NDRC) of the People’s Republic of China organized the Beijing International Renewable Energy Conference 2005 (BIREC 2005). This meeting brought together the international community around the shared goal of global renewable energy development, with a particular emphasis on developing countries. BIREC 2005 reviewed the status of renewable energy and its contribution to economic development and poverty reduction; shared success stories and lessons learned from renewable energy deployment; and explored approaches and trends in renewable energy policy, finance, and capacity building.

BIREC 2005 Federal Ministry for Environment, Natural Conservation and Nuclear Safety BMU Federal Ministry for Economic Cooperation and Development BMZ United Nations Department of Economic and Social Affairs UNDESA European Commission EC (WSSD) (JPoI) 2004

6 (Renewables

2004)

(IAP) 200 WSSD

BIREC 2005

2006 5 (CSD) 14 CSD 14

1-12

BIREC 2005 also reviewed progress on commitments made at WSSD and in Bonn. The Beijing Conference also provided a unique and timely platform for building consensus on issues, actions, and accomplishments for increasing the global market for renewable energy. The conclusions of the meeting provided important inputs to the upcoming 14th session of the Commission on Sustainable Development (CSD) to be held in New York City, May 1-12, 2006. CSD 14 will have energy as one of its principal themes. i Why Renewable Energy? Renewable energy–including biomass, geothermal, hydropower, solar, wind, tidal, and wave– offers tremendous benefits for meeting global energy needs. Building on a foundation of hydropower, biomass combustion, and geothermal power pioneered during the industrial revolution in the late 1800s, new forms of renewable energy began to be developed and commercialized, including solar, wind, and several forms of advanced bio energy. Today, these renewable energy technologies are the fastest growing energy technologies (particularly wind and solar) and are cost competitive in a variety of grid, offgrid, and remote applications worldwide. They utilize locally available resources, offsetting the need for costly fuel imports; are environmentally beneficial, without the harmful emissions of conventional energies; provide diversification to a country’s energy mix; and create local job and income opportunities.

2005

(UNF)

BMU

BIREC 2005

• BIREC 2005

Renewable energy scale-up: the road from WSSD to CSD WSSD CSD

BIREC 2005 was supported by the Federal Ministry for Environment, Natural Conservation and Nuclear Safety (BMU), Germany; the Federal Ministry for Economic Cooperation and Development (BMZ), Germany; the United Nations Department of Economic and Social Affairs (UNDESA); and the European Commission (EC). The Conference builds upon the groundwork

A number of drivers are spurring market growth in renewable energy. Most notably, investments in technology research, development, and demonstration (RD&D), primarily by industrialized nations; supportive policy and regulatory frameworks; energy security issues; environmental and climate change concerns; and local and regional development opportunities that these technologies offer. Price spikes and supply concerns over fossil based technologies are further increasing interest in and demand for the technologies.

2005

BIREC /

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Nonetheless, despite their advantages, the bulk of renewable energy development to date has occurred in industrialized countries, with the limited exception of a few emerging economies like China. The countries most in need of the positive attributes of these technologies are not yet beneficiaries. This is due in large part to a number of barriers that hinder renewable energy advancement. Most notably, renewable energy continues to be comparatively expensive for a range of developing countries’ needs. Further, many of these countries have not yet put in place the policy and regulatory frameworks needed to induce investment in renewable energy, or eliminated subsidies for conventional fuels that make it difficult for the technologies to compete. Moreover, many developing countries have imperfect capital markets and insufficient access to affordable financing for developers and consumers, as well as inadequate institutional capacity to support the technologies.

and convened under the guidance of UNDESA, with technical inputs and financial support provided by the United Nations Foundation (UNF) and BMU. This report outlines a number of priorities for the international community in accelerating the scale-up of renewable energy, particularly in the developing world. It also identifies the potential role that BIREC 2005 can play in moving these priorities forward. Proposed actions include: • /

/ (feed-in tariff) (vehicle ethanol)

Renewable energy electricity generation costs as percentage of 1980 levels: 1980 historical and projected (NREL 2005) / (NREL 2005)

Rapid increase of renewable energy in developing countries will require these barriers to be addressed, including the development of supportive policy and regulatory frameworks, securing public sector commitment, strengthening local capacities and entrepreneurship, transferring technologies, and increasing access to affordable financing and consumer credit. It will require a transition from traditional biomass to modern use of biomass, cleaner fuels, and improved stoves for cooking; maximizing the use of large, small, and micro hydro resources in an environmentally sustainable manner; more efficient use of biomass residues for power generation and transport, including growth of dedicated crops; and increasing deployment and reducing costs of solar, wind, geothermal, wave, tidal, and other renewable energy 1 sources . The good news is that these issues have been tackled successfully in several countries around the world and models exist for replication elsewhere. BIREC 2005 Report This report addresses issues and approaches for tackling the barriers and increasing market penetration of renewable energy. It has been prepared by a group of experts in the renewable energy field representing developing and developed countries across the globe. The report has been organized

•

(SME)

• /

• Technology Research, Development, and Demonstration. BIREC 2005 provided an excellent avenue to focus attention on the need for, and importance of, continued and accelerated investment in all aspects of renewable energy research, development, and demonstration. RD&D is necessary to drive down costs, increase performance and reliability, and improve efficiencies in all aspects of renewable energy manufacturing and production. RD&D is needed in the development of new and/or improved materials, processes, components, subsystems, and systems and these individual aspects need to be integrated in order to meet market and end user needs. Further, RD&D is required not only for renewable energy electricity end uses (grid and off grid) but also for thermal, mechanical, and refined fuel applications (including charcoal and pellets used in improved cook). BIREC 2005 helped to raise visibility on the need for more effective leveraging of public and private sector RD&D funds; the importance of expanding product and service offerings to match the needs and income streams of developing country customers (particularly rural poor); the need for ongoing dissemination of information on technology performance, costs, and market potential; and joint opportunities for RD&D between and among industrialized and developing countries. It also involves further research and development on "low tech" applications in the field (water pumping, water purification, etc.), and productive use applications, in order to expand the benefits of renewable energy, including to the rural poor.

A wedding picture in Xinjiang Autonomous Region of Western China. The groom bought two 40 watt photovoltaic panels for the bride as a wedding present. Wallace,William / NREL / 40

• Improve Policy and Regulatory Frameworks. Securing political commitment and putting in place effective policy and regulatory frameworks are crucial elements to improve the investment climate for renewable energy. Governments have a role to play at all levels–national, state, and local–and there is a range of policy options that have been applied and from which lessons are being learned. These include: targets and timetables for renewable energy; policies to accelerate grid connected renewable energy; technology specific policy measures; green power purchasing and pricing policies; policies at the local level (state, city, community, etc); rural electrification policies; cross sector policies that promote renewables (e.g., agriculture, water, etc); and removal of market distorting policies that favour conventional energy sources such as oil, gas, and coal and make it difficult for renewable energy technologies to compete. Though it is premature to determine the impact of renewable energy policies, as many are still in the early stages of development/implementation, several policies

(SME)

(NGO)

•

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creative leveraging of public and private sector resources will be needed to meet the financing requirements of the renewable energy industry. This will include support of national governments, international and local financial institutions, multilateral development banks, bilateral development agencies, other international agencies (UN, the Global Environment Facility), global partnerships, foundations, and carbon financing. • Capacity Strengthening. For renewable energy markets to grow, capacity strengthening is needed in all aspects of project and program design, development, implementation, and operation. Capacity building is the process of creating, mobilizing, and converting skills and institutions to achieve desired socio-economic results. It requires a long-term commitment, with activities focusing on individuals, institutions, and systems, and targeting public, private, and nongovernment organizations. In the renewable energy area, capacity building is needed at several levels, and these must be coordinated to maximize effectiveness.

Global Renewable Energy Applications /

have yielded significant results. Examples include feed-in tariffs in Germany, Spain, and Denmark; subsidies for gridconnected solar PV in Japan and the United States; the production tax credit in the United States; vehicle ethanol policies in Brazil; and programs for biogas, biomass, and small hydro in developing countries such as China, India, and many others. Solar hot water promotion policies at municipal and national levels have been very effective in supporting the integration of solar hot water and heating into buildings. Electricity restructuring allowing retail power competition has clearly fostered voluntary green power purchasing, which along with utility green power pricing and/or renewables certificates systems, has stimulated the growth of green power markets in Europe, the United States, Australia, and Japan. Continued monitoring, evaluation, and reporting of the effectiveness of these measures are important as policies have such a critical role to play in the advancement of the technologies. • Financing Facilitation. Finance and investment are essential ingredients in the growth and development of renewable energy for industrialized and developing countries alike. Though finance sector engagement in renewable energy is still nascent, it has been accelerating in many countries and a number of signs indicate that this trend will continue. In OECD member countries, there is currently a large buoyant market for investment in large-scale renewable energy projects. In non-OECD countries the trends are also somewhat positive, although they stem from a much more modest base and overall, the climate for investment in renewable energy is still difficult. In many less developed countries (LDCs), the private sector often faces significant barriers in accessing the credit markets, which due to limited liquidity and market instabilities, very seldom offer the sort of medium- and long-term financing needed for infrastructure investments. As the industry matures it will be increasingly important to expand the scope and breadth of financing sources and instruments, both locally and internationally, to include project equity, project debt, risk management, small and medium entrepreneur (SME) finance, and end-user finance. More

•

BIREC 2005

At the technology level, capacity is needed to develop academic, professional, and vocational skills. Support is required on all aspects of technology research, development, demonstration, deployment, marketing, financing, operation, and maintenance. Further, continued emphasis on accelerating renewable energy R&D is essential to bring down costs, improve performance, and enhance competitiveness with conventional energy sources. At the institutional level, national and sub-national governments require capacity support in the formulation, implementation, and enforcement of effective policies and programs. Financial institutions, whether public, private, or micro-finance, require training on the costs and rewards of renewable energy, how to review and assess projects, and the risks and risk mitigation instruments associated with renewable energy. At the business level, a range of business planning and support services are required to ensure development and delivery of renewable energy services. These need to be aimed at utilities, SMEs, entrepreneurs, non government organizations (NGOs), communities, and community organizations. At the individual level, capacity strengthening is needed to increase consumer awareness of the costs, benefits, and uses of renewable energy, and how to access, finance, and deploy the technologies. Though the needs for capacity support can often vary between the industrialized and developing nations, and a host of institutions will need to be involved in the delivery of capacity services, the fact remains that more effective strengthening of individuals and institutions worldwide is a prerequisite for the global scaling up of renewable energy. • International Collaboration. Though each country has the main responsibility for developing its own domestic renewable energy market, international collaboration can be beneficial. International collaboration can support national governments and industries to build market frameworks, strengthen industrial capacity, and enhance technical know-how through information sharing on successful (and not so successful) efforts, facilitation of industrial relationships,

A number of drivers are spurring market growth in renewable energy /

A newly-built school, complete with solar panels, celebrates its opening /

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and connection of local players to a wealth of international expertise. By linking national efforts to the broader international community, a country can reap the benefits of technological improvements and cost reductions at home, while contributing to the collective scaling up of renewable energy worldwide. Though different renewable energy technologies are in varying stages of development, all can benefit from international collaboration. Many developing countries have hydropower and geothermal resources that can be exploited, and would gain from the experiences of countries that have successfully deployed these technologies. For the “newer” renewable energy technologies (e.g., wind power, solar technologies, and newer forms of bio energy), international collaboration is useful to exchange experiences, learn from each other, and discuss best practices, in order to avoid time-consuming and costly mistakes, and provide a “shortcut” to success. The potential benefits of international cooperation could include reduced technology development and production costs, improved technological performance and reliability, improved market growth worldwide leading to economies of scale and further cost reductions, enhanced knowledge of effective market strategies and mechanisms to enhance technology competitiveness, expanded equipment standardization, and harmonization across countries, reduced trade and investment barriers, expanded opportunities for cooperative technology development and joint venture manufacturing and marketing opportunities, increased South-South and North-South trade opportunities, reduced dependency on imported energy sources, improved employment and income opportunities, and increased energy access to those in need. International cooperation in renewable energy is occurring today via a number of mechanisms including workshops, fora, technical assistance and training, pilot projects, and other information exchange media. Yet to date, these efforts have not yielded significant growth at the global level. Thus, opportunities exist to increase international collaboration and enhance the global penetration of renewable energy products and services, as well as the establishment of truly international markets. Continued collaboration is needed in the areas of technical assistance, joint research and development, technology transfer, reduction of trade barriers, investment and partnership, and opportunities for North-South, SouthSouth, and South-North exchange. • Mechanisms for Reviewing Progress on Increased Use of Renewable Energy. BIREC 2005 provided a forum for verifying the importance of continued and expanded efforts on renewable energy information collection and sharing. During the meeting, discussions examined the data gaps and barriers, with particular emphasis on the areas of policy, finance, and capacity development. BIREC 2005 also explored mechanisms for improving information reporting and review. In this regard, participants invited the Commission on Sustainable Development to

Solar water heater tanks in Kunming, Yunnan Province, China. Jean Ku / NREL /

consider an effective arrangement for reviewing and assessing progress towards substantially increasing the global share of renewable energy as foreseen in the Johannesburg Plan of Implementation. It was agreed that this would provide a long term prospective and encourage prompt action. Such periodic review could offer opportunities for enhanced national, regional, and international cooperation on renewable energy for sustainable development that could lead to more favourable environments for technology transfer and accelerated commercialization of innovative renewable energy technologies. The review would also be useful in addressing the link between energy and the Commission’s biannual thematic cluster. Finally, it was noted that voluntary reporting could be enhanced through inputs from relevant international organizations, partnerships, and networks.

In summary, opportunities for renewable energies are limitless and countries around the world have committed to work together on increasing their global market share. BIREC 2005 provided a unique and timely forum to exchange experiences on renewable energy development, share views on policies and approaches, explore financing mechanisms, promote international cooperation, and determine how to measure success. The conference also provided a platform to build consensus and secure commitments on moving forward towards a cleaner energy future, from which all can benefit. This report served as a background report for BIREC 2005, provided input to the dialogue and discussion, and contributed to the primary outcome of the meeting – the Beijing Declaration. 1

J. Saghir, The Global Investment Climate: Financing the Growth of Renewable Energy in Developing Countries, Renewable Energy World, July-August 2005.

Opportunities for renewable energies are limitless /

1 (The Global Investment Climate: Financing the Growth of Renewable Energy in Developing J. Saghir 2005 7-8 Countries) (Renewable Energy World)

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The role of policy Martin Devine Over the last decade the policy discussion around sustainable energy and, in particular, renewable energy has taken on a heightened significance. A growing awareness and appreciation of the complex issues associated with the way the world consumes energy, from the need to provide energy for development to the need to cut global emissions of greenhouse gas, against a background of sustained high oil prices, has brought into sharp focus the need to, in the words of the Johannesburg Plan of Implementation “With a sense of urgency, substantially increase the global share of renewable energy sources with the objective of increasing its contribution to total energy supply.”

14 2005

32 2002

In response there has been a widespread expansion of policies to promote renewables. At least 48 countries worldwide now have some type of renewable energy promotion policy, including 14 developing countries. By 2005 at least 32 countries and 5 states/provinces had adopted feed-in policies, half of which have been enacted since 2002. At least 32 states or provinces have enacted renewables portfolio standards, half of these since 2003. Policy targets for renewable energy exist in at least 45 countries worldwide, including 10 developing countries, all 25 European Union (EU) countries, and many states/provinces in the United States and Canada.

/ 32 2003

/ 45 10

/ 2004

300 200-250 1500 160GW

2000 2004 28% 450

60%

As a result, investment in renewable energy in 2004 was around $30 billion, excluding large hydropower, which accounts for an additional $20-25 billion. However, this is against a background of $150 billion investment in the conventional power sector. Renewables currently supply around 160GW of power worldwide, about 4% of the total and growing (but this does not include large hydro which accounts for a further 16%). The fastest growing sector is solar, which grew 60% per year from 2000 to 2004, and wind grew at 28% per year over the same period.

4% 16%

Ice Harbor Dam: Large hydropower produces 10% of the U.S.A.’s energy. US Army Corps of Engineers / NREL / Ice Harbor

1600

200 100

2030

10%

In the EU, Australia, Japan, US and Canada, over 4.5 million people chose to purchase renewable energy voluntarily, showing that consumer awareness of the benefits of renewable energy is increasing.

WSSD

16 The role of renewables in development is also increasing – small hydro power, biomass, and solar PV play an important role in providing energy services to tens of millions of people in rural areas, serving homes, schools, agriculture, and small industry. 16 million people use biogas to cook and light their homes and 2 million use solar lighting systems. The production of biofuels results in nearly 1 million jobs worldwide.

2002 (WSSD)

REEEP

PPP

Photo courtesy of Photos.com

PPP

Johannesburg Renewable Energy Coalition JREC JREC

The IEA estimates that around $16 trillion worth of investment will be necessary by 2030 to meet the world’s growing energy demands. Clearly, there will be a need to greatly increase the flow of investment into renewable energy if renewables are to play a significant role in the future.

WSSD

(REEEP)

WSSD

The need for this paradigm shift in renewables policy was voiced at the World Summit on Sustainable Development (WSSD) in Johannesburg in 2002, where there was a strong call for increased international collaboration to pursue the common goal of energy sustainability.

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This political momentum resulted in the formation of a number of new types of organisation, designed to bring a greater level of coherence to the various actors associated with sustainable energy across all sectors. At the political level, the Johannesburg Renewable Energy Coalition (JREC) was formed to push for clearer and stronger frameworks for the promotion of renewable energy. JREC has been successful in galvanising support with 88 member governments and has established a patient capital fund to support investment in renewables. Also to emerge from Johannesburg were a variety of organisations, across a range of sectors, operating under the new model of Type II partnerships. The Renewable Energy and Energy Efficiency Partnership (REEEP) is one of these. The vision at WSSD was to create a new means of working between all parts of the private and public sectors and of involving civil society in the discussion, to make the deals that are needed to deliver sustainable development. It was recognized that there exists a need to create change in a strategic way at a systemic level to reduce political, policy and economic risk in order to facilitate investment. By engaging the expertise and resources of a very open and diverse range of actors, all of whom have significant assets to bring to the table, partnerships such as REEEP set out to coordinate ongoing work and scale up its impact, enable a demand-driven approach to development, strengthen public sector policy and governance capacity at all levels, and support and enable progress in international negotiations. This goes a long way beyond the traditional ‘PPP’ model of the public private partnership, which has for some time been used by governments to collaborate with the private sector on specific programmes and projects. Such partnerships often involve only a limited number of actors (e.g. within a specific region) and operate in relative isolation from similar activities occurring elsewhere. What the WSSD partnerships bring is a way to join together actors working on similar issues from across the globe to share experience and learning, and to provide a common platform and forum for opinion, helping to bring together diverse interests under a common agenda, providing a voice that is more than the sum of its parts. In this way the WSSD partnerships seek to move from incremental, project by project change towards more fundamental and systemic reform. This approach of bringing together lots of smaller players and facilitating a stronger community is especially suited to sustainable energy, as it is a sector that includes many small scale actors who lack the political clout of the traditional energy sector and other well established industries. Gaining a meaningful influence on policy to allow the potential of renewables to flourish will, in large part, depend on the level of coherence in the sustainable energy community. WSSD partnerships have a number of challenges to overcome, if they are to bring people together in this way to affect systemic change. In developing REEEP, a range of issues were encountered that are likely to be common wherever partnerships seek to influence policy. After the initial burst of high-level endorsement at and immediately after WSSD, REEEP has had to work hard to ensure that interactions between the partnership’s on the ground activities and high-level politics are maintained.

WSSD

One kilometre off the coast at Blyth, Northumberland, UK, these turbines are subject to waves which can reach heights of 6.5 metres, wind speeds of up to 100 miles an hour and a tidal range of 4.5 metres in a water depth of Northumberland 5.8 metres. Copyright AMEC Wind / Blyth 6.5 100 5.8 4.5

REEEP WSSD REEEP

REEEP

REEEP (BP & Climate Change Capital) REEEP

[

REEEP

]

2004 (Renewables2004)

REEEP

154

21 Renewable Energy Network for the 21st Century REN21 REN21

2004

A failure by governments to invest political capital (rather than just money) in the partnerships is a risk when it to comes to the long term future of any partnership. One way to overcome this is to ensure that the value of the partnership is clear to the public and private sectors. Clearly defined objectives help in this, as do rigorous monitoring and evaluation mechanisms to assess the partnerships, progress, and impact backed up by skilled and committed staff working to facilitate the partnership. In selecting areas to work on REEEP’s programme, processes seek to build strong linkages into national and local level policy making processes and ensure that projects do not deliver in isolation, but help deliver systemic change. This means that REEEP, as with many partnerships, must take a strategic approach and identify where it can make the most impact – not just where all partners can happily agree an outcome. In engaging the private sector, the benefits of partnership need to be even more concrete. In REEEP, apart from direct involvement in specific projects, the most active private sector partners (BP & Climate Change Capital) already hold a reputation for their progressive thinking and appetite for exploration of new possibilities. REEEP’s key challenge over the short to medium term is to build stronger engagement with the private sector and ensure its active participation in the quest for systemic change. This seems more relevant to sustainable energy and renewables than to many other sectors, as energy is so central to our lives that the factors determining how we get and use energy are embedded deep in the way we run and govern society: in energy, more than in almost any other sector, change is needed at a systemic level if we are to make a significant difference to the sustainability of our energy systems. (Two case studies of REEEP projects are given below.) The work of partnerships such as REEEP, and many other organisations working to improve the policy and regulatory environment for renewables, was given a political boost in 2004 with the German government’s hosting of the Bonn Renewables 2004 conference. Bonn reaffirmed the call for an urgent expansion of renewable energy that emerged from Johannesburg and its importance in reaching the Millennium Development Goals that were agreed there. Indeed ministers from 154 countries stated in the Bonn political declaration that “They share the vision that renewable energies, combined with increased energy efficiency, will become a most important and widely available source of energy and will offer new opportunities for cooperation among all countries.” In addition to underlining the importance of renewable energy to the key issues of climate change, energy security and development, in particular the Millennium Development Goals, where there is a clear need for access to more reliable and affordable energy services which can increasingly be met through renewables, the political declaration to emerge from Bonn highlighted the importance of collaboration multi-sectoral engagement to create the necessary environment for renewable energy to flourish and the vital need for capacity building – in terms of knowledge of renewables, policy making, financing and assessment of renewable investments – across all sectors and in both the developed and developing worlds.

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The response to this need for greater collaboration was the formation of the Renewable Energy Network for the 21st Century (REN21). REN21 is a policy network that operates at a political level, bringing together high level actors from all sectors to provide political impetus that supports the on the ground work of its members and the renewables community at large. The Renewables 2004 Global Status Report released at Beijing is a prime example of the output of the network and sheds light on the current state of play of renewables policy and deployment. REN21 is also collaborating with REEEP to develop an Information Gateway on Renewables and Energy Efficiency that will provide a state of the art gateway to information on all aspects of renewable energy globally. That fact that Bonn was hosted jointly by the German departments for environment and for development co-operation was in itself a significant step, as it acknowledged the role of renewables and energy efficiency in development and demonstrated a new level of awareness on the part of developed countries. This was further exemplified later in the year with the Dutch Energy for Development (E4D) conference, again hosted by the environment and the development ministry, which called for a level playing field for different energy technologies to allow greater investment, and highlighted the importance of policy and regulatory reform to achieve this.

REN21

REEEP (Information Gateway on Renewables and Energy Efficiency)

(E4D)

REEEP Partnership GVEP

2005

Margaret Beckett As two of the key partnerships that straddle these two formerly distinct policy areas, REEEP and the Global Village Energy Partnership (GVEP) have agreed a memorandum of understanding that promotes co-operation between the organisations. Thinking Methane-fuelled gas cooking in China. Simon Tsuo / NREL /

Global Village Energy

BIREC

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on priorities and opportunities to add value to each others work is shared, and projects seeking funding can now be redirected to the more appropriate organisation, reducing the amount of duplication in fundraising efforts that project developers have to undertake. All the messages emerging from Bonn were reaffirmed at the Beijing International Renewable Energy Conference 2005. There was a strong call from the business community for clearer policy signals from government to promote better investment conditions and this was recognised by the UK’s Secretary of State for Environment Margaret Beckett who said, "It is important that the time frames of policies to promote sustainable energy fit with the time lines for investment by the private sector.”

The fact that Bonn was hosted jointly by the German departments for environment and for development co-operation was in itself significant /

Stavros Dimas

2006 2007 Commission on Sustainable Development CSD

CSD

WSSD

E4D G8 REEE

PMEDREP PMEDREP (Mediterranean Renewable Energy Partnership)

In addition, BIREC has taken renewable policy one step further. That the Chinese government not only hosted such a major renewables event with very high level attendance, but also announced a major expansion of their own renewable energy policy was a significant step in demonstrating that, in the words of Stavros Dimas, Environment Commissioner at the European Commission "The fact that the conference is taking place here in Beijing confirms that taking up renewable energy is no longer the sole purview of developed countries and that emerging countries also wish to play a leading role in this area." He later remarked that "renewable energy has been viewed as something only rich countries can afford, but now we see it is something developing countries cannot afford to be without". The timing of this shift is fortuitous. In spring of 2006 and 2007, the UN Commission on Sustainable Development (CSD) will meet in New York to consider progress towards the Millennium Development Goals, with a specific focus on energy, industrial development and climate change – three topics close to the heart of renewable energy. The Beijing conference has asked the Chinese to report its outcomes to the CSD and these outcomes echo the calls for reform and support that have come from WSSD, Bonn and E4D. Under the UK presidency, the G8 have this year focused on climate change and the Gleneagles Plan of Action calls on partnerships such as REEEP and MEDREP (Mediterranean Renewable Energy Partnership) to take forward the Johannesburg Plan of Action. Agreement in Montreal, at the United Nations Framework Convention on Climate Change’s first meeting of parties, to continue dialogue about future climate change mitigation, will add further impetus to the call for an urgent and substantial increase in the use of renewables, but the renewable energy community, as diverse as it is, must continue to galvanise itself to take advantage of the opportunities that will be presented over the coming years.

This infrared radiometer will look down from 100 feet above the Saudi Arabian desert to measure the infrared radiation emitted. Steve Wilcox / NREL / 100

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Case study 1: Policy & Regulation National policy road map for wind in China The potential for grid-connected wind power in China is enormous, with current estimates at 250 GW and an off-shore potential of 750 GW. China has recently established goals for near term development of 4 GW by 2010, and longer term goals of 20 GW by 2020 in order to accelerate the pace of development for wind. With the recent passage of the Chinese Renewable Energy Law, the goals and intent are now in place to create the policy and regulatory structures which are in support of renewable energy. REEEP, together with the Centre for Renewable Energy Development (CRED) will establish a logical framework of objectives and goals for cooperation between the Government, industry, and financial stakeholders to support the achievement of national objectives.

250 GW 750 GW 4 GW

2010

REEEP’s job, together with the Chinese Centre for Renewable Development (CRED), will be to determine how to get to that 15% from a current base of 764MW. According to CRED, China’s inland resource development potential is estimated at 250 GW and its offshore resource development potential at 750 GW. The major gateposts on the roadmap will be a total wind capacity of 5 GW by 2010 and 30 GW by 2020. “All of the present project will be decided by the market, no matter whether the developer is domestic or foreign. The price will be structured according to a feed-in tariff in line with the conditions in the Chinese Renewable Energy Law. But if more than one developer is interested in the same wind site development, the government will use a bidding procedure to make the decision for the developer,” says Zhongying. In order to create the roadmap or planning framework which monitors goals, needs, actions and achievements, a steering committee has been formed. Made up of the key players from government agencies and advisors, it will be critical in shaping four main themes: the vision and framework for wind development, the key development needs and strategies for the technology, industry, and market sectors for wind, a logical framework for key stakeholder actions required to reach the long term targets, and a set of metrics and appropriate intermediate targets. Stakeholders include utilities, turbine manufacturers, government agencies, investors, component makers, and project developers. Another aspect of its role will be to act as a central point for coordinating the stakeholders, as well as ensuring the committee is acting and thinking in accordance with the demands made by the industrial five-year planning period, the renewable energy law, and the government agency.

Wind turbines at the Renewable Energy Experiment and Demonstration Centre in Hohhot, Inner Mongolia, China. Jean Ku / NREL / (Renewable Energy Experiment and Demonstratioon Centre)

2020

REEEP Energy Development, CRED

The project will prepare a National Implementation Roadmap for Wind Energy Development which will become part of the MultiYear Technology and Industry Development Plan. The detailed planning framework will also establish specific targets that can be associated with the 11th Five Year Plan which is currently under development. The Chinese government introduced a new energy law in February 2006, and it also recently raised its renewable energy targets at the Beijing renewable energy conference in November 2005. Instead of 10%, renewable energy is to account for 15 % of national consumption by 2020, according to the Chinese government.

Case study 2: Finance

2006 2005

Centre for Renewable

The project will identify potential sources of capital, promote the involvement of national and local investors and financial institutions, and support the adaptation of orthodox financial mechanisms and business structures. The project will reduce issues of risk and contribute towards its mitigation through training, guarantees and bundling.

1 11 15%

REEEP 764MW GW 5 GW

20 GW

2020

2020 10%

(CRED) 15% 250 2010 30 GW

Seed funding for renewable energy and energy efficiency finance in Brazil To meet environmental and energy goals, Brazil needs to establish more small-scale renewable and energy efficiency projects, an objective supported by the REEEP and its partners, the Blue Moon Fund, and Econotech. REEEP is providing seed funds to support the establishment of a dedicated private equity investment fund to provide financing for clean energy in Brazil. The fund, known as “MMZ” is a spin off of Econotech, a vehicle created by Brazilian financiers that has established its credentials financing small hydro generation projects in southern Brazil. The LaGuardia Foundation, which promotes financial innovation in the delivery of sustainable energy, is working with MMZ to create a $45 million private equity and guarantee facility for clean energy in Brazil.

CRED 750

REEEP will build on lessons already learned from a feasibility study carried out in Brazil in 2004/2005. The project team recognises that the main activities necessary to establish a renewable and energy efficiency fund in Brazil are the preparation of a project pipeline, the involvement of financial advisory services, the preparation of documents with the Brazilian authorities, the raising of funds, and the overall coordination of a project. These activities will be cost shared with local fund managers with the relevant experience. Debt in local currency is available at attractive rates of interest for investors in renewable energy thanks to provisions made by the National Development Bank – the BNDES.

(Blue Moon Fund) MMZ

REEEP Econotech

REEEP

Econotech LaGuardia MMZ

REEEP

4500

2004/2005

(BNDES)

4500 3 20MW BNDES

1.8

BNDES The expected output is a first-of its-kind $45m equity and guarantee facility to finance small hydropower, energy efficiency and biomass projects. Based on average construction costs of small hydropower plants in Brazil, at least 20MW of new, installed capacity of renewable energy generation could be built within the first 3 years of the fund. The fund will provide leverage for about $180m in debt from the BNDES, although total leverage could be even higher.

Energy Service Company

ESCO

MMZ MMZ 100MW

Bagasse, a by-product of sugar generation, could provide a significant source of energy if technologies are improved: shown in the picture is the Usina Santa Sertaozinho Elisa mill in Sertaozinho, Brazil. Ralph Overend / NREL / Usina Santa Elisa

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The fund will also provide a significant new opportunity for the participation of local investors. Negotiations are underway with the BNDES to replace their current requirement for real asset guarantees with financial guarantee structures allowing the Energy Service Company (ESCO) industry more flexibility to achieve a level of financial viability commensurate with its economic and technical potential. MMZ goes so far as to set up special purpose companies to take equity stakes in a number of energy projects that it then bundles together under a single investment fund. MMZ expects its new fund’s investments to produce about 100MW of small scale hydro capacity over the next three years. The fund’s activities focus on pulling together the owners of different hydro projects to create the critical mass that will enable negotiation of better terms both with utilities that will buy the power and providers of equity and debt finance. “The truth is that there was never a shortage of good projects, just a shortage of good projects big enough to interest mainstream banks”, says Luiz Prado, LaGuardia Foundation’s Director in Brazil. “MMZ’s team overcame this problem by contacting all the companies in one region with a concession to produce small-scale hydropower. Confidentiality agreements were then signed with interested parties and the team began the process of bundling and structuring the projects so that it was able to win a Power Purchase Agreement (PPA) from the main local utility.” The bundling enabled Econotech to access long-term debt with acceptable rates of interest from the National Development Bank (BNDES) and Brazilian pension funds that had knowledge of the power sector. However, bundling is not just about gaining negotiating capacity with larger and more powerful players. MMZ has also found that the project developers gain flexibility by working with counterparts. “Developers have varying expectations,” explains Prado. “Some may be very confident in the value of their project and want to stay in until completion. Others may seek more cash up front. In financial jargon, they want different ‘exits’. If you can ally their interests by pooling projects in a single purpose company, you do not have to worry about the different details of each of the projects that, together, are supplying the hydropower.”

LaGuardia Luiz Prado MMZ

(PPA) (BNDES)

Econotech

MMZ Prado

MMZ Prado 99 MW Prado

MMZ

REN21 2005 (Worldwatch Institute) www.reeep.org

To make investors more comfortable, MMZ has hired independent engineering services to provide a full review of each individual project with the objective of increasing generating capacity and reducing investment costs. “We have now drawn up contracts with the owners of eight small hydro power plants in one area of Brazil, totalling about 99 MW,” says Prado. Prado sees the bundling of projects as essential to making small scale renewable energy developments viable investment opportunities. “By bundling a number of similar small projects, transaction costs become more palatable and there are better conditions for negotiating with investors, banks, utilities, technology suppliers and engineers,” he explains. “Bundling is crucial to the success of clean energy development, because it brings together projects and enables them to compete with big high-carbon energy projects. To do this you need an organisation, preferably a dedicated fund manager such as MMZ, prepared to deal with the plethora of technical, legal, and financial issues that characterise clean energy development.” Data in this article is taken from REN21’s Renewables 2005 Global Status Report, produced by The Worldwatch Institute, which provides an in depth assessment of the current status of renewable energy. Case studies are taken from www.reeep.org

This young girl in Cardeiros, Brazil can fill her jug from the school water tank thanks to a photovoltaic-powered pumping system. Roger Taylor / NREL / Cardeiros

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The Commercial Investment and Finance Forum Michael Eckhart and Michael Allen A key part of BIREC 2005 was the Renewable Energy Investment and Finance Forum that took place on Monday, November 7, 2005 in the Great Hall of the People. The Finance Forum provided leading investors and global financial institutions with a platform to discuss how and where new patterns of investment are taking hold in the renewable energy sector. It explored the financial instruments and deal structures that are working today, as well as the regulatory frameworks needed to underlie future development trends. An emphasis was placed on the rapidly expanding renewable energy markets in developing countries, and how they can help deliver sustainable world economic development. Whereas the theme of finance speeches several years ago was about barriers and the need to bring down costs, the central theme of the speeches in the BIREC 2005 Finance Forum was about the financing that is being done. The main points of the opening addresses are summarized below.

2005

7 BIREC 2005

BIREC 2005

2006

Wu Guihui Vice Director General Of Energy Bureau of NDRC: With the background of the new China Renewable Energy Law coming into force in January 2006, Wu Guihui provided a comprehensive review of China’s current renewable energy installations focusing particularly on hydro, wind, solar and biomass. Existing capacity in each of these fields is impressive, but generally represents only a small portion of the potential that has been identified for each of these resources. The development of all such resources will in future be regulated by the new law which sees three basic strategies to promote resources, namely:

The development targets in all areas are substantial, with a threefold increase in hydro, and a thirtyfold increase in wind foreseen. Under the broader biomass / biogas category a fourfold expansion of biomass power generation is anticipated, with a fiftyfold increase in the available supply of compressed biomass fuels. To reach the targets as outlined, a total investment of some ¥1500 billion will be required.

Airtricity -

Eddie O'Connor (Renewable Energy - Building the Future) 2025

Methane made from biomass is an important fuel in China. William Wallace / NREL /

30% 5%

1 Virginia Sonntag O'Brien Gardiner Basel Agency for Sustainable Energy BASE (Fortis Bank)

Dominique Campana

/ 15000

Those which are already commercially viable and need minor support to encourage extensive development – hydro, solar thermal and biogas; those resource rich applications, such as wind and biomass, that need increased technical support and the establishment of an expanded local capacity in manufacturing and development: and those such as solar PV which have huge potential but limited application until costs are reduced.

(ADEME)

Nick

Eddie O’Connor, CEO, Airtricity: In a paper titled “Renewable Energy – Building the Future”, the background context of the world supplies of oil and gas were presented in some detail, highlighting the author’s contention that by 2025 not only will resources be limited, but reserves will also be geographically restricted. The potential for wind power generation was outlined in some detail. The opportunity to integrate wind generation with more traditional forms of generation provides a number of benefits. The risk adjusted costs of various generation sources has demonstrated the immediate viability for wind and the positive impacts that its inclusion has in the overall generation mix. In Scotland, for example, where wind now contributes some 30% of generation, its installation has seen a 5% reduction in bulk electricity costs. Concerns about the intermittency of wind can also be offset by interconnection to a dispersed grid system - the potential exists to provide an enormous, steady, and reliable supply of wind generation across Europe. Such a system could be established, for example, if a distribution system were established for electricity that imitated that provided for oil and gas. The potential for wind generation in China is considerable given the very significant energy potential both onshore and offshore, but the success of this market will depend on the establishment of market features that ensure an attractive investment environment with, amongst other things, long term RE targets, appropriate and dependable legislation, and an open and unsubsidized market for wholesale electricity.

(RES)

2005

7 2010

21% 5.75%

50%

750,000 (CDM) Tetouan Lafarge 20%

CO2

(Asian Development Bank)

Klaus

Gerhaeusser

(sovereign guarantee)

(KfW)

Peter Pischker

25481 p40-p49 rev_CN_4.qxd 9/8/06 3:09 pm Page 42

Session 1: The panel on investing in the development of the renewable energy sector The first session of the Finance Forum was chaired by Virginia Sonntag Oâ&#x20AC;&#x2122;Brien, Managing Director of the Basel Agency for Sustainable Energy (BASE) in Basel, Switzerland, and Nick Gardiner, Vice President and Head of the Energy Finance Group of Fortis Bank in London. A panel of speakers presented the interests and activities of their organizations in a session that sought to summarize current activities and future trends in RE finance, both nationally and globally. Dominique Campana of ADEME, outlined a number of domestic approaches that have been implemented in France to help accelerate the development of renewables and the wider uptake of energy efficiency measures. Sustainable energy policy in France is based mainly on energy efficiency and Renewable Energy Sources (RES) promotion, within the European Union framework, to apply the Kyoto protocol and the new national law on energy policy by July 2005. In 2010 RES will have to provide 21 % of electricity consumption, 5.75 % of fuel consumption in the transport sector and increase their contribution to heat production by 50%. To achieve those targets, integrated partnerships between public and private professional and financial operators are implemented, such as innovative financing instruments between

Villagers working on the Hybrid Wind & Diesel Pilot Project on Xiao Qing Dao Island in the Yellow Sea, which provides electricity for 120 households. Jerry Bianchi / NREL / Xiao Qing Dao 120

for public sector lending. To further enhance their programmes the bank is working to establish co-financing facilities and to offer guarantees that will provide not only partial credit coverage, but also address issues of political risk.

The financial community needs stability of policy more than anything else / 2 Michael Eckhart American Council on Renewable Energy ACORE ADEME and private banks, supporting the development of biomass, or an advanced feed-in tariff system for wind power. At the international level, funding schemes within public and private cooperation between France and other countries are successful. For example, Renewable Energy Services Companies providing electricity in Mali, Morocco, and South Africa results in up to 750, 000 non-connected beneficiaries. Clean Development Mechanism (CDM) offers increased profitability to projects, like a private wind power project by Lafarge in Tetouan, Morocco, decreasing the CO2 emissions of the cement plant by 20%. From those examples a widening of the France-China cooperation could be proposed, in the field of institutional framework, capacity building, electrification from renewables and CDM implementation. Klaus Gerhaeusser of the Asian Development Bank described the bankâ&#x20AC;&#x2122;s renewed programmes to support clean energy developments through multi-tranche financing which offers more favourable terms and can provide facilities in local currency, an issue that is seen as key by many. The newer facilities through the bank will engage the private sector and eliminate the requirement for sovereign guarantees, as needed

The cement plant in Tetouan, Morocco is powered by wind generated electricity. ARR Lafarge Medialibrary / Tetouan

Peter Pischke of KfW outlined their interest in offering early stage financing, an area where there is often considerable difficulty in sourcing funding. Support can take the form of a grant to demonstrate project feasibility, through to the provision of much needed longer term financing for the exploitation and operational phase of projects. It was stressed that the establishment of recognized portfolio standards would be provide a real benefit to future investments. Similarly, the benefits of predictable feed-in tariffs were reiterated. To build the credibility of RE in the wider finance community, there is a need to focus on the success of projects, not linger on the occasional negative experiences of the past. For rural energy supplies there was a plea that these should not be technology driven solutions, but that the most appropriate approach and technology should be openly and critically assessed. Zhuang Laiyou of the China Development Bank provided a background on current wind developments in China and plans that the bank has to support a significant growth in the local industry. The need for domestic manufacturing of wind turbines and related equipment is seen as a crucial element, but there is a concern that China is still focused on R&D within this sector. The bank has introduced a number of support mechanisms for the wind industry and these were outlined in some detail. Of particular importance was the recognition that longer term funding (13 to 15 years) is an important element and that this will help underwrite accelerated implementation under the new RE law that is now in effect.

Nick Gardiner

4.5 MW

(World Bank)

Jamal Saghir

100

Saghir

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Li Fusheng of the Export Import Bank of China described in detail the support that can be provided by export credit agencies under the internationally accepted protocols for such institutions. He noted that world energy demand is growing rapidly with world economic development, but that development has also been frustrated by the energy and environmental crisis. Thus it is critical to explore energy renewability for human beings. Renewable energy is a new area in world energy exploration, due to its special characteristics for sustainable development strategy and bioenvironmental improvement. Export credits agencies, as one of the key development financiers, will play an important role in developing renewables. In recent years, many ECAs have begun to approach consensus on financing renewable energies and actively take part in the financing system. As an officially supported ECA in China, China ExIm Bank has been financing renewables in domestic and overseas projects through its export credits, aid related loans, overseas investment financing, and transfer loans from other foreign governments. The bank will collaborate with international financial institutions and the renewables sector to expand global renewable energy and contribute to sustainable global growth.

consolidation within the manufacturing sector, which limit sources, but which perhaps provides more robust financial resources to address the rapidly growing demand for equipment.

Michael Eckhart GE (Ecomagination)

IPO

BP CalPERS

(Green Wave) Power DFJ Technology Partners IPO

Nth 2005 SunPower 2005 (Green Fund) 200

Q-Cells SunTech Winslow Management New Energy Capital Bank 40

2005

US Renewables Group United Hudson 2004 120

Acciona Energia

Alberto de Miguel 10

Renewable energy financing is increasing rapidly, as are corporate commitments /

Jamal Saghir of the World Bank provided a fitting final paper in which the estimates of the total investment needs for proposed RE developments on a global basis were graphically outlined. He said: “Profound and radical changes are taking place all across the world that are altering our energy landscape - changes that will continue to do so throughout the rest of the 21st century. Rapidly developing countries such as Brazil, China, India, and others are having a dramatic impact on the global market for energy as they seek to fuel their economies. The impact of higher oil prices is having a crippling effect on some of the poorest oil-importing countries.” While the World Bank, KfW, GEF, EIB, the EU, EBRD and ADB are all increasing their commitments to this market, the source of the full $10 billion seen as needed each year has yet to be identified. Clearly the private sector has a key role to play, but it will take a significant team effort from all sides to provide adequate sources of finance from pre-investment through to construction and operation if we are to have any hope of meeting the ambitious targets that the industry has set itself. Mr. Saghir said: “Among international financial institutions and bilateral donors, the World Bank Group is without a doubt one of the developing world’s largest financiers for renewable energies - and just as importantly energy efficiency. “ He closed by saying: “All of us have a role to play, and how we can effectively play to our strengths, and, more importantly, in global partnership with one another, will determine whether or not we succeed.”

Christina Weirlen

Session 2: Commercial investment and financing of renewable projects The second Finance Forum Session was Co-chaired by Michael Eckhart, President of the American Council on Renewable Energy (ACORE) in Washington, DC, and Qin Haiyan, General Manager, China General Certification, and also a leader in the Chinese Wind Energy Association in Beijing. In this second session speakers representing leading renewable energy investors and lenders shared their experiences. Nick Gardiner of Fortis Bank outlined the portfolio of investments that the bank has in RE developments and then provided a very thorough overview of project risks, their assessment, and steps that are taken to address these for their investment in wind projects. The importance of high quality and reliable resource data was stressed as was the need for a clear and consistent regulatory environment. There is considerable enthusiasm within the current wind energy market as an increasing number of bankable projects are being presented for financing. In return, the interest of the finance market in wind is growing, major sponsors are emerging, and larger projects being undertaken. If there are concerns, these are around the fact that technology is evolving and turbine unit sizes are moving towards 4.5 MW, a size for which there is no experience to date. There is also some

A 100 kW photovoltaic system being installed at a wind farm site south of Coimbatore, India. Applied Power Corporation / NREL / 100 Kw Co imbatore

1991-2004 57.30 245.50

188.20

(Roaring 40s Renewable Energy Ltd) Kelleher CLP

(100 MW)

Mark

2005

10 15

BIREC 2005

25481 p40-p49 rev_CN_4.qxd 9/8/06 3:09 pm Page 46

Michael Eckhart of ACORE presented an overview of renewable energy financing in the US. He noted that renewable energy financing is increasing rapidly, and corporate commitments are up, such as GE’s Ecomagination initiative, and BP’s new Alternative Energy commitments. Institutional investors are also increasing commitments, such as CalPERS pension fund’s new Green Wave initiative. Venture capital is increasing, with traditional firms like Nth Power, DFJ, and Technology Partners being joined by newcomers into the Clean-Tech arena. IPO activity is up sharply, with the top three technology deals in 2005 all being solar PV companies: Q-Cells, SunPower, and SunTech. Public stock markets are responding well, as evidenced by Winslow Management’s Green Fund being ranked number two out of over 200 funds in 2005. Equity capital for RE projects is increasing, with new funds like New Energy Capital and US Renewables Group. Lending to the sector is increasing, with new participations by United Hudson Bank and others. Merger and Acquisition activity is increasing, up to $4 billion in 2004, anticipated to be $12 billion in 2005. Finally, there is the beginning of a market for Renewable Energy Certificates being formed in the US.

Harvesting corn and stover for ethanol production. Warren Gretz / NREL /

25481 p40-p49 rev_CN_4.qxd 9/8/06 3:09 pm Page 48

Mark Kelleher of Roaring 40s Renewable Energy Ltd provided an overview of how a newly established joint venture with CLP has assessed the regional wind market, built on the partnersâ&#x20AC;&#x2122; experiences with wind farms in New Zealand and Australia, and sees the future opportunities within China. The companyâ&#x20AC;&#x2122;s first investment in China, through the 100 MW Datang project in Jilin province, is the base from which a significant portfolio of investments will be built in China. In line with a number of earlier speakers, the importance of an efficient industry development, a clear signal on tariffs, and a realistic regulatory environment were all stressed as key elements to allow the marketâ&#x20AC;&#x2122;s rapid growth.

Overall, it appears that 2005 was the most successful year yet for renewable energy financing / 2005 Stacks of hay to be made into low grade paper, China. Simon Tsuo / NREL /

Wei Diansheng of China State Forestry Administration made a strong plea that the potential of forestry based biomass be recognized and supported as a key element of future RE in China. He also suggested that with some 100 million hectares of bare land within China, there was a considerable opportunity to utilize these for the growing of Jatropha and its integration as a biofuel into the transport industry. Alberto de Miguel of Acciona Energia spoke about the exciting yet challenging field of microfinance in Latin America, which has expanded tremendously in the past 10 years. Microfinance is expanding, from original business in very small loans to groups of poor women, to making a broader array of financial services available to rural and urban populations. This includes renewable energy, such as solar PV and other systems. Christina Weirlen of the Global Environment Facility spoke about GEF, noting that it is the financial mechanism of the UNFCCC, financing the incremental costs of taking care of the global environment. GEF is a partnership with and between international development agencies. Key partners include the World Bank, UNDP and UNEP. More recently ADB, IADB, EBRD, and AfDB have joined. These agencies propose, co-finance, and execute the GEF. During the period 1991-2004, GEF advanced $5,730 million in grants for the global environment, leveraging an additional $18,820 million in financing, totalling $24,550 million of impact. Today, GEF is moving away from direct support for hardware acquisition, and is moving towards supporting the creation of an enabling environment, such as information and awareness, policy frameworks, and capacity building. In addition, non-grant instruments are a field of experimentation, and will be further explored in the future.

Summary The tone of the Finance Forum was positive, with cautious but optimistic outlooks for the future. This fits very well with the similar tone in the main governmental event, where leaders spoke about recent successes and the need to do more in renewable energy. The speakers reported increasing levels of activity from all sources of financing including government export-import agencies, research agencies, development banks, commercial banks, investment banks, investors, and venture capitalists. The public markets are turning positive, with IPOs and stock prices increasing. Overall, it appears that 2005 was the most successful year yet for renewable energy financing. There are concerns about whether renewable energy will become a big, mainstream form of energy, and whether costs will continue to come down. The speakers expressed confidence that things are heading in the right direction, and all expressed commitments to remain focussed on this sector for future financial business. The one thing requested of public policymakers in the Forum is to recognize that the financial community needs stability of policy more than anything else. Temporary sweeteners might be good for demonstrations and prototype experiments, but this can be quite disruptive for mainstream financing which seeks stable and predictable environments. The basis for this can be easily seen when considering that investors and banks can be making 10, 15, and 20-year commitments, and it is not unreasonable therefore to expect public policy to make similar long-term commitments. The BIREC 2005 Finance Forum was a tremendous success, in terms of so quickly updating the audience about the state of finance, and the key issues of today.

25481 p40-p49 rev_CN_4.qxd 9/8/06 3:08 pm Page 40

2005

7 BIREC 2005

BIREC 2005

2006

Airtricity -

Eddie O'Connor (Renewable Energy - Building the Future) 2025

Methane made from biomass is an important fuel in China. William Wallace / NREL /

30% 5%

1 Virginia Sonntag O'Brien Gardiner Basel Agency for Sustainable Energy BASE (Fortis Bank)

Dominique Campana

/ 15000

(ADEME)

Nick

(RES)

2005

7 2010

21% 5.75%

50%

750,000 (CDM) Tetouan Lafarge 20%

CO2

(Asian Development Bank)

Klaus

Gerhaeusser

(sovereign guarantee)

(KfW)

Peter Pischker

25481 p40-p49 rev_CN_4.qxd 9/8/06 3:09 pm Page 42

Villagers working on the Hybrid Wind & Diesel Pilot Project on Xiao Qing Dao Island in the Yellow Sea, which provides electricity for 120 households. Jerry Bianchi / NREL / Xiao Qing Dao 120

The cement plant in Tetouan, Morocco is powered by wind generated electricity. ARR Lafarge Medialibrary / Tetouan

Nick Gardiner

4.5 MW

(World Bank)

Jamal Saghir

100

Saghir

25481 p40-p49 rev_CN_4.qxd 9/8/06 3:09 pm Page 44

consolidation within the manufacturing sector, which limit sources, but which perhaps provides more robust financial resources to address the rapidly growing demand for equipment.

Michael Eckhart GE (Ecomagination)

IPO

BP CalPERS

(Green Wave) Power DFJ Technology Partners IPO

Nth 2005 SunPower 2005 (Green Fund) 200

Q-Cells SunTech Winslow Management New Energy Capital Bank 40

2005

US Renewables Group United Hudson 2004 120

Acciona Energia

Alberto de Miguel 10

Renewable energy financing is increasing rapidly, as are corporate commitments /

Christina Weirlen

A 100 kW photovoltaic system being installed at a wind farm site south of Coimbatore, India. Applied Power Corporation / NREL / 100 Kw Co imbatore

1991-2004 57.30 245.50

188.20

(Roaring 40s Renewable Energy Ltd) Kelleher CLP

(100 MW)

Mark

2005

10 15

BIREC 2005

25481 p40-p49 rev_CN_4.qxd 9/8/06 3:09 pm Page 46

Harvesting corn and stover for ethanol production. Warren Gretz / NREL /

25481 p40-p49 rev_CN_4.qxd 9/8/06 3:09 pm Page 48

Overall, it appears that 2005 was the most successful year yet for renewable energy financing / 2005 Stacks of hay to be made into low grade paper, China. Simon Tsuo / NREL /

25481 p50-p57 rev_CN_4.qxd 9/8/06 3:15 pm Page 50

The standardization and certification of renewable energy products in china China is a country with both a large population and a rapidly growing economy.

Its energy industry at the beginning of the twenty-first century is confronted, as is the case in many other countries, with two major conflicting pressures: economic growth and the need for environmental protection. Changing traditional methods of energy production and consumption and pursuing the development and utilization of clean renewable energy have a significant role to play in the establishment of a sustainable energy system that can both promote national economic development and improve the quality of the environment.

China began to develop and apply renewable energy technology in the 1970s and gradually started a process of industrialized development in recent years. However, there still remains a large shortfall of good quality renewable energy products in China, which severely restricts the further development of industry. Therefore, the lack of standardization and certification - a cornerstone for improving product quality â&#x20AC;&#x201C; is without doubt a problem in need of urgent solution. 1 This article will give a brief introduction to the administrative and implementation systems for standardization, certification and accreditation in China, as well as the relevant standards and certification systems for renewable energy technologies such as wind and PV power generation and solar water heating. Rural communities in China often rely on solar water heaters. Simon Tsuo / NREL /

Figure 1: The Structure of Chinaâ&#x20AC;&#x2122;s Standardization and Certification Administration /

Framework for the Standardization and Certification of Chinese Renewable Energy Products The standardization and certification of Chinese renewable energy products is administrated by two Committees subordinated to the General Administration of Quality Supervision, Inspection and Quarantine of P.R. for China, namely, the National Standardization Administration Committee and the Certification and Accreditation Administration of P.R. for China. Other relevant supporting bodies include the Technical Committee for Standardization and the National Accreditation Centre for Conformity Assessment, as well as various laboratories and other certification bodies (see Figure 1). The administrative system is structured such that it combines unified management with clear divisions of responsibility. The following paragraphs will present standardization, certification, and accreditation respectively.

2005

283

1 TC20 TC50

ISO/TC180 (SC6) IEC/TC88 TC90

IEC/TC82

25481 p50-p57 rev_CN_4.qxd 9/8/06 3:15 pm Page 52

Authorized by the State Council and supervised by the General Administration of Quality Supervision, Inspection, and Quarantine, CNCA presides over standardization throughout the country. The Technical Committee of National Professional Standardization is mainly in charge of nationwide standardization in various technical fields, as well as the technological jurisdiction of standardization within its own field. It was established, and is administered by, the National Standardization Administration Committee. By the end of 2005 there were, in total, 283 national professional standardization techniques commissions, involving a variety of areas such as industry, agriculture, service, security, sanitation, and environmental protection & management, amongst others. Three of these, as Figure 1 shows, are related to renewable energy: the New Energy and renewable Energy Subcommittee (SC6) under the Technical Committee of National Energy Foundation and Administration Standardization (TC20, connected withISO/TC180); the Technical Committee of National Wind Mechanism Standardization (TC50, connected with IEC/TC88); and the Technical Committee of National Photovoltaic Solar Energy System Standardization (TC90, connected with IEC/TC82).

Figure 2: The Administration and Implementation System for Chinese Certification and Accreditation / 2

2001

WTO

2 1

Historically, China’s certification and accreditation system was established and managed by various departments and industries within relevant fields, which to some degree brings about the diversity of policies and rules, intersectional management, multiple standards, and inadequate supervision and surveillance. Confronted with these problems the State Council determined, on July 29th 2001, to set up CNCA to supervise, administrate, and coordinate certification and accreditation work at the nation level. The establishment of CNCA indicates that China will establish a new management structure, in accordance with the requirements of market economics, to conduct the work of certification following the National Treatment Principle under WTO guidelines, thus finally establishing a certification and accreditation system with unified standards and regulations, internal and external consistency, and high efficiency.

(CNAB)

(1) CNCA implements the ‘licensing’ system for certification bodies, which means that a certification body can only conduct certification work within defined parameters, and after it has been approved by CNCA, having gained the corporation’s qualification.

(CNAL)

(2) China implements a unified accreditation system, that is, CNCA designates accreditation bodies to evaluate the capability of certification bodies, inspection bodies, and laboratories, and to grant Accreditation Certificates to those qualified. To date, the three accreditation bodies designated by CNCA are CNAB, CNAB and CNAT.

(5) Manufacturers entrust certification bodies to conduct certification tests on their products and make commitments to provide products to the required standards.

CNAB_China National Accreditation Board for Certifiers / CNAB: CNAL_China National Accreditation Board for Laboratories / CNAL:

A sustainable energy system can promote economic development and improve the quality of the environment /

(3) Certification bodies conduct certification work in accordance with the Implementation Rules of Products Certification approved by CNCA. Certification bodies will grant Accreditation Certificates to qualified manufacturers and permit them to use a certification mark on their products. (4) Testing laboratories contracted with certification bodies are entrusted to conduct sample testing, make evaluations and then make a final report on products in accordance with the relevant standards and the rules of implementation for product certification.

CNCA_The Certification and Accreditation Administration of P.R. China / CNCA:

Figure 2 shows the current administration and implementation system for Chinese certification and accreditation.

(CNAT) So far, many national standards have been formulated, of which twelve are related to solar thermal applications, nineteen to photovoltaics, twenty one to wind, two to geothermal, and six to methane.

19 21

(6) Certificates and Marks of Certification, granted by certification bodies that are independent of both supply and demand parties, are authoritative guarantees of product quality. Consumers can identify the product quality according to the Certificates and Marks of Certification, enhancing their confidence in such products.

(TC50)

1999

1999 2005 36 3

21 1

(IEC) GB 18451.1-2001 IEC61400-1

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Wind Turbines Generator System Part 1: Technical Condition, Wind Turbines Generator System; Part 2: Testing Methods; and Technical Specifications for the Integration of Wind Farms into the Power System. The product and testing standards relevant to wind turbine generating systems are now basically complete. Some of them are identical to those adopted by the International Electro-technical Commission (IEC), in particular some of the central standards. For example, GB 18451.1-2001 Safety Requirements for Wind Turbine Generators, which is the foundation of the design and certification for wind turbine generating systems is identical to IEC61400-1. For historical reasons, the technology for wind power generation has mainly been developed in Europe, which results in the relevant standards being based on the European environment and wind conditions. However, China’s wind conditions are very different from those in Europe. For instance, typhoons are frequent in the southeast coastal areas of China, but they are not a consideration for the above-mentioned European standards. Damage caused to wind turbine generators by typhoons often occurs in China, India and Japan, and regions such as these need the international standards to be urgently re-evaluated, and improved in applicability, to take account of their specific situations and, in China’s case, to allow the establishment of its own standards system for wind energy. Figure 3: Certification Process /

•

PV Products The standards system for PV products includes four main parts: PV cells, PV modules, PV systems and PV components. The 18th Institute of the Ministry of Information Industry is in charge of the establishment of the standard system for PV products in China (TC90).

Figure 3 shows the specific certification process: When manufacturers submit their application for certification to a certification body, the certification body will conduct a first audit. After the corporation passes the first audit, the certification body will send a notice of acceptance and an announcement of the submission of product samples. At the same time, they will also notify the testing bodies, who will then conduct sample testing and give the final report in accordance with the implementation rules for product certification and other relevant criteria and standards. After reviewing the report, if a product is deemed to have qualified, the certification body will inform the corporation and establish a team to make an inspection of the factory. After the inspection team submits its final report on the factory, the certification body will review the report and grant certificates to those corporations it considers qualified.

•

(TC90) IEC GB/T 19064-2003 / / -

TC90 The Standardization of Chinese Renewable Energy Products Wind Turbine Generating Systems The standardization of technology in the field of wind mechanisms is presided over by the Technical Committee of National Wind Mechanism Standardization (TC50). Since 1999, TC50 has shifted its focus from off-grid generating systems to grid-tied generating systems. By 2005, China had put in place twenty one national standards and thirty six professional standards for wind turbine generating systems. Three national standards for wind turbines generating systems being compiled recently included

IEC 62124-2004 2004 - 1 2

IEC 61727IEC 61730-1 IEC 61730- 2

1982

The basic standards have been put in place and the national standards for PV cells and PV modules have been integrated with international practices, with the adopted standards identical to IEC. However, the primary standard for PV systems is currently GB/T 19064-2003 Solar Home System Specifications and Test Procedure which is compiled by TC20 (The Technical Committee for National Energy Foundation and Administration Standardization) and based on the Solar Home System and Wind/Solar Hybrid System Technical Specification developed by NDRC/GEF/WB Renewable Energy Development Programme Office. This standard is mainly aimed at small household systems, with particular emphasis on the examination of component quality, but neglects examination of the rationality and reliability of the whole system. As PV products are increasingly popular in China, TC90 is now making efforts to formulate corresponding national standards, taking the following as references in order to meet the demands of safety and integration of PV systems into power systems:

A photovoltaic powered loudspeaker installed by Solar Electric Light in a Chinese (Solar Electric Light) village house. Simon Tsuo / NREL /

IEC 62124-2004 Photovoltaic (PV) stand alone systems Design verification; IEC 61727-2004 Photovoltaic(PV) systems characteristics of the utility interface; IEC 61730-1 Photovoltaic (PV) module safety qualification - Part 1: Requirements for construction; and IEC 61730-2 Photovoltaic (PV) module safety qualification - Part 2: Requirements for testing

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Solar Water Heaters China has made tremendous progress in the application of solar water heating and has now, after twenty years of research and development, reached a level as advanced as any in the world. Parallel with the formation and development of the solar water heating industry, related standardization work has also been proceeding. The formulation of these national standards in China started in1982, with the drafting of Testing Method for Rating the Thermal Performance of Flat Plate Solar Collector. Subsequently, following the industry’s development, the Technical Committee of National Energy Foundation and Administration Standardization formulated fourteen national standards including Specification for Flat Plate Solar Collectors and Solar Energy-Thermal Applications-Terminology, etc. On the whole, China’s technical standards system for solar water heating is now quite sound, and the next stage will focus on the formulation of relevant standards for architectural integration so as to further accelerate its development. The Certification of Renewable Energy Products In order to regulate the renewable energy market, improve product quality, and promote the development of renewable energy, the National Institute of Metrology, supported by NDRC and MOST and authorized by CNCA, has established a certification body especially for Chinese renewable energy products. This is the China General Certification Centre (CGC). CGC is the only domestic certification body accredited to conduct certification on renewable energy products such as wind turbine generating systems, solar water heaters and PV products. Wind Turbine Generating Systems Under the leadership and support of CNCA, NDRC and MOST, CGC has made the following progress in the programme for Quality Certification System in Chinese Wind Turbine Generating Systems: • Quality Testing and Certification System of Wind Turbine Generating Systems: Rules and Procedures has been compiled and is now moving towards approval and application. • The draft of The Handbook of Design and Evaluation on Wind Turbine Generating Systems has been finished, and the performance comparison of evaluation software is now being made and the work of trial certification conducted. • Manufacturers of components (including gearboxes, vanes and generators) have had corresponding testing capability and they can now conduct certification by means of witnessed tests. The Wind Energy Technology Centre of CGC has finished the draft of The Test Manual and conducted the witnessed test on gearboxes and generators. They are currently preparing testing equipment for the whole machine, as well as conducting training at expert level. • Preparations are under way to construct ‘national-level’ wind farms to meet the needs of certification and R&D.

•

/ /

(REDP) REDP

(UNDP)

(GEF) 2005 7

China’s wind conditions are very different from those in Europe /

A tower maintenance mechanic climbs a wind turbine to install meteorological instruments. Jerry Bianchi / NREL /

Solar water heater systems on rooftops in Kunming, Yunnan Province, China. Jean Ku / NREL /

• The draft of The Implementation Rules for Certification of WTGS (Wind Turbine Generator Systems) and Components has been finished and trial certification for WTGS as well as generators, gearboxes and vanes, etc. is now being conducted. PV Products Supported by NDRC/GEF/ REDP, CGC is engaged in a Feasibility Study on the Establishment of a PV Products Certification System in China. REDP will initiate the Programme for the Establishment of the PV Products Certification System in the near future and will make quality surveillance through certification in the process of carrying out the PV subsidy programme. CGC has finished the initial survey, collated the information, and drafted the certification implementation rules. CGC will soon carry out trial certification work. Solar Water Heating With the support of NDRC, UNDP and GEF and under the coordination of relevant organizations, CGC has compiled The Implementation Rules for Certification of SWH Products and established the Technical Committee of Certification for SWH. Since July 1, 2005 when certification for solar water heating was formally put into practice, numerous domestic manufacturers of solar water heaters have applied for certification of their products. At present, the trial certification process has almost been completed, with the result that most of the leading manufacturers in China have been approved for certification.

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High-efficiency solar panels help power the headquarters of the Berlin Bank. Courtesy of BP Solarex / NREL /

Global energy development An overview of the main conference session Globally, the change in the mix of renewable energies is expected to be significant, as the use of wind, solar, geothermal energy, and biofuels for transportation continue to increase rapidly , and the use of biomass for cooking and heating remains stable, or declines. Recent growth rates for renewable energy have outpaced all other fuels, although they still represent a very small percentage of total world energy consumption. Other more traditional renewable power generation technologies, including biomass, geothermal and small hydro, are more mature, and growing more slowly at rates similar to those of fossil fuels. Renewable energy costs have declined at rapid rates across the board over the past two decades, and are all projected to continue to decrease. The factors behind these cost reductions include improvements in technological performance, and increasing scales of production and use. Coupled with increasing prices for conventional energy sources and other market and policy drivers, these cost reductions have allowed renewable energy technologies, such as wind power, bioenergy, solar hot water and photovoltaic systems, geothermal energy, and hydropower to achieve significant market penetration around the world. The primary markets for renewable technology are power generation, much of it localised, for applications such as hot water and space heating, and transportation fuels. World electricity demand is expected to double between 2005 and 2030, and to triple in developing countries by 2030. Renewable energy accounted for 4% of total global electricity capacity, or 160 GW, in 2004 and is projected to increase rapidly over

2005 2030

2030 4%

GW 160 GW 2/3

A geothermally heated greenhouse in New Mexico. Robb Williamson / NREL /

2004 160 2004 44%

the next several decades. Developing countries accounted for 44% of the 160 GW in 2004, with two thirds of this capacity coming from small hydropower and wind energy. (PV) There are opportunities for increasing use of all the major sources of renewable energy electricity generation in the future. Onshore and offshore wind energy is expected to make the largest contribution of the available technologies, expanding both in developed, and in developing countries that have made major commitments to wind power generation. Photovoltaic (PV) markets are currently booming in Germany, Japan and some US states, with an expectation that the growth will continue in these markets and others. Biomass electricity and heat production is slowly expanding in Europe, while small scale power and heat production from agricultural waste should see ongoing growth in developing countries with large agricultural industries. The concentrating solar power market is also seeing a resurgence of investment, with numerous new projects under development. 20 Small scale hydro equipment continues to offer rural communities opportunities to enjoy reliable localised power supplies. In the developed world, the emphasis is on modernization and plant life extension, whereas in many developing countries, the priority is on attracting investment for new projects.

70 70

80 20

90 90

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Utility scale wind power has tremendous potential for meeting some of the rapidly increasing global demand, as costs have become competitive with conventional power generation, the industry has matured, and the technology has been made reliable.

The removal of market distortions can be the most effective policy instrument to promote investment in economically viable renewable energy technologies. These are not promotional policies for renewables, rather they are designed to remove market barriers.

The evolution of renewable energy policies has shown a discernible pattern over the past three decades. Starting with RD&D in the early 1970s, government investments were found mainly in support for market deployment. In the late 1970s, government investment started to emphasise market investment incentives, voluntary programmes, and tax measures. By the mid 1980s, most developed countries had RD&D policies. Towards the end of the 1990s, new market based policies were being introduced, and by the late 1990s and early 2000s, a clear acceleration in renewable energy policy making was taking place at national, state/provincial and municipal levels. Some policies set targets for future shares or amounts of renewable energy, others promote power generation, solar hot water, biofuels, or purchase of green power.

By mid-2005, at least 43 countries had set a national target for renewable energy supply, amongst them the 25 EU countries. The EU has Europe-wide targets as well: 21% of electricity and 12% of total energy from renewable sources by 2010. In addition to these 43 countries, 18 US states, plus and the District of Columbia, and three Canadian provinces have targets based on renewables portfolio standards. Most national targets are for shares of electricity production, typically in the 5-30% range. EU country targets by 2010 range from 3.6% in Hungary to 78% in Austria, with most of these targets providing a 5-10% increase in the share from renewables compared to 1997. Other targets around the world are for shares of total primary energy supply, specific installed capacity, or total amounts of energy from renewables, with most aiming for 2010-2012 as fulfilment dates.

2004

2005

12%

3.6% Analysts may argue about the details and relative effectiveness of different renewable energy policies, but nonetheless many policies have clearly produced significant results.

43 25 2010

21% 43

5-30% 78%

2010 1997 5-10% 2010-2012

(IAP) 200

25%

Among the 43 countries with national targets, 10 are developing countries â&#x20AC;&#x201C; Brazil, China, the Dominican Republic, Egypt, India, Malaysia, Mali, the Philippines, South Africa, and Thailand, with a few other developing countries expected to announce targets in the near future. At the Renewables 2004 Conference, capacity building for market development was recognized as a key challenge. In fact, of the 200 actions and commitments set out in the International Action Program (IAP), 25% targeted the development of human and institutional capacity. This was a higher percentage than for any other issue, and underscores the importance of capacity building for many countries. Since Bonn, a number of capacity development initiatives have been put in place. Examples include:

Recent growth rates for renewable energy have outpaced all other fuels /

Industrialized countries, newly industrialized economies in transition, and developed countries have continued to build capacity on policy, finance and technical issues. Policy makers, private firms, utilities, industry groups, and NGOs have sponsored and participated in a range of domestic, regional, and international forums aimed at strengthening the capacity of decision makers and implementers of renewable energy projects. Research organizations continue to advance renewable energy R&D and to develop and enhance models and tools for evaluation. Benefiting from capacity building activities, several countries have recently put in place policy commitments, targets, and timetables for renewable energy advancement and are following through with implementation. An aerial view of the Horns Rev Wind Mill Horns farm, Denmark. ÂŠ Elsam A/S / Rev

Capacity building efforts have helped to expand the range of corporate and financial players now investing in renewable energy.

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New technology in renewable energy development – Japan’s experience

BIREC has outlined a number of priorities for the international community in accelerating the scaling up of renewable energy, particularly in developing countries. Proposed actions include:

Speaking at BIREC’s plenary session on policy, Ichiro Takahara Director-General of the Energy Conservation and Renewable Energy Department of Japan’s Ministry of Economy, Trade and Industry, said that long-term commitment to technological innovation is of central importance in keeping up to date with renewable energy developments.

Technology R&D. The continuation and acceleration of investment in technology research, development and demonstration, in order to drive down costs for technologies’ enhanced product and system performance, reliability, and efficiency; and to expand the base of cost competitive enduse applications.

His country has certainly benefited from its promotion of the sector, and is now the world’s top photovoltaic power producing country, accounting for 48% of the global electrical output derived from photovoltaics. at the same time producing about 50% of the world’s solar cells and batteries. This could not have been accomplished without active and continual investment in research and development, which now has reached 170 billion yen, or US$1.5 billion.

Improvement of policy and regulatory frameworks. Securing political commitment and putting in place effective policy and regulatory frameworks are crucial elements in improving the investment climate for renewable energy. Governments have a role to play at all levels, and there is a range of policy options that have been applied, and from which lessons are being learned. Financing facilities. As the industry matures, it will be increasingly important to expand the scope and breadth of financing sources and instruments, both locally and internationally. More creative leveraging of public and private sector resources will be needed to meet the financing requirements of the renewable energy industry.

U.S. biodiesel is made primarily from soybean oil and recycled restaurant cooking oil. Bob Allan / NREL /

Capacity strengthening. For renewable energy markets to grow, capacity strengthening is needed in all aspects of project and programme design, development, implementation, and operation. Areas where capacity strengthening is most needed include technology R&D, marketing, financing, operation, and maintenance; policy formation, implementation, and regulation; business planning and development; and consumer outreach and awareness. International collaboration. Though each country has the lead responsibility for developing its own domestic renewable energy market, and fulfilling commitments made at WSSD towards increasing the global market share for these technologies, a role exists for enhanced international collaboration. Networks such as REEEP and the Global Village Energy Partnership (GVEP) have made capacity strengthening part of their core strategic plans, and support such efforts worldwide. The overall picture is one of renewed determination to achieve real progress in the immediate future, with a general acknowledgment amongst governments that policy initiatives have to be capable of creating an environment in which there are real incentives for private investment, together with by meaningful levels of public support, at both the institutional and consumer levels.

Japan started promoting energy conservation and renewable energy in the 1970s when the oil crisis threatened the country’s economic development. Since then, the country has made strenuous efforts in energy conservation, and has actively worked for international cooperation.

Wind turbines north of Rumoi City on the west coast of Hokkaido, Japan. Bill Bauer / NREL / Rumoi

(GVEP)

(Ministry of Economy, Trade and Industry) (Energy Conservation and Renewable Energy Department) Ichiro Takahara

48% 1700 20

50% 15

New Energy & Industrial Technology Development Organisation NEDO 100 8700

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Are China’s targets ambitious enough? A 200 watt concentrator photovoltaic module developed by Daido Steel in Japan. Daido Steel / NREL / Daido Steel 200

The development of innovative technology has led to drastic cost reductions and helped overcome many of the problems facing the renewables industry. In PV alone, Japan has invested more than 10 billion yen (US$87 million) through its New Energy & Industrial Technology Development Organisation ( NEDO), a government agency. Japan believes that the fruits of technological innovations in renewable energy must be shared among the contributing countries, and has established information and technology exchanges with partner countries such as its joint development of three PV projects in China. However, simply sharing is not enough and Japan proposes that the sharing of such technology information must be actively promoted in a multilateral forum where as many countries as possible can participate. In the IEA’s “Renewable Energy Working Party,” there is a framework for joint research and development, in which non-IEA countries can participate.

2002

China ratified the Kyoto Protocol in 2002 and is currently actively engaged in applying the Protocol’s Clean Development Mechanism (CDM). Chinese officials announced an ambitious plan at BIREC for the world's second biggest emitter of greenhouse gases to boost the proportion of renewable energy in its primary energy production from the current 7% to 15% by 2020. The expectation is that this will alleviate increasing pressure both on resources and the environment.

(CDM) 2020 7%

15%

(NDRC) 2020

Xu Dingming, director of the Energy Bureau of the National Development and Reform Commission (NDRC) said in an interview that by 2020, China expects at least 30% of its electricity to come from power plants fuelled by renewable energy sources. By that date, the combined generating capacity of hydropower plants in the country should reach 290 million kilowatts, that of wind power plants 30 million kilowatts, and that of solar power plants, 2 million kilowatts.

2.9

3000 200

2020 3

4000

2020 In the sharing of technological information, Japan suggests that the participating countries actively make use of such a multilateral framework and the proposal for a framework was referred to in the Action Plan of the Gleneagles Summit earlier this year. Japan plans to continue active participation in the framework, and to develop further cooperations with the participating countries.

240

Already the world's largest market for solar water heaters, China plans to increase the total heat collecting area for this application to 300 million square metres by 2020, with an annual fossil fuel saving equivalent to 40 million tonnes of standard coal. China will also aggressively push ahead with the use of methane in its rural areas and by 2020, the country's annual methane consumption will reach 24 billion cubic metres.

25% 1.08 25%

(IEA) In order for each country to establish a renewable energy market, it is necessary to introduce a clear renewable energy policy which will set targets and regulations based on each country’s circumstances. For this reason, it is essential to develop the human resources to not only shoulder the responsibility for constructing systems and developing policies in their own countries, but also to provide expertise and enthusiasm for the development of an independent renewable energy market.

(Renewable Energy Working Party)

However, environmentalists suggest that Beijing's new target is still not ambitious enough to offset the climatic damage that will be caused by its spectacular economic growth, which will continue to be predominantly fuelled by coal.

To promote such human resources in developing countries, Japan initiated an ongoing plan in 2005 to train 100 renewable energy personnel from Asia each year. Japan believes that a further challenge facing the wider promotion of renewable energy in developing countries lies in encouraging private sector investment in renewable energy businesses. Those renewable energy projects that make the best use of the Global Environment Facility, or GEF, are good examples. But the greater challenge remains the involvement of more private funds and the encouragement of investment in developing countries in order to further promote wider use of renewable energy. The APEC Energy Ministers’ Meeting, in which Japan participates, has also emphasized this aspect.

2005 100

(GEF)

(APEC) The hope is that a significant contribution to the resolution of these issues can continue to be made by Japan through international forums like BIREC, as well as the country’s assistance to specific renewable energy projects in many countries by means of ODA and official export credits and through JBIC as a public financial institution. Certainly current policy is the continued support of such projects for the foreseeable future.

(ODA) (JBIC)

30%

A solar home system in Gansu Province, People's Republic of China. William Wallace / NREL /

6500 50 65,000

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DOE/NREL and the State Power Corporation of China (SPCC) developed Xiao Qing Dao Village Power Wind/Diesel Hybrid Pilot Project, which was commissioned in February 2001. Jerry Bianchi / NREL / DOE/NREL State Power Corporation of Xiao Qing Dao / China (SPCC) 2001 2

In the meantime, China is considering policy instruments and regulations to facilitate renewable energy development and to enforce the Renewable Energy Law. Article one of the law emphasises the benefit of renewable energies for the improvement and diversification of energy supply, supply security, environmental protection, and sustainable development. It guarantees the connection and purchase of electricity generated from renewable energies, as well as the feed-in of biogas to the gas grid (on condition that it is of the appropriate quality) and biofuel admixture. It also sets out to facilitate the use of renewable energies for both heating and cooling. Additionally, allowance is made for the introduction of feed-in regulations and tenders, with higher than average prices transferred to the cost of sales. Independent companies now have a fundamental right to develop and operate renewable energy projects, and. the state will set up a fund for renewable energies which will be used to support increased R&D, studies on available renewable energy resources, projects in remote areas, and the development of local industry. On average, China's renewable energy consumption is growing by over 25% a year. Official statistics show China's hydroelectric power generating capacity has reached 108 million kilowatts, 25% of its total generating capacity. The total heat collecting area of solar water heaters in China is currently 65 million square metres, its annual methane consumption has reached 5 billion cubic metres, and the combined generating capacity of photovoltaic systems in the country is 65,000 kilowatts. Xu said the renewable energy industry is still in its infancy and should be given preferential treatment in terms of taxes, government funds, and financial markets, so that it can survive and develop in competition with the existing power industry.

0.23

2004 2005

Measures regarding electricity tariffs have already been formulated and will be announced by the end of the year. Electricity produced by wind power will cost 0.23 yuan per kWh more than electricity produced by coal-burning plants, while electricity generated by biological materials will cost 0.25 yuan per kWh more. The Chinese government submitted two programmes for action at the Bonn International Renewable Energy Conference in 2004. One was the formulation of a Renewable Energy Law, the other the preparation of a renewable energy development plan. In February 2005, the National Peopleâ&#x20AC;&#x2122;s Congress of China reviewed and passed the Renewable Energy Law, which defines the responsibilities and obligations of government, businesses, and users in the development and use of renewable energy. It also provides a series of policies and measures, including the total quantity objective, power generation in-grid, price management, cost amortization, special funds, and tax preference systems.

0.25

In addition, NDRC has organized the drafting of a Mid-and Long-term Development Plan for Renewable Energy setting out Chinaâ&#x20AC;&#x2122;s objectives, strategies, construction priorities, with firm targets for renewable energy resources by 2020. With the approval of the State Council, the plan will serve as the foundation for renewable energy development policy in China for the next two decades. With supplies from conventional sources failing to keep up with the demands of China's fast-expanding manufacturing sector, and frequent blackouts in many cities, China has good reason to look for new sources of power.The huge potential for the exploitation of renewable technologies in China opens up many possibilities for international collaboration, with new technologies produced in China being used to supply its vast market with energy produced in power plants using renewable energy sources. China is working with many other countries as well as international agencies in the development of renewable energy. The Italian Ministry for Environment and Territory launched a programme of cooperation with China in 2000, aimed at the development of pilot projects and feasibility studies for natural resources protection and conservation, energy efficiency, renewable sources promotion, low emission transport systems and technologies, sustainable agriculture, and environmental training courses. Germanyâ&#x20AC;&#x2122;s renewables agencies also have a long standing and growing programme of activities in many regions.

2020

Children in rural China benefit greatly from methane derived from biomass. Simon Tsuo / NREL /

(Ministry for Environment and Territory)

2000

Xu confirmed that China will give further support to the development and use of renewable energy and considers renewable energy development of prime importance in increasing the energy supply, protecting the environment, eliminating poverty, and promoting sustainable development.

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The answer is blowing in the wind 2020

China's capacity for wind-generated electricity is expected to reach 30 GW by 2020, making wind generation the country’s second largest electricity source, after thermal power. According to Li Junfeng, secretary general of the China Renewable Energy Industries Association (CREIA), China's wind generated electrical output will reach 80 billion kilowatthours in 2020, sufficient to satisfy the demand from 80 million people, or about 5% of the projected population. These wind power plants would also help China reduce carbon dioxide emissions by 48 million tonnes annually, and development on such a scale is expected to generate revenues of at least 300 billion yuan (US$37 billion) over the next 15 years.

(CREIA) 800 5%

2020

8000

4800 15

3000

2004

370

43 1,291 2005 2004 764 MW

By the end of 2004, China had 43 wind power plants incorporating 1,291 wind power generators, with a combined generating capacity of 764 MW, the tenth largest worldwide, and Asia’s third largest. The 2005 target was for wind farms with a total capacity of 1,000 MW, compared with the 764 MW capacity that had been installed in 2004. Li said the pending implementation of China’s Renewable Energy Law in early 2006 will give the wind power industry a big boost. China has abundant wind power potential in over 20% of its landmass, largely in the Xinjiang Uygur Autonomous Region and the Inner Mongolian Autonomous Region. Largescale windmills will soon be completed in the provinces of Gansu, Jiangsu, Hebei, and Jilin, with a combined supply of almost 1 GW. Numerous further projects are planned, to be located in northeastern, northern, and northwestern regions.

30 GW

764 MW

With 70% of its energy currently derived from coal, China has set a target of 30 GWs of electricity generated from wind sources by 2020, an increase from an estimated 5 GW by the end of 2006, and up from 1 GW in 2004. However, China faces technological barriers in the development of wind power and the government is encouraging foreign technology transfers by guaranteeing market share to overseas firms. The fact remains, however, that development costs are currently still too high, as the country depends on imports for most of the equipment needed. Wind power generating units produced by foreign companies dominate the Chinese market, and their sales account for 82.2% of sales, with the remainder held by Chinese companies.

1,000

2006 20%

1 GW

In order to promote the development of China's wind power industry, the government has outlined a new electricity pricing system, which will be a major incentive to firms wanting to produce power from these cleaner sources. The government is also considering setting a quota for the country's big power producers, such as Huaneng, which would oblige them to produce electricity from renewable sources. Photo courtesy of ARR Lafarge Medialibrary

70% 2020 5 GW

30 GW 2004

2006 1 GW

82.2%

Installing poles for instrument cables: wind turbines power the station on Xiao Qing Dao Island, China. Jerry Bianchi / NREL / Xiao Qing Dao

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Establishing a southern coalition on renewable energy - WWF’s approach

Benefits of the coalition include the following:

The World Wildlife Fund, sponsors of the South-South Cooperation Forum at BIREC, put forward a new proposal for discussion with delegates for the establishment of a Southern Coalition on Renewable Energy (SCREN).

Southern Coalition on Renewable Energy SCREN

SCREN’s aim is to provide a structure for viable South-South cooperation, based on the principles of equity and sustainability, that will encompass renewable energy trade, investment, technology transfer, and capacity building among developing countries in Asia-Pacific, Africa, and Latin America.

• Increased trade volumes among developing countries, which will help to create employment and wider business sector involvement. • Investment flows steered toward renewable energies, with more engagement of financial institutions and government commitment and support.

Such a mechanism is necessary, as renewable energy development requires robust South-South cooperation to maximize synergies between emerging economies that have much in common in terms of history, economic realities, and challenges to sustainable growth.

The proposal is for SCREN to become a component of REN21, composed of governments, the private sector, and civil society, that will:

Moreover, the dominance of oil and coal exporting countries, and major energy companies based in the North, requires a coherent and viable strategy for cooperation among developing countries to enable them to chart their own energy future, independent of narrow corporate interest.

• Boost information exchange on renewable energy, including the establishment of institutions and legislation to support renewable energy development, the application of relevant policy tools to help attract public and private investment, support for renewable energy R&D, and public/private enterprise development.

The mechanism will also enable southern countries to be in a stronger negotiating position to deal with established northern blocks, such as the European Union and North American countries. WWF envisages that establishing SCREN will result in a win-win situation – a more equitable trade, investment, and technology transfer regime for renewable energy among developing countries, making it a big business with wider societal participation.

One year after the installation of photovoltaic home systems in the village of Cacimbas in the state of Ceara, Brazil, TV antennas have sprouted from the Caera Cacimbas roofs of many homes. Roger Taylor / NREL /

• Transfer of technologies that have proved successful in developing countries’ market situations, such as household biogas, small hydro power, and solar water heaters in China, wind power development in India, and bio-fuels in Brazil, which can be adopted by other countries or regions with similar economic or cultural situations.

Renewable energies have an important role to play in overcoming poverty in many parts of the world. Above: A poor city street in Inner Mongolia. Roger Taylor / NREL /

•

• Facilitate business partnerships in renewable energy among companies, governments, and local communities in developing countries. •

• Help analyse challenges and opportunities for developing countries, determine priority areas, and assist international organizations and multilateral and bilateral financial institutions in finding effective approaches for assisting in the development of renewable energy.

REN21

•

• • Increase the negotiating capacity of developing countries with developed countries over climate change, renewable energy trade, investment, and technology transfer. The organization, as a non-governmental, not-for-profit network will work on the promotion of clean power development based on the use of renewable energy resources. Emphasis will also be on wider market dissemination of appropriate renewable energy technologies in rural areas that can help improve the lives of poor and disadvantaged social groups and communities.

•

An important component of the work would be the use of renewable energies in combination with income generation and an increase in local employment opportunities. Attention should also be focused on the impact of access to cleaner energy services on gender and social equity, as indicated in the UN Millennium Development Goals.

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• Establish a southern coordination network and respective regional focal points/secretariat, i.e., in Asia, Africa, and Latin America, in order to coordinate innovative renewable energy activities and initiatives.

•

• Trade and Investment – the Coalition shall create a mechanism by which trade on renewable energy equipment (and other related technologies based on equity among developing countries) shall be facilitated. The objective is to promote favorable terms in mutual assistance pacts among developing countries, with the Coalition acting as intermediary. The collaboration of developing countries will enhance the growth in the private sector renewable energy business, and will open up new markets well beyond borders. A Guideline on South-South Renewable Energy Trade and Investment shall be established by the Coalition to ensure an equitable trade and investment regime among southern countries.

• • Establish the network within an existing organization experienced in renewable energy development with good contacts with governments, industries, and relevant NGOs. • • Renewable energy activities coordinated by the focal points in their respective regions on information exchange and Website management; dialogue to be facilitated with governments, industries, and the NGO community. • Annual workshops held to promote greater government, industry, and NGO dialogue/cooperation on renewable energy; each region will be responsible for organizing similar activities.

•

• Founding agencies will promote and support network activities. Institutional establishment is viewed as the first step and key to the success of the network’s development. It is estimated that it could be fully established within a two-year period (2006-2007) with extensive networking and coordination undertaken globally and regionally and it is proposed that the international coordinator would be based in China, with regional focal points (secretariats) in Asia-Pacific, Latin America, and Africa. Each focal point will be responsible for coordinating relevant activities in its own region with those in member countries.

(2006-2007)

•

SCERN’s principal areas of focus are • • Capacity-building – the Coalition shall facilitate the flow of assistance, primarily S-S but also possibly N-S, in training and skill development in all areas of renewable energy development (such as policy, financing, resource assessment, and R&D). The Coalition shall also facilitate access to capacity-building opportunities from international organizations such as the IEA, the UN System, and the EU, among others. • Technology Transfer – the Coalition shall establish schemes and mechanisms that will develop and strengthen effective transfer of renewable energy technology from developing countries with matured renewable energy technologies to those that lack them but have substantial RE resources. Priority shall be given to least developed countries in order to spur rural development and poverty alleviation. Innovative financing options for efficient and effective technology diffusion shall also be explored, developed, and shared by the Coalition and its members. The thorny issue of patents shall also be high on the agenda, as it is one of the stumbling blocks of effective renewable energy technology diffusion.

• Energy Financing Reform, Needs Assessment, and Accessing – the Coalition shall work on institutional reforms in the energy financial markets. It will do so by forging consensus among its members on measures that will influence micro finance institutions (MFIs), regional development banks (RDBs), and export credit agencies (ECAs) to shift their lending policies, giving preferential treatment to renewable energy. The creation of a vast market for renewable energy in developing countries, anchored by a strong cooperation regime, will be the main argument for this shift. Likewise, the Coalition shall be the main vehicle assisting MFIs, RDBs, ECAs and international development organizations (IDOs) in identifying and prioritizing financial assistance for renewable energy development, taking into consideration regional balance, poverty alleviation, gender equity, and rural development, as well as helping developing countries achieve a lowcarbon development path. Likewise, the Coalition, together with MFIs, RDBs, ECAs and IDOs shall explore and develop innovative financing mechanisms for a more effective, clean-energy technology diffusion regime.

•

WWF envisages that establishing SCREN will result in a win-win situation / WWF SCREN

• (MFI) (RDB)

(ECA)

(IDO)

The intention is that the main negotiating block of the developing countries for renewable energy should also be their main channel for articulating and advancing their interests in negotiations with established northern blocks. It is important that developing countries speak with one voice and negotiate from a position of strength, in order to redress the current unequal trade relationship over renewable energy between north and south. This is a proposal from WWF and does not necessarily reflect the view of BIREC organizers.

WWF

BIREC

A village house supplied with lighting from a photovoltaic panel in the Sundarbans region of West Bengal, India. Jim Welch - Remote Power / NREL / Sundarbans

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The SWERA programme: an outline east Brazil, the San Francisco River hydropower plant runs at low capacity in the dry season, when winds and direct normal irradiation are highest, while in Central America, dry season winds are high and steady when many rivers used for generation have diminished flows.

“Utilities need to be persuaded that the use of solar and wind power is a practical option for augmenting grids supplied by hydropower, and can make significant contributions to satisfying peak demand,” (SWERA)

Interviewed at BIREC, Tom Hamlin, manager of the UNEP/GEP project, Solar and Wind Energy Resource Assessment (SWERA), added that UNEP & GEF are working with utilities in developing countries to ensure that such applications are more widely accepted. Many utilities reject solar and wind generation because it is not “firm power” and is thought to be too expensive. However, with a large and growing number of failures in hydropower supplies, solar and wind power are being re-evaluated. In Kenya, the drought in 1999-2000 caused the four Tana River dams to run below generating capacity, and in Ghana in 1983 and 1998, severe drought resulted in water levels falling below the minimum. Recently, in Ethiopia, drought resulted in power rationing, while some hydro installations averaged outputs of less than 20% of their rated capacities.

The potential for wind energy is enormous. SWERA estimates that seventeen of the countries included in the assessment have an aggregate wind generating potential of three terrawatts.

Tom Hamlin

1999-2000

Tana 1983

River 1998

With a large and growing number of failures in hydropower supplies, solar and wind power are being re-evaluated /

SWERA is a UNEP project with co-financing from the Global Environment Facility (GEF). From August 2002 to December 2005, it promoted solar and wind energy by combatting resistance to their use that had been based on misconceptions, and by supporting more informed decision making, and science & technology based policies. The ultimate hope is that such initiatives will increase investors’ interest in renewable energy.

(GEF)

2002

2005

SWERA helped to assess the overall potential for renewable energy, creating a reliable source of information, and tools for energy planners and project developers, including regional and national maps of solar and wind energy resources. It is also developing a geographical information system (GIS) interface.

20%

(GIS) One major factor in favour of wind power is that, in many regions, the strongest and most consistent winds arrive in the dry season and, generally, they also coincide with the longest periods for solar generation. For example, in north-

San Francisco River

Thirteen countries in Latin America, the Caribbean, Africa, and Asia participated in the SWERA programme. Some countries, including Ethiopia, Bangladesh, El Salvador, Kenya, and Nepal had almost no useful resource information, while others like Nicaragua, Ghana, Honduras, and Guatemala were initially unconvinced of the potential . Still others like Brazil, China, and Cuba had good capacity but sought international cooperation to support policy initiatives. The table below gives the basic results of the SWERA assessment in eleven countries

Remote power systems in Ghana were provided by UNDP-GEF (United Nations Development Program - Global Environmental Facility) in cooperation with the Ministry of Mines and Energy and NREL. Roger Taylor / NREL / UNDP-GEF (Ministry of mines and NREL Energy)

Country

10% East China 10% Oaxaca Mexico Oaxaca Honduras Guatemala El Salvador Nicaragua Ghana Sri Lanka Bangladesh Cuba Brazil

*Area>300w/m2 * >300w/m2 650138 9859 4591 3446 2724 8176 11974 12284 218 4792 791697 1499899

Windy % of land area

Unknown 0.105 0.041 0.056 0.245 0.771 0.018 0.421 0.016 0.023 0.242 0.194

Potential @5Mw/km2 @5Mw/km2 3250690 49295 22955 17230 13620 40880 59870 61420 1090 23960 3958485 7499495 Mw ~7.5 TW

* The land area with a potential modelled wind energy density of more than 300 w/m2 (the energy in the wind adjusted for density). These are broad estimates by country and particular sites would have to undergo detailed assessments. * 300 w/m2

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SWERA in China In China, the programme helped reduce uncertainties associated with investment and development decisions for solar and wind projects. It has also made key stakeholders and decision-makers aware of the relevance of the resource information to the development and deployment of various solar and wind technologies.

SWERA in Nepal Products already available include TMY solar data for selected stations, monthly latitude tilt radiation for Nepal, monthly global horizontal radiation, monthly direct normal radiation, and geospatial toolkit. DLP has provided direct normal irradiance & global horizontal irradiance high resolution data (10km).

In addition, SWERA has increased the capacity for making solar and wind energy plans on the local, provincial, national, and regional levels.

SWERA in Sri Lanka Products already available include monthly direct normal radiation, monthly global horizontal radiation, monthly latitude tilt radiation, TMY data for selected stations, direct normal irradiance (DNI) high-resolution data, and global horizontal irradiance (GHIi) high-resolution data. Also available are hourly time series of GHI and DNI for selected sites, medium- and high-resolution solar atlas, wind atlas, the Sri Lankan final wind power density (w/m_) at 50 m above ground level, and a geospatial toolkit.

This progress has resulted from training provided by SWERA in 2002, working with multiple international projects, and supporting those projects by sharing resources and expertise of consultants. SWERA in Ghana The programme was implemented by the Meteorological Service Agency of Ghana, the Department of Mechanical Engineering of KNUST, and the Department of Geodetic Engineering of KNUST. Its aim was to develop adequate, reliable solar and wind energy resources data and information, and evaluation tools for energy planning and policy. So far, the National Renewable Energy Laboratory (NREL) of the U.S. has produced the following: • 40 km resolution satellite data on direct, diffuse, global, and latitude tilt.

2002

(Meteorological Service Agency of Ghana) KNUST

KNUST

National Renewable Energy Laboratory NREL

SWERA will be producing a global report in late 2006, aggregating the results of its assessment programme and looking at potential impacts.

•

• •

(German Aerospace Agency) 10

In many regions, the strongest and most consistent winds arrive in the dry season /

A 1 kilowatt wind turbine at the Grameen shrimp farm in Bangladesh. April Allderdice / NREL / Grameen 1

• Solar radiation maps (direct, global and latitude tilt). • A national wind map (drawn from EC wind data and 40km resolution satellite wind data).

(DLR) 10

(Risø) 5

• A Geospatial toolkit.

40 WasP WasP

• The German Aerospace Agency provided high resolution (10km) solar data (direct and global). KAMM The study concludes that the resource, in terms of global radiation, is high throughout the country. This abundant natural resource is a ideal for the development of off-grid rural electrification. There are an extensive electricity distribution networks and a road network in the “rich” wind resource areas on the coast, preconditions that should facilitate investment in the wind resource there. SWERA in Bangladesh The programme has helped to produce a number of maps, including a high-resolution (10-km) solar map in cooperation with DLR, a 5-km wind map (draft) for offshore areas in cooperation with Risø, a medium (40-km) solar map in cooperation with NREL, and a wind atlas for the coastal locations developed using WasP. In addition, comparison between Lisa is this WasP or WasP? and KAMM analyses for Kuakata and Charfassion have been completed, and RETScreen and HOMER analysis has been carried out for Kutubdia and St. Martin’s Island.

RETScreen

Lisa Kuakata Charfassion Kutubdia St. Martin's Island HOMER

(TMY) DLP 10

(TMY) (GHIi)

(DNI)

50 (w/m2) 2006

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Policies, finance & frameworks

An ethanol fuelled bus in Peoria, Illinois. Courtesy of Greater Peoria Mass Transit District /

Government representatives at BIREC give their view on the major issues Zhang Guobao Deputy Director, National Development and Reform Commission, China On policy: The Chinese Government will follow guidelines that prioritise energy development, energy saving and energy efficiency. During the tenth five-year plan, energy consumption per unit of GDP in China will be reduced by 20%.

GDP 20%

The Chinese Government will support further development and use of renewable energy, with renewable energy development as an important means of increasing energy supply, regulating the energy structure, protecting the environment, eliminating poverty, and promoting sustainable development. China will accelerate the development of technologically mature renewable energy resources such as hydroelectricity, solar energy heaters, and energy extracted from wastes, to develop and use resources as soon as possible. At the same time, China actively promotes the development of potential and technologically mature renewable energy technology such as wind power, biomass and solar energy power generation, and biomass liquefaction, as well as driving industrial development through large-scale construction, enabling renewables to become competitive commercial energy sources. On international cooperation: If economic globalization continues to develop, no country can progress independently, especially in light of the global climate changes caused by the emission of greenhouse gases affecting every country. Therefore, addressing global energy resources and the environment is the common responsibility of all countries. However, countries have different abilities and responsibilities since they are at varying development stages. With advanced industrialized progress, the developed countries have strong technology, skills, and economic strength. As most global energy resources are consumed by developed countries, they should assume more responsibility for the development and use of cleaner energy and environmental protection. Restricted by technology, skills, funds, and management, developing countries are saddled with low energy efficiency, weak development ability, low use of renewable energy, and backward environmental protection technology. If they depend solely on themselves, these countries will inevitably develop along the traditional route, which will cause energy waste and environmental damage. To promote global sustainable development and protect the earth, developed countries should provide support to developing countries. Aspects of support include technology, skills, and funds, especially to help developing countries build renewable energy industry systems. It is also necessary to continually improve the technology level for development and use of renewable energy, through technology transfer and service. In return, developing countries will provide a huge market for the technologically advanced wealthy developed countries.

Therefore, developed and developing countries assume common but differentiated responsibilities in promoting the development of world renewable energy. Strengthening cooperation, learning from others’ strengths to offset weakness, coordinated actions, and mutual benefit is the route for developing renewable energy globally. A carpenter uses wind power generated electricity for his saw. Jerry Bianchi / NREL /

Jonathan Margolis Special Representative for Sustainable Development, U.S. State Department On policy & progress: It is important to be very clear about what the U.S. is trying to accomplish. Currently, 9% of the United States’ electricity demand is met by renewable energy, using the full range of technologies. Wind energy is the fastest growing, with installed capacity tripling between 1998 and 2003. The 2005 Energy Policy Act renews a “production tax credit” for wind that has already contributed over 5400 MW of installed capacity from 1995-2004. Since 2002, through U.S. government support for the Global Village Energy Partnership and other programmes, 12.9 million people have benefited from increased access to electricity. Through the Energy Star programme, which promotes energy efficiency, Americans saved enough energy last year to power 24 million homes, eliminating greenhouse gas emissions equivalent to those from 20 million cars. The Partnership for Healthy Fuels and Vehicles has made substantial progress in eliminating lead from gasoline. For CSD to be successful it must galvanize public opinion with these kinds of concrete and measurable results.

Jonathan Margolis

9% 2005

1998 2003 (2005 Energy 1995 5400 MW

Policy Act) 2004 2002 (Global Village Energy Partnership) 1290 (Energy Star) 2400 2000 (Partnership for Healthy Fuels and Vehicles)

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On finance and resources: In 2004, the total U.S. federal onbudget support for renewables was over $2 billion, including a research and development budget of well over $300 million. The 2005 Energy Policy Act expands R&D programmes. At the front line of this R&D effort is the National Renewable Energy Laboratory (NREL), one of the world’s premier research facilities on renewable energy and energy efficiency. Technical assistance and analytical tools also are important. The United States government supports industrial innovation through NREL’s National Wind Technology Center, where cutting-edge techniques test commercial wind turbine designs. The U. S. also conducts resource assessments that facilitate the diffusion of renewables. These efforts include wind resource mapping, both in the United States and abroad, that help investors identify cost-effective renewable options. American state and local governments also play a key role, contributing hundreds of millions of additional dollars to renewable efforts. Furthermore, 18 states plus the District of Columbia have adopted Renewable Portfolio Standards of similar instruments. According to the recently released REN21 Renewables 2005 Global Status Report, current state Renewable Portfolio Standards laws could contribute an additional 52 GW of renewables by 2020, thereby more than doubling the existing U.S. renewables capacity.

2004 20 2005

National Renewable Energy Laboratory

NREL

(National Wind Technology Center)

18 REN21

2005

2020

On how to measure success: One metric that the United States will use is to measure the number of people around the world hooked up to electricity services. A second area is energy efficiency. A third area is improved and healthier fuels. The mechanisms that deliver results are handled by specialists and project implementers in organizations around the world. On lessons learned: In the United States, the fifty states are really fifty laboratories exploring options to increase the use of renewable energy. On the basis of this experience, we have learned an important lesson: no one-size-solution fits all states. This lesson applies globally as well – each country faces a unique energy challenge with unique solutions. Some countries have vast solar resources, others wind, others geothermal, and still others hydroelectric. We cannot pick a single technology, or a single policy, to promote growth in renewables – there is no magic bullet.

Heidemarie Wieczorek-Zeul

2002 10 2005

52 GW

This wind turbine on a farm in Clarion, Iowa saves the Clarion-Goldfield Community School about $9,000 a year and provides part of the school's science curriculum. Robert Olson / NREL / Clarion Clarion-Goldfield 9,000

Heidemarie Wieczorek-Zeul Federal Minister for Economic Cooperation and Development, Germany On international cooperation & policy: The German government has made support for renewable energies a priority for international cooperation. The pledge at the 2002 Johannesburg World Summit to provide developing countries with 1 billion euros for renewable energies and energy efficiency over the following five years was fulfilled in 2005 – in other words, in three years instead of five. In Germany, the political parties are currently engaged in negotiations to set the agenda for the new government. The new government will remain a strong advocate for renewable energies, both in Germany and across the world, and I will make it a priority within that government to implement and move ahead with the decisions made in Bonn.

If globalization continues, no country can progress independently /

(MDG) On poverty reduction: Without a sustainable, efficient, and secure supply of energy, we cannot fight poverty. The current situation on the crude oil markets is jeopardizing our efforts to reach the Millennium Development Goals (MDG). The countries of sub-Saharan Africa will suffered average income declines of 2.7% in 2005 as a result of the increased oil price. What does this mean for the international community? First, the developing countries must reduce their dependency on oil and rely on renewable energy to a greater extent. Second, we must discourage speculation on the oil market. Developing countries need access to better data on prospective demand, supply, and investment. And third, the question arises as to how the extra income of oil-producing countries – which is estimated at US$200 billion – can be invested in such a way that the financial system will not be destabilized and the MDG’s will be fostered. It would be a gesture of solidarity and of good economic sense if the oil-producing countries could devote part of these funds to development cooperation, for instance through a contribution to IDA.

2005

2.7%

2000

2005

On legal frameworks: The Ministry of Energy is taking action to support the development of new legal, regulatory, and financial instruments that are compatible with the current electricity law, in an effort to prevent controversy. The Ministry

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is now supporting the Congress in passing a new law for the promotion of renewables, tabled in Congress in April 2005, and promoting the development of regulatory instruments for self-supply. The government supports the new law and provides technical advice to Congress. The law includes a specific fund to provide incentives for renewable electricity, R&D, and other renewables applications. The government has also conferred new powers on the regulatory body.

Wars can never and will never be fought over access to the sun /

On the rationale for using renewables: International tensions and competition over access to the world’s oil resources have become worse rather than better, and that is another reason why we need more renewable energies. In the past, wars were fought over access to oil. Yet wars can never and will never be fought over access to the sun. On climate change: 2005’s horrific storms have shown us that the risks to the world climate are a reality and not a thing of the future. Every year, some 200 million people are hit by natural disasters, and in 2004 alone, 250,000 people across the world lost their lives as a result of them. Many of these events are related to climate change and these natural disasters hit people in the developing countries particularly hard. Often they destroy in a matter of minutes what took years of hard work to build up. The human suffering, but also damage to the economy, is immense. Dr. Michael Hofmann Federal Ministry for Economic Cooperation and Development, Germany On international cooperation: South-South Cooperation is a very important aspect of Germany’s development cooperation and GTZ is co-host of the parallel South-South Forum. GNESD (The Global Network on Energy for Sustainable Development) can be regarded as a model of South-South cooperation and knowledge exchange, and Germany is proud to be able to support this effort together with other bilateral partners and with UNEP. On technology and financing: Sometimes we hear that the most critical issues in renewable energy promotion are financing and technology transfer. I want to challenge this view. Missing financial resources and technology are not the problems that developing countries are facing. Today, the necessary technology is available in many renewable energy sectors, even if there is still a lot of room for improvement and for cost reductions. Financial resources are available in the markets, both commercial and concessional, and financial mechanisms have been developed over the last couple of years. On capacity building: The experience with actual diffusion of technology and with the development of energy service markets clearly shows that capacity development is one of the most important “missing links.” Especially in Africa, capacity is missing at all levels, from local to national, both in the public and private sectors, and in the electric and the non-electric energy sectors. This is even truer for the rural consumers.

Photovoltaic modules are being tested in a European pilot project to directly connect to a tram system, Karlsruhe, Germany. Courtesy of BP Solarex / NREL /

2005

Carlos Garza (Energy Planning and

2 250,000

Technological Development)

2004

Michael Hofmann

(GTZ) The Global Network on Energy for Sustainable Development GNESD

On energy efficiency: It is essential to integrate renewable energy and energy efficiency, as both factors are intrinsically linked. Enhancing energy efficiency will quite often be the most cost-effective way of mitigating environmental effects. The rational use of energy has to be improved at all stages of energy generation, transmission, and distribution, as well as in all areas of energy use. To achieve this, we have to provide a level playing field, without any subsidies to fossil fuels, and charge tariffs which cover costs, according to the “consumer pays” principle. We have to provide clearly targeted subsidies to the poorer consumers for improved access to energy, but we should not subsidise consumption. On strategy: We have to use more environmentally-friendly technologies, such as renewable energies. We have to use less polluting, carbon-intensive energy sources. This includes fuel substitution. To get there, the situation has to be analyzed case by case and the most promising and affordable strategies for each country have to be chosen. A policy framework has to be established which supports the implementation of these strategies. It is the wrong way to start by selecting technologies. First, the problems have to be analyzed from a demand-side perspective, and then one has to seek appropriate solutions.

1992 (IPP)

(CDM)

Shahid Hamid (Alternative Energy Development Board)

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Photovoltaics are being used to pump water in many wells throughout rural India. Harin Ullal - Central Electronics, Ltd. / NREL /

Carlos Garza Undersecretary for Energy Planning and Technological Development, Mexico On policy: The current policy framework establishes State control of electricity transmission and distribution. Since 1992, the private sector has had limited participation in power generation in only two schemes: self-supply and independent power production (IPP). The current electricity law presents barriers for renewables development and some of the benefits of renewables are not clearly enough defined. However, the current income tax law already offers accelerated depreciation to all investment in renewable energy equipment. A consensus is developing among a number of sectors, including government and congress, that the existing projects and the tax incentives are beneficial, but inadequate, and participation of renewable energy sources in the primary supply needs to grow steadily, both in absolute and relative terms. The Energy Ministry is gathering multilateral and bilateral support to develop methodologies and policy instruments, and supports the development of Clean Development Mechanism (CDM) projects. In the long run, the government is promoting renewable energy as part of a sustainable development strategy. The strategy for the promotion of renewables includes financial incentives, policy changes, project promotion, and creation of an institutional framework with local governments, geared towards the facilitation and supply of local initiatives. Air Marshal (r’t’d) Shahid Hamid Chairman Alternative Energy Development Board Government of Pakistan On policy : Pakistan is a new and big emerging market for renewable energy technologies. It has drafted a National Renewable Energy Policy, which offers attractive financial incentives as well as a security package to foreign investors. The country is an active partner in the international community for the promotion of renewable energy. On barriers: To remove barriers in the use of renewable energy, there is a need to enhance international cooperation on renewable energy for sustainable development, cooperation among public and private and governmental and nongovernmental agencies, and a more favourable environment for technology transfer, and the rapid commercialization of renewable energy technologies. Also, we will need to encourage exchanges through international and regional partnerships to share lessons learned, best practices, and scaling-up experiences in the development and application of renewable energy.

This small 10 kW wind turbine has performed well in the harsh seaside environment of the Costa de Cocos resort in Mexico. Charles Newcomber / NREL / Costa de Cocos 10 Kw

Viji Jegarasasingam (Ministry of Power and Energy)

240

1040 4%

22%

Viji Jegarasasingam Additional Secretary, Ministry of Power and Energy, Sri Lanka On poverty reduction: South Asia lags behind other regions due to poverty, with per capita income varying from US$240 to US$1040 per year, and about 22% of the world’s poor are in South Asia, in 4% of the world’s landmass. The region has gaps in policy initiatives and regulatory frameworks for renewable energy and faces institutional, investment, and technical barriers. To use energy as a tool for poverty alleviation, the government should reduce short-term energy intensity to support higher economic growth, and shift economic strategies towards less energy-intensive activities. In the meantime, governments should also encourage technological advances to support harnessing renewable energy sources, and deploy these sources to rural masses for economic activities. Ahmed Abdullah Minister of Environment, Energy and Water, Maldives On policy: Only recently, the government has focussed on introducing and promoting renewable technologies in the Maldives. At present, the country uses renewable energy in very limited applications, and there are many barriers to be overcome at this stage. Renewable technologies involve very high capital costs, and it is therefore necessary to seek funding sources and schemes to allow citizens access to renewable energy applications. Work to formulate the First National Energy Policy is in progress: it aims to promote renewable energy by providing reasonable incentives for adoption of the available technologies.

Ahmed Abdullah

On barriers: The barriers to renewables development include: inadequate information on the availability of renewable energy resources; inadequate information on the options available for renewable technology; lack of policies for the utilization of renewable energy; inadequate capabilies amongst the key players in government in the development, design, implementation, and management of renewable technology applications; lack of significant field testing of renewable energy technologies; lack of financing available for renewable energy applications, as well as for renewable energy-based livelihood projects. On ongoing activities: Several islands have been surveyed and studies were conducted to establish the feasibility of solar-diesel and wind-diesel hybrid systems. One island has been selected to implement a solar-diesel hybrid pilot system for power generation. The solar-diesel hybrid pilot system is in the process of implementation and installation for commission.

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The importance of co-operation BIREC participants reiterated the importance of international partnerships for renewable energy development, particularly because renewable energy is, in many respects, still a nascent field. As the technologies are relatively new to the market, and since policies, approaches, mechanisms, and market structures are still in the early stages, it is critical to share experiences, learn from each other, discuss best practices, and avoid time-consuming and costly mistakes. Since industrialized countries have consistently lead the field in most renewable energy technologies and applications, it is important for them to work with their counterparts in developing countries to advance the technologies in their markets. International cooperation in renewable energy is taking place today through a number of mechanisms, including workshops, technical assistance and training, pilot projects, and other information exchange. Yet these efforts have not yielded significant growth at the global level. Thus, opportunities exist to increase international collaboration and enhance the worldwide penetration of renewable energy products, services, and markets. BIREC reaffirmed the six areas that need international cooperation, as cited in the Political Declaration of Renewables 2004. The conference stressed the need for stronger international cooperation in policy development, capacity building, technology transfer, joint R&D, financing, and trade barrier reduction. Continued attention to the themes drawn from Bonn, through implementation of the International Action Programme and others, will enhance the success of international cooperation in promoting renewables.

2004

(Ministry of Non-Conventional Energy Sources) Participants agreed that REN21 represents a strong foundation for collaborative policy development. Its goal is to allow the rapid expansion of renewable energies in developing and industrial countries by bolstering policy development and decision-making on international, national, and sub-national levels. Since Bonn, a number of developing countries have launched major policy initiatives that will inform decisionmaking. These include development of the China Renewable Energy Law and its small hydro resources assessment programme; improved planning for integration of renewable energy into rural electrification in the Philippines; the Indian Ministry of Non-Conventional Energy Sources wind resource assessment programme. Sharing this information with other developed and industrialized countries will help to reinforce the global reference base.

A 1-kilowatt photovoltaic/battery system at Camp Leakey, Borneo, Indonesia, for the Solar in the Jungle project. Susan Thornton / NREL / Borneo Camp 1 / beakey

The conference stressed that it will be important to focus on technologies that have broad and deep applications, not on the niche market, and on those that can help address energy access issues. It will also be necessary to address specific gaps with targeted solutions. In policy development, the potential areas for support from industrialized countries include international agreements and market mechanisms, open trade policies, integrated policy networks and policy exchange, and technical support. In terms of capacity building, the industrialized countries should support developing countries in technological innovation, management expertise, collaborative education, state-of-the-art research institutes, and tools for technology assessment. In the technology sector, the developed countries should offer help in national policies for technology transfer, private sector technology transfer, and international technology transfer funding streams. (GHG) In joint R&D, the developed countries could offer R&D funds for collaboration, integrated E&D and technology deployment, and international collaborations. In finance, the industrialized countries should offer carbon investment, carbon funds, multilateral credit lines, export credit, fiscal incentives, and restrict tied aid.

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To overcome trade barriers, the potential areas for support from the industrialized countries include international law reform, subsidy review, tariff reform, and international standards. All these economies will require tremendous energy inputs to fuel their growth. China is second in energy consumption after the U.S, with India fast catching up. The same trend has been observed in the emerging economies of smaller Asian countries like Thailand, Malaysia, Indonesia, Philippines, and Vietnam, as well as the fast-growing Latin American countries. The demand created has forced the price of fossil fuels to record highs in recent months, threatening the growth of these emerging economies, with a predictably more extreme effect on those dependent on imported fossil fuels.

Regional and bilateral trade ties exist and continue to be forged among these countries, with China fortifying its position as a regional (soon to be global) economic powerhouse, even extending its economic reach as far as Brazil and Argentina. Regrettably, cooperation in the field of energy, specifically renewable energy, remains weak if non-existent. This is indeed unfortunate, as such cooperation could be the key to sustained economic growth and energy security. At the same time, it could prevent dangerous climate changes that are likely if U.S. inaction combines with the inertia of the developing countries in addressing the rapid growth in GHG emissions.

(MDG)

This scenario could be prevented if key developing countries are persuaded to steer away from a carbon-intensive path to a cleaner energy future, by making renewable energy and energy efficiency major pillars in their energy strategies.

This galloping growth in energy demand will, potentially, result in an exponential growth in the emission of greenhouse gasses (GHG) coming from power generation, transportation, and industrial operations. This will be the inevitable outcome if conventional approaches to energy solutions are allowed to dominate and strategic interventions to influence government energy policies are not made.

A photovoltaic panel used for pumping water,Thailand. Photo courtesy of United Solar Ovonic /

Apart from preventing dangerous climate change, renewable energy can play a major role in providing electricity to the more than two billion people who currently lack it, and in meeting the Millennium Development Goals (MDG). This requires a robust South-South cooperation mechanism to maximize synergies among the emerging economies that have so much in common in terms of history, economic realities, and future challenges to their sustainability. Moreover, the dominance of oil and coal exporting countries and major energy companies from the North calls for a coherent and viable strategy for cooperation among developing countries. This will enable them to chart their own energy future, independent of the narrow corporate interests of the northern energy companies. The mechanism would also provide southern countries with a stronger negotiating position to deal with established northern blocks, such as the European Union and North American countries.

Regrettably, cooperation in the field of renewable energy remains weak /

Family members wash clothes as workers install a photovoltaic-powered security light in South Africa. Bob McConnell / NREL /

China and India, along with other major emerging economies, such as Brazil and South Africa, are the natural centres of gravity for this South-South cooperation, being the lynchpins of the ongoing economic revolution. Already, China is the second biggest producer of solar PV systems after Japan, and a world leader in small hydropower technologies, small wind turbines, and solar thermal and biogas applications. India has a burgeoning wind power industry and has made tremendous technological headway in this cutting-edge industry. Brazil leads in bio-fuel development and utilization, a technology with vast potential in largely agrarian economies. However, China and India, for example, also pose a huge threat to the global climate due to their heavy reliance on coal for power generation. A healthy environment for collaboration on renewable energy among these largest emerging markets, in partnership with other developing countries, will lead to better approaches to low carbon development and the attainment of the MDGs.

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The EU’s global partnership commitment In his keynote speech at BIREC, the European Commissioner in charge of environmental policies, Spiros Dimas, reaffirmed the European Union’s commitment to working with partners to promote global environmental issues, such as renewable energy. Dimas said the EU’s experience in establishing multi-country, multi-faceted, target-based programmes can provide some indication as to how renewables can be promoted at the global level. Renewable energy sources have real potential for local economic development and for communities below the poverty line. The Johannesburg Renewable Energy Coalition, (JREC) is a broad platform where governments are working together to strengthen renewables, he said. To encourage the exchange of expertise, the Commission has reinforced its alliance with the International Energy Agency. The plan is to develop the JREC Renewable Energy Policy and Measures Database into the largest online data repository of national renewable energy policies and related information. The aim is to cover all 88 JREC countries, as well as other major countries, in time for the UN’s Sustainable Development Commission session in 2006 that will focus on energy.

A researcher examines samples of solar reflective materials at the outdoor test site at NREL in Golden, Colorado. Warren Gretz / NREL / Golden NREL

A geothermal well on the north-west flank of the Aguade de Pau Volcano on the island of Sao Miguel, Azores, Portugal. Dick Moore - USGS / NREL/ Sao Miguel Aguade de Pau

Spiros Dimas

Dimas

Johannesburg Renewable Energy Coalition JREC

JREC 2006 88

JREC

JREC JREC (European Investment Bank) 2007

The JREC Capital Initiative follows up on a commitment by JREC member countries to identify and bridge financing gaps for renewable energy business developers and SMEs, particularly in developing countries. From the preliminary interest shown by governments, private investors, and the European Investment Bank, it seems that an initial budget of around 100 million euros is feasible by mid-2007, but much more work has to be done for this to happen. Dimas expressed confidence in this new mechanism, which will encourage the creation of joint north-south ventures and accelerate the much needed transfer and development of renewable energy technologies in developing countries. In addition to these dedicated partnerships, there is the European Union’s research and development framework programme. The next programme, starting in 2007, will emphasize international cooperation even more, especially in the area of renewables and energy efficiency. It will continue to make funding available for scientists to participate in European research projects. This will further boost the transfer of renewable technologies and know-how to developing countries and help achieve global sustainable development patterns.

Dimas

2007

Dimas

2010 0.56% 2015

0.7% Dimas

2002

Dimas also highlighted the European Union’s commitment to an increase in aid to 0.56% of national income by 2010, reaching 0.7% by 2015.

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In 2002, the World Summit for Sustainable Development in Johannesburg took a fundamental step by acknowledging for the first time that renewable energy is a key factor in addressing climate change, poverty, and more generally, economic development, said Dimas, also acknowledging that taking action on climate change is urgent. The scientific evidence is very clear â&#x20AC;&#x201C; greenhouse gas emissions will peak within two decades, and must then decline if global warming is to be limited to 2 degrees C. In economic terms, governments need to reconcile the challenge of climate change with the economic growth, to which all countries are entitled, and the resulting rise in energy demand. While further measures to promote energy efficiency are certainly necessary and promising, a comprehensive and efficient energy policy must encompass energy supply. In this context, renewables are key, offering a great opportunity for producing clean energy. By definition, they do not alter the economic balance of the world.

The UKâ&#x20AC;&#x2122;s first semi-offshore wind farm at Blyth, Northumberland, UK can provide enough electricity for over 4,000 households. Copyright AMEC Wind / Northumberland Blyth 4,000

Dimas

2004 This offers opportunities for developing and developed countries alike. Developing countries can have at their disposal appropriate and sufficient energy without the uncertainties and vulnerabilities related to oil-price fluctuations.

9 (EU-China Partnership on Climate Change)

The world's largest residential photovoltaic project in Amersfoort, Netherlands, produces over 180 kWp. Courtesy of BP Solarex / Amessfoort 180 Kwp

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Renewables strengthen countries’ reliance on their own energy supply and promote local economies, as developing countries can exploit resources already available to them. This increases the sense of ownership and creates more job opportunities. 2007

Renewables are also an important source of technological innovation. As a major decentralized energy source, renewables offer important potential savings in transmission and distribution costs. This makes it possible to leapfrog the expensive grid-based energy systems that have been used in Europe and the United States since the early 1990s. Renewable energy sources offer many solutions for providing millions with access to affordable energy. Dimas said the fact that the conference was being held in Beijing is very positive and encouraging. It confirms that accelerating the uptake of renewable energy is no longer only the business of developed countries, and that emerging economies also wish to play a leading role in creating conditions for renewables to thrive. Further evidence of this is China’s renewable energy law of 2004 that introduced a support scheme based on advanced feed-in tariffs.

2020 25%

Dimas One of the largest thin-film systems in Europe features 870 Millennia modules and produces 29.58 kWp for a school in Aachen, Germany. Courtesy of BP Solarex / 870 Millenia 29.58 kWp

The EU-China Partnership on Climate Change (agreed on at the September EU-China Summit) and related EU-China agreements in the energy sector, provide an excellent basis for future cooperation to combat climate change and for sustainable production and use of energy.

Dimas 2005

a lot needs to be done in terms of Member States’ support, public awareness, and research in innovative technologies. The promotion of renewables is, in fact, not the same in all Member States.

(CDM)

The clean development mechanism (CDM) under the Kyoto Protocol provides incentives for cooperation and technology transfer between industrialized and developing countries. Under suitable framework conditions, CDM offers great opportunities for investment in renewable energy in China and other parts of the world. The Commission stands to gain from working together in this area and helping developing countries benefit from their vast renewable energy sources.

Taking this all into consideration, the Commission wants to explore new areas for renewable energy policy. By the end of 2005, the EU was expected to adopt an ambitious Biomass Action Plan. It will list a range of actions on biomass, including renewable heating applications, to ensure that the general and operational targets are met by 2010. 90 12% 2010 21%

The European Union has a comprehensive and target-based approach to renewable energy. Since the late 1990s, the Union has been working towards a general indicative target of 12% as the share of renewable energy in primary energy consumption by 2010. Since 2003, the European Union has worked actively to reach two operational targets: 21% for electricity and 5.75% for biofuels. The target year here is also 2010.

There is, however, another side to the coin: As the Commission stated in its Communication on Renewables in May 2004,

12% 200,000 450

2004 5 (Communication on Renewables)

2005 (Biomass Action Plan) 2010

20 2010 2003 5.75%

150

Six percent of the energy and 12% of the electricity the EU consumes today already comes from renewable sources. The renewable energy sector is one of the fastest-growing in the EU. Annual turnover has reached 15 billion euros and more than 200,000 jobs have been created and Europe has more than 4.5 million green-power consumers.

2020 20%

The Commission has also reviewed the national support schemes designed and implemented by the European Union’s Member States to accelerate the uptake of renewable electricity. The review highlights, for example, the effectiveness of the German and Spanish systems of feed-in tariffs. Nevertheless, cumbersome permission procedures prove to be the main obstacle to bringing more renewables on stream. Member States are being asked to focus in particular on removing such disincentives. The Commission is also undertaking a scenario analysis to enable the European Union to set a new general target for renewable energy before 2007. The European Parliament recently called for an integrated approach to energy policies that will give renewables a 25% share by 2020. Considering climate change, issues of security of supply, and energy price volatility, the European Union should indeed seriously consider adopting this ambitious target. Nevertheless, the jury is still out and the Commission will report its findings early next year.

12% of the electricity the EU consumes today already comes from renewable sources / 12%

(forum of African Energy Ministers)

Energy Facility)

2.2

(European Union 2006

(Intelligent Energy - Europe) (Partnership and Dialogue Facility)

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This petrol station in Perivale, United Kingdom has grid-connected photovoltaic modules generating electricity to power the pumps and canopy lights. Courtesy of BP Solarex / Perivale

Dimas admitted that, in addition to boosting renewables, unless there is also an effort to increase energy efficiency, any increases in renewables use will be negated by growing energy demand. In this context, Dimas cited one particular initiative because of its relevance to the goals of BIREC. The Commission issued a Green Paper on energy efficiency in June 2005, identifying possibilities for cost-effective energy savings equivalent to 20% of the European Union’s current energy use by 2020. An action plan on how to achieve these savings will be presented shortly and will identify guidelines that the European Union should follow to become an energyefficient economy. Measures will cover various aspects of people’s lives, including transport, housing, and industry. The EU’s internal efforts to promote renewable energy go hand in hand with its willingness to enhance and strengthen international cooperation in this area and the European Union is well equipped to continue playing a key role through the many initiatives it is involved in. The deployment of renewable energy technologies are highly relevant in the EU’s dialogue with developing countries.

The European Union Energy Initiative, focuses on policy dialogue in conjunction with specific partnerships, and actions addressing access to energy and poverty alleviation, with renewable energy as a major focal point. Many governments in developing countries have acknowledged the European Union Energy Initiative as a major partner, including the recently established forum of African Energy Ministers. The Energy Initiative establishes the European Union Energy Facility, with a budget of 220 million euros, that will become operational in 2006 and act as a catalyst for concrete investments in energy services for those living below the poverty line. These funds will be in addition to the resources made available to developing countries through the European Union’s “Intelligent Energy – Europe” funding programme, through the “Partnership and Dialogue Facility,” and through several other actions by the Commission and European Union Member States. So it seems that the will to address the issues is there, together with some of the means. The work to achieve the goals is, however, just beginning.

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