Environmental Law and Policy in Namibia: Towards Making Africa the Tree of Life (Third Edition)
III. INTERNATIONAL LAW ASPECTS OF RENEWABLE ENERGIES
Oliver C. Ruppel and Katharina Ruppel-Schlichting
Energy security is one of the most important topics of our times. Energy is an essential requirement for all fields of our daily life, for the functioning of social and political systems, businesses, and communication, and for economic growth and sustainable development, among others. Primary energy is embodied in natural resources such as crude oil, natural gas and coal, which have to undergo anthropogenic conversion in order to become usable energy.
Another type of energy is renewable energy, which is
obtained from the continuing or repetitive flows of energy occurring in the natural environment and includes low-carbon technologies such as solar energy, hydropower, wind, tide and waves and ocean thermal energy, as well as renewable fuels such as biomass.2
To secure an energy supply that meets the growing demand is one of the major global energy challenges. So far, no commonly accepted definition of the term ‘energy security’ exists. The International Energy Agency (IEA) has defined energy security as “the uninterrupted availability of energy sources at an affordable price.”3 According to the IEA, energy security has a long-term component which
mainly deals with timely investments to supply energy in line with economic developments and environmental needs. On the other hand, short-term energy security focuses on the ability of the energy system to react promptly to sudden changes in the supply-demand balance.4
In very general terms, energy security can be understood as robustness against disruptions of energy supply.
Energy security plays an important role at the crossroads of national security, economic security and environmental security, and is thus equally high on the agenda of national and international politicians, scientists and economists. To achieve secure, clean and efficient energy is the target of many national governments5 and regional groups,6 as securing energy supply is considered to be one of the means to overcome poverty and to achieve the millennium development goals (MDGs).
There is no question about the importance of energy security, in general; nor about its relevance for economic growth and development, in particular. However, in light of the fact that energy-related carbon dioxide emissions make up most global greenhouse gas (GHG) emissions, the world community is charged with the task of balancing the extension of energy supply, on one hand, and the consumption of energy, on the other, in order to reduce the extent of climate change – one of the major challenges of our time. Thus, international climate change negotiations are fundamentally about energy use and the linkages between energy and economic development.
2 Sustainable Energy and Climate Change
The Intergovernmental Panel on Climate Change (IPCC) has launched its Assessment Report (AR5) on Climate Change in 2013 and 2014.7 The fact that energy and particularly renewable energies are closely linked to climate change is not only reflected in the contributions by Working Group I onThe Physical Science Base in 2013, by Working Group
II onImpacts, Adaptation and Vulnerability in 2014, and by Working Group III on Mitigation of Climate Change , but also in a Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN), which had already been published by the IPCC in 2012. The SRREN has impartially assessed the scientific literature on the potential role of renewable energy in the mitigation of climate change for policy makers, the private sector, academic researchers and civil society. Six renewable energy sources are covered by the report, namely bioenergy, direct solar energy, geothermal energy, hydropower, ocean energy, and wind energy; and an assessment has also been made on how these renewable energy resources are integrated into present and future energy systems. The report furthermore considers the social and environmental consequences associated with the deployment of renewable energy technologies. Strategies to overcome technical as well as non-technical obstacles to their application and diffusion are presented, and costs of energy from renewable energy sources are compared to recent non-renewable energy costs.
The aforementioned reports are of great relevance with regard to many aspects of energy security and contain a solid base for further debate on this important topic. A general message from the reports can be summarised as follows: we live in a world which is altered by climate change, one of the greatest challenges of the 21st century. Climate change poses risks to human and natural systems and has the potential to impose additional pressures on the various aspects of human security.8 The risks and impacts related to climate change can be reduced by improving society to decrease vulnerability and hand down the overall risk level (adaptation) and by reducing the amount of climate change that occurs. Thus, energy technologies play an important role in the field of climate change mitigation. Greenhouse gas (GHG) emissions resulting from the provision of energy services have contributed significantly to the increase in atmospheric GHG concentrations and most – about 60% in 20109 – global anthropogenic GHG is attributed to the consumption of fossil fuels. Options for lowering GHG emissions from the energy system while still satisfying the global demand for energy services include energy conservation and efficiency, fossil fuel switching, nuclear and carbon capture and storage (CCS) and low-GHG energy supply technologies such as renewable energy.
Energy security and climate change share the need for innovation and technology, smart policy making, high levels of Government attention, effective diplomacy, and international cooperation. Synergy effects will occur from innovative actions that make for a more secure energy system, as these may also result in reducing the warming emissions that come from energy supplies.10
The nexus between climate change and energy security has been focused upon in the IPCC’s assessment and it has been found that
most climate policies intersect with other societal goals, either positively or negatively, creating the possibility of ‘co-benefits’ or ‘adverse side-effects’. Since the publication of AR4 a substantial literature has emerged looking at how countries that engage in mitigation also address other goals, such as local environmental protection or energy security, as a ‘co-benefit’ and conversely. This multi-objective perspective is important because it helps to identify areas where political, administrative, stakeholder, and other support for policies that advance multiple goals will be robust. Moreover, in many societies the presence of multiple objectives may make it easier for governments to sustain the political support needed for mitigation. Measuring the net effect on social welfare requires examining the interaction between climate policies and pre-existing other policies.11
It has furthermore been observed that the driving forces for climate policy are not solely the concern about climate change. This can be seen from the various efforts of national governments in which the issue of climate change is addressed in the context of other national objectives such as the alleviation of poverty and the achievement of energy security. “For countries that want to reduce their dependence on imported fossil fuels, climate policy can bolster energy efficiency and the domestic renewable energy supply, while cutting GHG emissions.”12
It is widely recognised within the international community that the deployment of renewable energies is an important means for mitigating climate change.13 Equally well acknowledged is the necessity of promoting renewable energies to foster technological and competitive performance. Correspondingly, support mechanisms have been introduced in many countries worldwide.
The relative importance of the drivers for RE differ from country to country, and may vary over time. Energy access has been described as the primary driver in developing countries whereas energy security and environmental concerns have been most important in developed countries.14
The current over-reliance on finite traditional sources of energy, which are patchily distributed across the world’s regions, has resulted in an intense competition over these resources. However, when looking at the ratio of proved reserves to current production, it is estimated that, globally, oil and natural gas will be exhausted in about four and six decades, respectively.15 Assessing the theoretical potential of renewable energy, the IPCC in its SRREN concludes that “the theoretical potential is much greater than all of the energy that is used by all the economies on Earth.”16 If supported by the right enabling public policies, close to 80% of the world’s energy supply could be met by renewables by mid-century.17 While fossil energies are the engine of today’s global economy,18 renewable energies are one of the guarantors of a future-proof energy supply and they do play an important role in the fight against climate change. Wind power, solar energy, hydropower plants, geothermal energy, and energy from biomass are becoming important economic trends and key mechanisms to mitigate climate change. Technologies which supply energy with a limited production of greenhouse gases contribute to reducing the dependency on fossil fuels such as coal, oil and gas and are constantly being developed further with a view to achieving a globally sustainable energy supply.
Efforts to strengthen the renewable energy sector in general and to develop relevant technologies to this end have increasingly been subject to various international climate-related negotiations, particularly to the discussions and decisions of the Conference of the Parties (COP) of the United Nations Convention on Climate Change. In one of its latest decisions, the COP at its 20th session in Lima, Peru, in December 2014 has agreed on theLima Call for Climate Action ,19 in which the Parties reaffirmed that
all developing countries need access to the resources required to achieve sustainable social and economic development and that, in order for developing countries to progress towards that goal, their energy consumption will need to grow, taking into account the opportunities for achieving greater energy efficiency and for reducing greenhouse gas emissions, including through the application of new technologies on terms which make such an application economically and socially beneficial.
With regard to financing, it has been laid down as a guiding principle that the mobilisation and provision of finance will, among others, support the integration of climate objectives into other policy-relevant areas and activities, such as energy and development policy and plans in line with country circumstances and according to countries’ priorities. The establishment of an international renewable energy and energy efficiency bond facility has been envisaged.
Although the deployment of renewable energy technologies does face market challenges primarily owing to the maturity of the conventional energy markets and technical and financial restraints in the development of RE technology, the need for promotion of renewable energies is becoming more evident than ever before. It is for good reason that the mitigation of dangerous anthropogenic climate change is seen as one strong driving force behind the increased use of RE worldwide. In addition to this, there are a number of interactions between RE and sustainable development which speak in favour of an increased use of RE: RE technologies are essential to address energy supply concerns and offer the opportunity to contribute to social and economic development, employment creation and the reduction of environmental and health impacts. Moreover, these technologies do also play an important role in terms of climate change adaptation20 . Not only can RE technologies contribute towards less negative effects on our climate by way of emission reduction, such technologies can also contribute towards more reliable energy access, which particularly applies to oil-importing developing countries. For these, an increased uptake of RE technologies could be an avenue to “redirect foreign exchange flows away from energy imports towards imports of goods that cannot be produced locally, such as high-tech capital goods”.21
The understanding of the necessity to promote the deployment of renewable energy technologies is reflected in some figures on growth in the renewable energies sector, as provided by the IPCC:
On a global basis, it is estimated that RE accounted for 12.9% of the total 492 EJ of primary energy supply in 2008. The largest RE contributor was biomass (10.2%), with the majority (roughly 60%) of the biomass fuel used in traditional cooking and heating applications in developing countries but with rapidly increasing use of modern biomass as well. Hydropower represented 2.3%, whereas other RE sources accounted for 0.4%. In 2008, RE contributed approximately 19% of global electricity supply (16% hydropower, 3% other RE), biofuels contributed 2% of global road transport fuel supply, and traditional biomass (17%), modern biomass (8%), solar thermal and geothermal energy (2%) together fuelled 27% of the total global demand for heat. The contribution of RE to primary energy supply varies substantially by country and region. Scenarios of future low greenhouse gas futures consider RE and RE in combination with nuclear, and coal and natural gas with carbon capture and storage.
While the RE share of global energy consumption is still relatively small, deployment of RE has been increasing rapidly in recent years. Of the approximately 300 GW of new electricity generating capacity added globally over the two-year period from 2008 to 2009, 140 GW came from RE additions. Collectively, developing countries hosted 53% of global RE power generation capacity in 2009. Under most conditions, increasing the share of RE in the energy mix will require policies to stimulate changes in the energy system. Government policy, the declining cost of many RE technologies, changes in the prices of fossil fuels and other factors have supported the continuing increase in the use of RE. These developments suggest the possibility that RE could play a much more prominent role in both developed and developing countries over the coming decades.22
3 Regulatory Framework on the International Level
Energy security is crucial for keeping economies competitive, for enhancing sustainable development, and for reducing poverty. It is thus on the one hand surprising that no global energy security system exists. On the other hand, it has to be taken into consideration that global energy governance must take into account a variety of topics, including climate change, development, environmental protection, trade, investment, and human security, which explains the fact that the global energy governance regime is fragmented with its many components being managed in a disjointed manner, bringing about overlaps as well as normative gaps. Numerous instances of inter-state cooperation interrelate and create a normative patchwork with implications for the global energy economy and security. This can be attributed to the pursuit of national interests, the diversity of energy sources, and the plurality of relevant institutions and agreements.23
Many international organisations are operating in the field of energy matters and include, among many others, the International Energy Agency (IEA); the Organization of the Petroleum Exporting Countries (OPEC), the Gas Exporting Countries Forum (GECF); the International Energy Forum (IEF); the World Trade Organization (WTO); and the International Renewable Energy Agency (IRENA).
A large number of international processes promote the acceleration of the deployment of renewable energies as an important part of designing a sustainable energy framework for the future. Among them are the millennium development goals and the United Nations secretary general’s Sustainable Energy for All Initiative, which is focused on three objectives, namely to ensure universal access to modern energy services (over one billion people worldwide lack access to electricity), to double energy efficiency (global energy-related carbon dioxide emissions could rise 20% by 2035; equipment maintenance, thermostat settings, and upgrades can reduce emissions by up to 50%), and to double the renewable energy share in the overall global energy mix by 2030 (global energy demand will grow up to 33% from 2010 to 2035).24
Relevant instruments of a more legal nature include the UN Charter,25 which sets out some foundation for international agreements relevant to energy-related issues by providing, for example, for the preservation of sovereignty over domestic matters, including the management of natural resources and especially of energy-related resources. Besides this, there are many other relevant international agreements, such as the Energy Charter Treaty and the legal regime of the WTO.26
Interrelating issues between climate change and energy security are most pertinently addressed within the regimes under the United Nations Convention on Climate Change (UNFCCC) and its Kyoto Protocol, which also address the environmental impacts of energy. Commitments to reduce GHG emissions are subject to the ongoing international climate change negotiations and international agreements, and an increased use of RE is a key element in subsequent implementation on the national level.
The UNFCCC, as adopted in 1992, was designed to protect the climate system for present and future generations. It recognises that in order for developing countries to progress towards sustainable social and economic development,
their energy consumption will need to grow taking into account the possibilities for achieving greater energy efficiency and for controlling greenhouse gas emissions in general, including through the application of new technologies on terms which make such an application economically and socially beneficial.27
Within the framework of the Kyoto Protocol, the enhancement of energy efficiency has been stipulated as a means for countries to achieve the quantified emission limitation and reduction commitments. This highlights the need for research, promotion, development, and increased use of new and renewable forms of energy.28 Thus, for many countries the need for promotion of renewable energies results from their obligations under the legal regime of the UNFCCC/Kyoto Protocol. Consequently, there are various activities on the UNFCCC level related to renewable energies, such as discussions on how the deployment of renewable energies and energy efficiency improvements can unlock climate change mitigation opportunities.29
Global energy transition will continue to be high on the international stage in future, not only in terms of a new UN climate agreement, but also regarding a post-2015 agenda with universally applicable (applicable to all countries, not just developing nations and emerging economies), sustainable development goals (SDGs), which have been proposed by the UN Open Working Group30 and unanimously adopted by 193 UN members in September 2015. One of the seventeen SDGs defines the goal pertinent to energy as follows:
Goal 7. Ensure access to affordable, reliable, sustainable, and modern energy for all:
7.1 By 2030, ensure universal access to affordable, reliable and modern energy services;
7.2 By 2030, increase substantially the share of renewable energy in the global energy mix;
7.3 By 2030, double the global rate of improvement in energy efficiency;
7.a By 2030, enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy efficiency and advanced and cleaner fossil-fuel technology, and promote investment in energy infrastructure and clean energy technology;
7.b By 2030, expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all in developing countries, in particular least developed countries, small island developing States, and land-locked developing countries, in accordance with their respective programmes of support.31
4 Regulatory Framework in the Southern African Development Community (SADC)
Challenges related to energy are increasingly being addressed on the sub-regional level with regional integration as a motor for the creation of new opportunities for renewable energies and energy efficiency technologies. Major pressing energy challenges include the limited access to energy; energy security; but also household air pollution as a result of cooking and heating with solid fuels and impacts on overall environmental quality resulting from the extensive use of coal. Currently, SADC generates about 74% of its electricity from coal thermal stations. Renewable energy sources, which are in abundance across the region, are not yet considered as major contributors to the region’s electricity needs, save for hydropower that accounts for about 20% of SADC’s total energy generation.32 According to the African Development Bank, the SADC region has the potential to become a “gold mine” for renewable energy due to the abundant solar and wind resources that are now hugely sought after by international investors in their quest for clean energy.33
For the time being, however, wide disparities exist in terms of access to electricity between SADC countries and between urban and rural areas as shown in the table below.
Share (%) of population with electricity access (2012)
Share (%) of population with electricity access in urban areas (2012)
Share (%) of population with electricity access in rural areas (2012)
Share (%) of renewable energy in total final energy consumption (2012)
Source: Table compiled by author with figures based on REN21 (2015:19f.).
Although SADC is committed to renewable energy, a number of challenges remain:
- Renewable energy entails high upfront costs, especially for technology;
- Most renewable energy equipment is imported, with no local options for manufacturing;
- There may not be capacity to connect large-scale energy projects to the grid;
- Much renewable energy equipment is of poor quality and the region lacks appropriate testing facilities to ensure effectiveness;
- Research, development, and production of renewable energy infrastructure occur outside the region and there are no localisation strategies in place;
- Renewable energy depends heavily on donor subsidies at present;
- There are no guidelines for assessing the impacts and benefits of renewable energy incentives, such as feed-in tariffs;
- Data on possible deforestation caused by biomass development is lacking, inhibiting progress on regulation and decision-making.34
Against the backdrop that large areas of Africa remain without access to modern energy, SADC has emphasised the need to increase energy security throughout the history of renewable energy policy in the region, which is captured in SADC’s legal and institutional frameworks. Although implementation of energy related policy has been slow, the region has made some strides, particularly in electricity. At present, nine member states of SADC have merged their electricity grids into the Southern African Power Pool35 , reducing costs and creating a competitive common market for electricity in the region. Similarly, SADC has established the Regional Electricity Regulatory Association, which has helped in harmonising the region’s regulatory policies on energy and its subsectors.
4.1 The SADC Protocol on Energy
The SADC Protocol on Energy entered into force in April 1996 to develop a coordinated approach towards the development of energy and energy pooling to ensure security and reliability of energy supply and the minimisation of costs. According to the general principles contained in in Article 2, SADC member states are encouraged to:
- Use energy to support economic growth and development, alleviation of poverty and the improvement of the standard and quality of life throughout the Region.
- Use energy to promote collective self-reliance among Member States.
- Ensure that the development and use of energy takes cognisance of the gender realities of the Region.
- Encourage the development and transfer of science and technology related to energy through the promotion of research and development and the evolution and use of comparable methods and standards.
- Fully accept the responsibility to share the costs associated with institutional mechanisms created for the effective implementation of this Protocol.
- Settle all disputes peacefully, amicably and in accordance with procedures set forth hereunder in Article 12.
- Promote and encourage the direct participation of citizens and communities in the development and use of energy.
- Ensure that the development and use of energy is environmentally sound.
- Create a conducive environment for the private sector to participate fully in energy development in the Region.
- Ensure that sectoral and sub-sectoral regional energy policies and programmes shall be in harmony with the overall policies and programmes of SADC and with the strategies and programmes of other SADC sectors.
The objectives of energy cooperation within SADC have been captured in Article 3 of the Protocol as to:
- Strive to harmonise national and regional energy policies, strategies and programmes on matters of common interest based on equity, balance and mutual benefit.
- Co-operate in the development of energy and energy pooling to ensure security and reliability of energy supply and the minimisation of costs.
- Co-operate in the development and utilisation of energy in the Region in the following sub-sectors: woodfuel, petroleum and natural gas, electricity, coal, new and renewable energy sources, energy efficiency and conservation, and other cross-cutting themes of interest to Member States.
- Strive to ensure the provision of reliable, continued and sustainable energy services in the most efficient and cost-effective manner.
- Promote joint development of human resources and organisational capacity building in the energy sector.
- Co-operate in the research, development, adaptation, dissemination and transfer of low-cost energy technologies.
- Strive to achieve standardisation in appropriate energy development and application including the use of common methods and other techniques.
Pursuant to Articles 3 and 10 of the Protocol, Annex 1 of the Protocol on Energy sets forth guidelines for cooperation for promoting renewable energy production and usage. Substantive provisions are made in the Annex with regard to specific sub-sectors, namely electricity; petroleum and natural gas; coal; woodfuel; new and renewable sources of energy; and energy efficiency and conservation. For each of the sub-sectors, a set of target activities is established in Annex 1 to the Protocol and include, among others, the following: developing appropriate financing mechanisms and introducing favourable tax regimes for both renewable energy and energy efficiency, targeting reductions in commercial energy intensity and involving utilities in energy efficiency schemes.
The institutional mechanism for the implementation of the Protocol is a Commission established by Article 4 of the Protocol.
Although the Protocol and its Annex provide an initial guideline for programming, they do not suggest specific mechanisms for implementation, nor do they set quantitative targets or establish any formal monitoring of target achievement.36
4.2 The Regional Indicative Strategic Development Plan (RISDP)
The SADC Regional Indicative Strategic Development Plan (RISDP) was originally adopted in 2003 and contained specific quantitative targets for infrastructure development (including energy) for the period from 2004 to 2018. RISDP envisaged six energy related targets, including that 70% of rural communities within southern Africa should have access to modern forms of energy supplies by 2018.37
In 2014 and 2015, a task force comprising the SADC Secretariat, all member states and key stakeholders developed and finalised the Draft Revised RISDP 2015-2020 and its Implementation Framework and Indicative Costs. In 2015, the SADC Summit has approved the Revised Regional Indicative Strategy of Development Plan (RISDP) and Implementation Framework of 2015-2020.38
4.3 The Regional Energy Access Strategy and Action Plan (REASAP)
The Regional Energy Access Strategy and Action Plan (REASAP)39 was approved in 2010. It sets goals for improving access to modern forms of energy. The REASAP envisages a Renewable Energy and Action Plan (RESAP) to be developed.
The initial consultant report on RESAP suggested a number of targets for renewable energy for the period 2020-2030, including targets for 175 MW of biomass power and 500 MW of solar power by 2020. Significantly, both of these targets fall well short of targets for those SADC countries that are implementing large-scale power generation from renewable sources. Final approval of RESAP is expected in late 2016.40
The envisaged SADC Renewable Energy Strategy and Action Plan 2015 to 2020 (RESAP I) aims to encourage the region to achieve a renewable energy mix of at least 32% by 2020, which should rise to 35% by 2030.41
The establishment of the SADC Centre for Renewable Energy and Energy Efficiency (SACREEE) has been approved by SADC energy Ministers in 2015 and Namibia has been selected as the host country of SACREEE.
4.4 The Energy Sector Plan of the SADC Regional Infrastructure Development Master Plan (RIDMP)
The Energy Sector Plan42 was developed in 2012 as part of the SADC Regional Infrastructure
Development Master Plan (RIDMP) whose aim is to define regional infrastructure requirements and conditions to facilitate the realisation of key infrastructure in the energy, water, transport, tourism, meteorology and telecommunications sectors by 2027. It proposes that “additional capacity beyond 2027 should be based on a combination of hydro, wind and solar. Apart from hydropower, SADC estimates that the major renewable energy capacity addition will be from wind energy, followed by solar PV, CSP and biomass.”43
5 Regulatory Options to Support Renewable Energies on the National Level
Support mechanisms for renewable energies have been introduced in many countries worldwide, with different types of promotion models. The success of these models varies and is crucially determined by the specific political commitment.44 In order to strengthen renewable energies, national legislation can provide for specified tariffs for renewable energy production. In very simplified terms, producers of renewable energy earn a certain income for every kilowatt hour they generate (for example by installing solar systems) and can either use the produced energy or export it to the national grid and receive an export tariff.
On the national level, two main support models for renewable energies have emerged, namely feed-in tariff schemes and capacity-driven models.45 While in feed-in tariff schemes utilities are obliged to buy energy at fixed purchase prices for a fixed term, capacity-driven models are characterised by a price which is to be decided by the market. Capacity-driven models include bidding processes and tradable quotas.46 Both these models are given effect by way of policy targets for renewable energies and respective regulation or legislation, with the latter providing a greater level of certainty for investors.47 Governments have been innovative when drafting support models for renewable energies, combining distinct policies in new and innovative ways in order to promote renewable energies.48
Aside from tax exemptions,49 feed-in tariffs are currently the most common renewable energy policy type in developing countries.50 One main criticism of feed-in systems is the fixed price level which is not set by market rules but guaranteed by law, which constitutes a substantial market interference. Tariffs must thus be subject to (time and cost-intensive) continuous reviews and adjustments at short intervals in order adequately to reflect market changes and cost trends, considering the latest market developments and the technological state of the art.51 However, properly set feed-in tariffs are considered to be the most efficient and effective support mechanism for the promotion of renewable energies,52 as feed-in tariffs with a reliable legal framework grant investment security for a specific period of time and are beneficial for green economic development and job creation,53 ultimately resulting in more access to energy, more stable electricity prices and a higher diversity in the electricity portfolio. While the integration of renewable energy technologies into the grid may indeed pose technical, financial, and administrative challenges, grid stability can be ensured by way of a strategic approach to renewable energy growth with a focus on the necessary infrastructure and required technical expertise.54
Capacity-driven models, particularly competitive tender systems and tradable quota models primarily aim to ensure that a fixed amount of renewable energy is generated. In capacity-driven models, electricity suppliers, electricity consumers or electricity generators are obliged to cover with renewable energies a certain share of their electricity supply, their electricity demand and their electricity generation, respectively.55
In competitive bidding procedures, an auction among producers of renewable energy is organised in which tenders are given in respect of a certain quota of each renewable technology. The provider of the lowest asking price is given the contract. The European Commission for example has presented auctioning as standard procedure for allocating support for renewable energy in its Guidelines on State aid for environmental protection and energy 2014–2020.56
Competitive bidding systems have a high record in terms of bringing renewable energies to the grid and furthermore have the advantage of an intense price competition. Challenges related to this model include the following:
Not all projects that are selected will actually be carried out: the rate of implementation almost always falls short of 100%. The risks for applicants are higher than in open feed-in schemes, because a proposed project may not be selected and bidders may incur costs or face penalties when they are unable to implement a project that has been selected. A sufficient number of bidders are required to participate, otherwise the auction will not produce a competitive result. Auctions may invoke strategic behaviour of market players which can drive up costs. Market players will also try to exercise market power. Large market actors may have a favoured position over their smaller competitors.57
In tradable quota models, usually a percentage or amount of energy to be generated from renewable resources is determined by Government and allotted to certain operators who are free to decide whether they will fulfil the quota themselves or whether they will trade their quotas by paying another entity for covering their allocated amount.58 The rationale of this model is that by way of competition, the costs of supplying renewable energy are kept low, in turn minimising the costs to the consumer. Despite being considered efficient in terms of energy security, tradable quota systems are criticised for not creating an economically feasible environment and for not supporting a wide range of renewable energy resources, but rather only the development of least expensive renewable energies, as the demand for these is usually the highest owing to the low prices involved.
Capacity-driven models thus always have to balance between their gains in efficiency on the one hand and possible lack of investor security as well as ecological set backs on the other hand.59
The promotion of renewable energies, of course, has financial implications, and cost recovery remains a critical issue, especially for developing countries. Even if renewable energies might be less costly in the long run, the generation costs need to be lowered as much as possible in order to keep renewable energies competitive. This problem can, for example, be addressed by redirecting fossil fuel subsidies. International funding is in some cases obtained from various financing streams which provide support for renewable energy projects, such as the Global Environment Facility (GEF),60 the Africa Renewable Energy Fund, and Nationally Appropriate Mitigation Actions (NAMAs).
Worldwide, energy investments are rising. Renewable energy investment has been rising rapidly around the world to US$260 billion last year and created 2,3 million jobs.61 Worldwide, climate change mitigation activities attracted US$350 billion in 2011, mostly related to renewable energy and energy efficiency and approximately 30% of the global distributed adaptation finance went to Africa.62 The key to tapping financial resources for more green economic development is to attract local as well as foreign capital. There is thus a critical need, particularly for developing countries, to encourage private sector involvement by creating investment security.
6 Concluding Remarks
One of the biggest challenges of our time is to reduce climate change, and in light of the fact that energy-related carbon dioxide emissions make up most of the harmful global greenhouse gases (GHG) we produce, the world community is necessarily charged with the task of balancing the extension of energy supply, on one hand, and the consumption of energy, on the other. Legal aspects and processes governing the production of secure, clean and efficient energy is an increasingly consuming pursuit of national and international lawmakers and policymakers; and in international and national politics energy security has become the dominant topic at the nexus of national, economic and environmental security.
Renewable energies play an important role in the field of energy security, and although the deployment of renewable energy technologies does face market challenges, primarily owing to the maturity of the conventional energy markets and technical and financial constraints in the development of renewable energy technology, the need for promotion of renewable energies is becoming more evident than ever before.
Global energy governance is intertwined with various facets, including climate change, development, environmental protection, trade, investment, and human security. This explains why the global energy governance regime is fragmented, with its many components being managed in a disjointed manner, bringing about overlaps as well as normative gaps. Numerous instances of interstate cooperation interrelate and create a normative patchwork with implications for the global energy economy and security. This can be attributed to the pursuit of national interests, the diversity of energy sources and the plurality of relevant institutions and agreements. Global energy transition will continue to be high on the international agenda in future, not only in terms of a new UN climate agreement, but also regarding a post-2015 agenda.
1 This Chapter draws on on the author’s earlier contributions, particularly: Ruppel / Ruppel-Schlichting (2015) and Ruppel (2015).
2 See the definition of energy by the IPCC in its Special Report on Renewable Energy Sources and Climate Change Mitigation, IPCC (2012:Annex 1, Glossary).
3 See the International Energy Agency athttp://www.iea.org/topics/energysecurity/; accessed 7 November 2014. Of course, definitions of energy security vary and the definition proposed by the IEA is very broad and leaves questions unanswered, such as the question about what can be considered ‘affordable’ under the definition above.
5 Namibia’s Vision 2030, for example, sets out the objectives to achieve high value-added products and services; to provide security of energy supply through an appropriate diversity of economically competitive and reliable sources; to ensure that households and communities have access to affordable and appropriate energy supplies; and to establish an energy sector that is efficient and that makes contributions to Namibia’s economic competitiveness. Vision 2030 defines, as one of its strategies, the promotion of renewable energy sources and the implementation of projects for production from these sources to meet industry demand. See GRN (2004a:87).
6 The European Union (EU) for example “has agreed on ambitious Energy and Climate targets for 2020 and beyond to reduce greenhouse gas emissions, increase the share of renewable energies and improve energy efficiency. Achieving these objectives advances Europe along the path to an energy system that will deliver a competitive and secure energy supply which is sustainable.” See EC (2014a). At a recent meeting of the European Council at the EU Summit in Brussels on 23 and 24 October 2014, EU leaders agreed to reduce greenhouse gas emissions by at least 40% compared to the 1990 level, and to increase energy efficiency and renewables by at least 27%.
7 For more details see Chapter 14.
8 Adger / Pulhin (2014:760).
9 Victoret al . (2014:122).
10 See also World Economic Forum (2012).
11 Edenhoferet al . (2014:40).
12 Kolstad / Urama (2014:237).
13 See, for example, the speech of the executive secretary of the United Nations Framework Convention on Climate Change, Christiana Figueres on the occasion of the Investor Summit on Climate Risk in January 2014, in which she urged investors to move into green investments, UNFCCC (2014).
14 See IPCC (2012:148).
17 IPCC (2011).
18 Within the 2012 estimates on energy share of global final energy consumption, fossil fuels amounted to 78.4%, nuclear energies 2.6% and renewables to 19% of the global share, REN21 (2014:21).
19 Advance unedited version available at http://unfccc.int/files/meetings/lima_dec_2014/application/pdf/auv_cop20_lima_call_for_climate_action.pd f; accessed 15 December 2014.
20 See IPCC (2012:40).
23 For these and further aspects on the fragmentation of the global energy economy, see Leal-Arcas / Filis (2013).
24 For more details on this initiative, see http://www.se4all.org; accessed 11 February 2015.
25 Available at http://www.encharter.org/fileadmin/user_upload/document/IEC/IEC_text_brochure_ENG.pdf; accessed 30 January 2015.
26 On renewable energies, subsidies and the WTO, see Bougette / Charlier (2014).
27 See Preamble of the UNFCCC.
28 Article 2 of the Kyoto Protocol.
29 For example technical expert meetings and related follow-ups on energy efficiency or renewable energy in the pre-2020 period. Seehttp://unfccc.int/bodies/awg/items/8112.php; accessed 30 January 2015.
30 Ruchser (2015).
31 Available at https://sustainabledevelopment.un.org/focussdgs.php; accessed 30 October 2015.
32The Villager (2015).
33 See Ngwawi (2015).
34 Seehttp://www.sadc.int/themes/infrastructure/en/hydropower/; accessed 3 November 2015.
35 For more details see http://www.sapp.co.zw; accessed 2 November 2015.
36 See REN21 (2015:61).
37 SADC (2003:68).
38 GRN South Africa (2015).
39 Available at http://www.sadc.int/files/5713/5791/7436/EUEI_PDF_SADC_Regional_Energy_Access_Strategy_Mar_20 10_EN.pdf; accessed 2 November 2015.
40 REN21 (2015:62).
41The Villager (2015).
42 Available at http://www.sadc.int/files/5413/5293/3528/Regional_Infrastructure_Development_Master_Plan_Energy_Se ctor_Plan.pdf; accessed 2 November 2015.
43 REN21 (2015:24).
44 See Lüdemann (2012:315).
45 For a more detailed discussion of these models and their peculiarities, see for example UNEP (2012:10ff.); REN21 (2014:76ff.); Lüdemann (2011:9ff.).
46 For further references and details, see Lüdemann (2011); Haaset al . (2004); Ringel (2006).
47 UNEP (2012:viii).
49 Or tax credits reducing tax liability. These are typically calculated on the basis of percentage of project cost or on project output, UNEP (2012:11).
50 UNEP (2012:14).
51 Lyster / Bradbrook (2006:198).
52 See for example Eurosolar (2006).
53 See REN21 (2014:63).
54 UNEP (2012:7).
56 EC (2014b).
57 See De Vos / Klessman (2014).
58 Ringel (2006:8).
59 Lüdemann (2011:14).
60 GEF (2009).
61 Seehttp://www.se4all.org/our-vision/our-objectives/renewable-energy/; accessed 11 February 2015.
62 Niang / Ruppel (2014:1241).