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Drivers for the Transition to Renewable Energy in Developing Countries

Term Paper 2014 14 Pages

Sociology - Economy and Industry

Excerpt

Inhaltsverzeichnis

A. Introduction

B. Main Part
I. Drivers for the Transition to Renewable Energies
1. Dependency on and availability of Fossil Fuels
2. Social Development
3. Economic Development
4. Climate Protection
5. International Economic Development
II. Case Studies
1. The Philippines
2. Kenya
3. Brazil

C. Conclusion

Bibliography:

A. Introduction

It is beyond doubt that limiting the extent of climate change and its effects is one of the most important challenges of the 21st century. Many developed countries have recently introduced large-scale programs to promote the transition from fossil fuels to renewable energy as a source of power. Power Generation from fossil fuels is one of the most important causes of the global CO2 emissions.

While some programs, such as the German 'Energiewende' have had some moderate success it is also often overlooked, that a significant part of the world's population does in fact not live in these developed countries. But is their demand for power that is going to be increasing the most in the next decades, since for many of these developing countries their advancement is inevitably linked to an increase in their electricity generation capabilities.

But not only do renewable energies promise to help maintain the CO2 reduction goals, that we need in order to avoid the worst consequences of climate change, they also promise to open up new fields of economic and social opportunity for many developing countries, where the populations and economy still suffer from a lack of power sources. Many people suffer from negative consequences caused by primitive power sources, such as wood or dung, and renewable energies promise to help these developing countries on path towards sustainable growth.

It is however strange that some developing countries have been extremely successful in promoting the transition to renewable energy technologies, while other countries have been less successful. This paper thus aims to find the major drivers, which allow a developing country to effectively transition to renewable energy. In a first chapter possible drivers for the transition to renewable energies will be presented and the processes behind these drivers shall be discussed. A second part offers a few case studies on some developing countries, which have been particularly successful in the transition to renewable energy, thereby identifying what has made these developing countries so successful.

B. Main Part

I. Drivers for the Transition to Renewable Energies

The first part aims to present possible factors, which could stimulate the transition to renewable energies in developing countries.

1. Dependency on and availability of Fossil Fuels

The first possible driver for a transition to renewable energy in developing countries discussed here shall be the countries dependence on fossil fuel, and corresponding the availability of these fuels in the country.

Dependence on fossil fuels poses several problems for developing countries. The world market price, especially for crude oil, which is one of the most important fossil fuels has proven to be subject to extreme fluctuations during the last decades. A good example for the problems that developing countries can expect from being highly dependent on fossil fuels can be found in the oil crisis of 1973. Prior to the crisis many developing countries, trying to industrialize, had become very dependent on oil imports. While the price for a barrel of crude oil had been around $ 3.22 in 1972, the price had increased to around $12.52 per barrel in 1974. (compare: U.S. Energy Information Administration 2015). This quadruplication of the oil price endangered the industry in many developing countries. “In order to pay for imported fuel and other increased costs, third world countries began borrowing.[...] Many of the loans to third-world countries went to pay for fuel or imports “ (Easley 2000). In 2011 the price for crude oil reached a new nominal and real all-time high.(compare: U.S. Energy Information Administration 2015) This shows that the oil price is subject to strong fluctuations, and that it might be unwise for developing countries to rest their economy's energy supplies on a source of power, that they have no control over.

It is also worth mentioning, that we can expect developed countries to have some interest in reducing the fossil fuel consumption of the developing world. The fossil fuel consumption of many developing countries has been rising sharply during the last years. An excellent example is China. U.S. Energy Information Administration data shows a steep increase in the consumption for oil, gas and coal. (compare: U.S. Energy Information Administration 2013). Should other developing countries follow this example the world market prices for these fossil fuels would increase, threatening the highly dependent economies of the developed countries.

So in conclusion I would state, that developing countries should be more willing to transition to renewable energies when they are more dependent on fossil fuels, and they lack significant sources of these fossil fuels in their own country and/or importing them is difficult for some reason.

2. Social Development

Another factor that is of interest to developing countries trying to decide, whether to make the transition to renewable energies are the social developments that they allow compared to fossil fuels.

The first factor that we have to discuss here are the advantages that renewable energies have over energy created from conventional fossil fuels when it comes to social development. After all energy should be energy no matter where it comes from. The dividing factor between energy from fossil fuels and from renewable energies is their dependence on a centralized power grid. Fossil Fuel is typically converted to energy in large scale power plants, which require the grid in order to transfer the power generated to the user. Renewable energy sources can be deployed on a much smaller scale, and do not require extensive power grids.

It is estimated, that “approximately 1.3 billion people around the world [...] don’t have access to grid electricity“ (Bullis 2012). Since these people often live in rural areas, connecting them to a power grid is an expensive undertaking, which is often unfeasible for the developing countries. Living without electricity causes several adversities for the people: “Even though they are typically very poor, these people have to pay far more for lighting than people in rich countries because they use inefficient kerosene lamps“ (Bullis 2012).

Additionally, various adverse health effects can be attributed to indoor pollution in developing countries, ranging from respiratory infections in young children to cancer (compare: Smith 1993, p.51). The World Health Organization estimates indoor pollution ”to cause 36% of all lower respiratory infections and 22% of chronic obstructive pulmonary diseases“ (WHO 2002 p. 9), and that about “1.6 million premature deaths can be annually attributed to indoor air pollution from biomass and coal use in poor households in developing countries“ (Sagar 2004, p.1).

These findings lead to the expectation, that developing countries will accelerate the transition to renewable energy driven by the following factors: A poorly developed power grid and/or obstacles to the creation of a nationwide power grid (such as high amounts of rural population, low population density, challenging landscape for the construction of a power grid). And corresponding to this the opportunity for the country to achieve social development in the country created by the usage of renewable energy devices.

3. Economic Development

A driver connected to Social Development is the issue of Economic Development. Developing countries are called developing, since they aim to alleviate their economies to the level of a developed nation. In some cases renewable energies offer bonuses to economic progress, that cannot be gained from fossil fuels.

A first argument for developing countries to build their power networks on renewable energies is the so-called idea of leapfrogging. The developed countries “have an existing grid, existing energy production, which will over time have to be replaced, and this costs a lot of money“ (Piebalgs 2007, p. 21). The idea of leapfrogging states, that the developing countries can “jump from the present situation to a situation in which it doesn't need this obsolete and polluting infrastructure” (Piebalgs 2007, p. 21).

As previously discussed, fossil fuels and their dependence on a centralized power grid often endanger the sustainable access to energy in many regions in the developing countries. It can be argued that a reliable access to power is an essential part of any larger-scale economic activity. “Access to sustainable energy services is necessary at macro level to foster economic growth, and at micro-level to stimulate businesses and income-generating activities. Small businesses, public buildings and homes need adequate energy for lighting, communication, water supply, heating and cooling.“ (Piebalgs 2007, p. 22). A briefing paper by the World Bank names modern sustainable energy as “a necessary input for economic development and the elimination of poverty” (Cecelski 2003, p. 6). A report by the Worldwatch Institute also lists many technologies based on renewable energy, that can boost economic activity on a small scale, among them biogas for decentralized cooking and electricity, small wind power for water pumping and local electricity, ethanol and biodiesel for agriculture and transportation and Solar collectors for water and space heating. (compare: Flavin / Aeck 2005, pp. 7,8). All of these technologies promise to help local economies grow, where they could not do so without renewable energy. They “can contribute to poverty alleviation […] by providing the energy needed for creating businesses and jobs” (Flavin / Aeck 2005, pp. 8). Renewable Energy can also help setting free productive power in the local population by “freeing up time for education and income-generating activities” (Flavin / Aeck 2005, pp. 8)

Developing countries can also hope to increase their economic stability by switching to renewable energy, since “of the 47 poorest countries, 38 are net importers of oil, and 25 import all their oil” (Flavin / Aeck 2005, p. 7). As previously pointed out increases in prices for these fuels are quite common, and might suffocate economic activity.

So we can conclude, that developing countries will boost renewable energies when they can hope to reap economic benefits from the transition.

4. Climate Protection

An international interest in reducing CO2 output and protecting climate in developing countries can also help to drive a transition to renewable energy in these countries. It should however not go unmentioned, that the developing countries also have certain climate-related incentives to transition to renewable energies.

The U.S. Energy Information Administration estimates that “Energy-related carbon dioxide emissions from developing countries will be 127 percent higher than in the world's most developed economies by 2040„ (Reuters 2013). Even in 2010 “non-OECD emissions exceeded OECD emissions by just 38 percent“ (Reuters 2013). It thus seems reasonable to start reducing CO2 emissions in developing countries today.

The most important part of the mechanisms helping developed countries support developing countries is the Clean Development Mechanism (CDM), which is part of the Kyoto Protocol, the central part of international climate policy. The CDM “allows a country with an emission-reduction or emission-limitation commitment [...] to implement an emission-reduction project in developing countries“ (UNFCCC 2015). The CDM basically allows a developed country to finance projects in developing countries, which reduce CO2 emissions, and then count some of the resulting reduction in CO2 emissions towards their own CO2 reduction goals. The United Nations Framework Convention on Climate Change also names examples for the kinds of projects developing countries might finance: “for example, a rural electrification project using solar panels or the installation of more energy-efficient boilers.“ (UNFCCC 2015). These projects are usually cheaper, than projects in the developed countries. We can thus see, that there are some incentives for advancing renewable energy in developing countries for the developed countries.

The developing countries themselves also have a huge interest to avoid global climate change. Climate change can have negative effects in many developing countries. “The consequences of climate change could definitely rank amongst the most difficult challenges that the developing world will have to face in the coming years. “ (Piebalgs 2007, p. 22, 23). A report by the Intergovernmental Panel on Climate Change (IPCC) comes to the conclusion, that developing countries are especially threatened by climate change. “Drought-prone areas will become drier and wet tropical regions wetter“ (Vidal 2013). This is especially threatening agriculture in many parts of the developing world, since it is extremely vulnerable to droughts and natural disasters. “Oxfam predicted that world hunger would worsen as climate change inevitably hurt crop production and disrupted incomes“ (Vidal 2013).

To sum it up here I would state, that developing countries should be more eager to transition to renewable energy when they are directly threatened by the effects of climate change. It is however unclear how effective international aid is in helping developing countries with the transition to renewable energy.

5. International Economic Development

Developed countries may also have economic interests in facilitating a transition to renewable energies in developing countries.

Many developing countries are investing heavily into their energy infrastructure. This transition to modern energy-intensive economies will require the investments of huge amounts of money, money that can at least partly flow to companies in developed countries providing the technology for the creation of renewable energy networks and sources. “It is estimated that the rapid process of industrialization in China, India and other energy-intensive transition economies, will need about EUR 250 billion in investments in new energy production per year for the next 30 years“(Piebalgs 2007, p. 23). Consequently huge sums of money actually are invested into renewable energies each year. “The 2012 global investment total for renewable energy (including small hydro-electric projects) was $244 billion. In previous years, global investments totaled $279 billion (2011), $227 billion (2010), $168 billion (2009), $172 billion (2008), $146 billion (2007) and $100 billion (2006). “ (UNEP 2015). We can see there, that investment has grown over 200% in just about 5 years.

It seems probable, that the developed countries might try to foster the growth of renewable energy in developing countries, since there is a lot of money to be earned by them. Many parts of renewable energy technologies are produced in developed countries, and might be an additional source of revenue for these countries when sold worldwide.

II. Case Studies

This part aims to present several small case studies on the development of renewable energies in different developing countries. Each of these countries is special in regards to renewable energy development in some way. The selected countries are also located in all three areas of the world, where developing countries are mainly found: South-East Asia, Africa and Latin America.

1. The Philippines

The Philippines can be considered one of the world leading countries in the transition to renewable energy. According to the IEA the Philippines were generating 40.3 percent of their total energy supply from renewable energy sources in 2010. (compare: Senate of the Philippines 2014, p 1). “According to the Department of Energy (DOE), the Philippines is the world's second largest generator of geothermal energy“ (Senate of the Philippines 2014, p 1). Hydro power is an important additional source of renewable energy for the Philippines. In 2012 three large hydro power projects with capacities if 346, 225 and 44 MW were in the stage of financial closure on the Philippines. (compare: World Bank 2015).

The Philippine government is truly committed to furthering the transition to renewable energy in the country. In 2011 the country launched the National Renewable Energy Program, which included the launch of a National Renewable Energy Board. “In collaboration with other agencies such as the Department of Energy and the Energy Regulatory Commission, the Board works to ensure that the National Renewable Energy Plan and the mechanisms foreseen in the Renewable Energy Act are implemented.” (Weischer 2011). The program “aims to increase renewable energy capacity to 15,400 megawatts by 2030 from about 5,400 MW at present” (Reuters 2011). The government says it is “hoping renewable energy will account for at least 50% of our energy mix by 2030” (Reuters 2011), as stated by Energy Undersecretary Jose Layug in 2011.

So the important question is why the Philippines have such a keen interest in increasing their renewable energy supply. I would argue here that one of the main reasons for this interest can be found in the geographical position of the Philippines and their dependence of oil imports. The Philippines imported roughly 270.000 barrels of oil and petroleum products per day in 2013, with the country itself producing just under 10 percent of that. (compare: U.S. Energy Information Administration 2013a) Consumption of coal for energy production has also increased by about 650 percent between 1990 and 2012, only about half of that amount being produced domestically. (compare: U.S. Energy Information Administration 2013a). This is considered to be a problem in the Philippines, “high oil prices have pushed inflation up this year, and were a factor in the central bank's decision to increase interest rates in March and May [2011].” (Reuters 2011). The Philippine net value of imports was “$12.292 billion in 2014.” (Business World Online, 2015), and the “fast-growing economy depends heavily on imported oil.” (Business World Online, 2015).

There are also huge economic concerns involved in the Philippine support for renewable energies. The Philippines, comprised of several thousand island are able to profit massively from the decentralized nature of renewable energy. “The cost of transmitting power and transporting fuel to the more than 7,000 islands of the Philippine archipelago and to isolated missionary areas is very high.” (Weischer 2011). The renewable energy- based power grid could be “essential for the Philippines to attain energy security and economic sustainability” (Weischer 2011).

Social development does not seem to play such an important role in the Philippines, since the country is already relatively developed among the developing countries and is rather searching for more efficient ways to develop, rather than to kick off development.

Another point mentioned earlier was, that especially those countries threatened by climate change should be more eager to transition to renewable energies. According to the WWF the Philippines are considered to be “one of the most vulnerable countries to climate change” (WWF 2015). The WWF lists several factors that contribute to this strong vulnerability: “With impacts ranging from extreme weather events and periodic inundation to droughts and food scarcity, climate change has been a constant reality that many Filipinos have had to face” (WWF 2015). The World Bank estimates that “more than 60 percent of the nation's total population of 87.8 million [July 2005 estimate]lives in the coastal zone” (World Bank 2015a), and that “the country depends heavily on its rich coastal and marine resources for the many economic, employment and biodiversity values and services they provide” (World Bank 2015a). The Philippine government is already aware of this threat and enacted a Climate Change Act in 2009, which also included elements connected to the development of renewable energies.

In conclusion I would thus say that the Philippines are a great example for some drivers we worked out in the first part. It can be seen that dependence on fossil fuels, the hope for economic advancement and a vulnerability to climate change are especially important drivers for the transition to renewable energies in the Philippines.

2. Kenya

Kenya shall be our case study for the African continent. I selected Kenya, because has one of the strongest renewable energy sectors in Africa. Kenya's energy consumption has just about doubled between 2000 and 2012, and it seems like this trend is likely to continue. (compare: U.S. Energy Information Administration 2013b) ”Kenya is the global leader in the number of solar power systems installed per capita (but not the number of watts added)“ (Kammen 2006, p. 86). The government plans to expand its solar energy generation network through several plants, “that could provide more than half the country's electricity by 2016“ (Njeru 2014). Kenya additionally has several geothermal plants that supply about 200 MW of power.

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Details

Pages
14
Year
2014
ISBN (eBook)
9783668051515
ISBN (Book)
9783668051522
File size
421 KB
Language
English
Catalog Number
v305358
Institution / College
LMU Munich
Grade
1,6
Tags
erneuerbare energie renewable energy Entwicklungsländer developing countries

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Title: Drivers for the Transition to Renewable Energy in Developing Countries