Commentary: A New Era of Shared Clean-Energy Leadership Begins in China
There is a new reality in clean energy. The world’s major emerging economies – including China, India, and several others – are moving to the center stage of the clean energy transition. By betting heavily on energy efficiency, on wind, solar and other renewables, as well as other less carbon-intensive technologies, these countries are increasingly leading the way.
This is the significance of the top-level meeting of energy ministers from the world’s biggest economies in Beijing next month. The fact that representatives from fossil-fuel producers like Mexico and Saudi Arabia will join renewable-energy pioneers like Denmark and Germany for a top-level meeting in China is not a coincidence. We are witnessing a global consensus that the key to the energy transition will reside with decisions made in emerging economies.
There are many reasons to stand for clean energy today. These can range from reducing greenhouse gas emissions but also battling the scourge of air pollution, improving energy security by reducing the dependency of fossil fuels, diversifying supply, creating high-tech jobs or fostering innovation. As such, approaches to clean energy will vary from country to country.
According to the International Energy Agency, all of the projected growth in energy demand in the next 25 years will take place in emerging and developing countries. This means that implementing the right kind of policies and technologies will be critical to ensure stable supplies as well as meeting desirable environmental outcomes.
The good news is that this is happening. India was the first country to set comprehensive quality and performance standards for light emitting diodes (LEDs), and it expects to save as much as 277 terawatt-hours of electricity between 2015 and 2030, avoiding 254 million metric tons of CO2 emissions or the equivalent of 90 coal-fired power plants.
Another upshot is that by committing to these new clean technologies, countries like China are helping drive down costs for the benefit of the world. China is now the undisputable global leader of renewable energy expansion worldwide, and the IEA forecasts that by 2021, more than one-third of global cumulative solar PV and onshore wind capacity will be located in China.
Recently announced renewable projects have broken new records, with power purchase agreements for several onshore wind and large solar PV farms now below USD 50/MWh. In Mexico, the average price of the long-term auctions in October 2016 was 33.5 USD/MWh, a level that is extremely competitive, even if wind and solar power are not always generating. Similar figures can be found in several Latin American countries, Middle-East and African countries.
Clean Energy Ministerial
As clean energy is increasingly driven by the emerging economies, global political leadership in advancing clean energy will be increasingly shared. This is precisely the function of the Clean Energy Ministerial (CEM), which was created in 2010, and whose goal is to form a partnership that brings together major industrialized and emerging economies to focus on clean energy technologies and policies, reduce environmental impacts, and ensure reliable and affordable supplies.
Our timing is critical. Action by the 25 CEM members, representing 90% of global energy investment and 75% of global emissions, is crucial for making the world less carbon-intensive than today.
In Beijing, our focus will be to provide a collaborative environment to tackle these challenges in areas ranging from transportation, buildings to the power sector. Our governments will seek to increase electric mobility, with a target to reach 30% of the new vehicle fleet by 2030. The recent announcements of the Indian government will go a long way towards this end. Another challenge for CEM governments will be to increase EV charging providers by a factor of ten in the next five years. Other priority areas include improving efficiency in buildings, which account for nearly a third of all energy consumption and 20% of greenhouse gas emissions. It remains a critical sector and must be addressed at all levels, between governments, industry, regional and city leaders.
In the power sector, the CEM is seeking to move away from the coal-or-renewables paradigm. Coal was the fuel of the last 100 years, and renewables will likely be the dominant fuel of the next century for many countries. At the same time, we must recognize that so-called dispatchable power plants – including thermal generation – are key for many countries to ensure energy security during the transition to a cleaner energy system. And so, the Beijing meeting will launch new work to address this challenge.
To succeed, this energy transition will require the full backing of industry. This is why the CEM includes top-level executives from companies involved in all aspects of the energy field who offer a unique on-the-ground perspective and ultimately determine where investments end up going. They are often the first to recognize what drives clean energy uptake.
This is a unique time for the CEM, which is entering a new phase of cooperation and growth in our short history. The world of energy is changing. Facts on the ground unequivocally point to the key role of emerging economies in clean energy. Come next week’s meeting in Beijing, held from 6-8 June, we are likely to see this reflected in the leadership of the CEM.
The CEM, which is housed at the International Energy Agency, is a global forum that promotes clean energy policies. This Op-Ed was originally published by the Financial Express in India by China Energy News.