1. Where do you think the world stands now in its global commitment to decarbonisation, and what are the key challenges and motivations?
The appetite for decarbonisation has arguably reached critical mass. The commitments made at the 2015 Paris Climate Conference (COP 21), while not as aggressive as many would like, were a statement from political leaders of the importance of global decarbonisation and the need to limit emissions moving forward. The position of the US may have changed, but the commitments from almost all other countries, and now from individual states within the US, are set.
This momentum has made it an unstoppable force for change across the global economy, which is evident at global, regional and local levels, and has elevated the weight of low carbon energy as a policy driver. Furthermore, across global industries, most businesses are making public commitments to environmental sustainability, and energy is increasingly a boardroom issue.
Much of this commitment is word rather than deed and the objectives of sustainability and profitability are not yet intrinsically connected. Rather than being achieved in tandem, it is still often a case of one or the other, with profitability usually emerging victorious. It is easy to understand, and difficult to change – until we find an effective and meaningful way to place a quantifiable and measurable value on sustainability.
What the long-term sustainable energy mix will look like is up for debate, but in the near to mid-term renewable energy will deliver a growing proportion of our energy needs. We are on a journey, and on that journey we will encounter obstacles – obstacles that we can overcome with technology, reasoned debate and strong political leadership.
2. Renewable energy capacity is achieving record growth as costs continue to fall. How can we overcome the barriers to adoption and advance its deployment?
Unsurprisingly, cost has traditionally been one of the most significant barriers to innovation development; and certainly it is still a key factor. However, successful collaborations between industry, regulators, academics and policy makers have led to increased standardisation which has in turn reduced the cost – and risk – of innovation and deployment. At the same time, downward pressure on oil prices has increased the attractiveness of innovation in renewables technologies.
Renewable energy is now the cheapest form of new generation technology globally and, in many markets, needs little or no subsidy. A level playing field against existing generation can quickly drive transition as those embedded generators age and require upgrade and refurbishment. Clear political desire, coupled with continuing improvement in technology and reduction of cost will help advance deployment.
Government appetite and policy signals effectively serve as a filter on investment decisions and long-term bankability. Unclear and inconsistent policy creates a hostile environment for the growth of immature technologies – on which most renewable energy sources depend. Conversely, governments can remove blockers by developing and communicating stable energy policies that are based on science rather than politics, and provide clear and reliable signals for investors, regulators, developers and supply chain partners.
Perhaps more surprisingly, renewable energy can also suffer from reduced social licence. Although the move towards “green” or “clean” energy is largely considered positively by publics around the world, localised concerns can be strongly held and difficult to overcome. In recent projects this has included bird and marine mammal pressure groups and local residents, as well as more generalised negative sentiment – usually focused on the effects on consumer prices, subsidies and overseas investment, but sometimes reflecting scepticism about the technology or sector’s contribution. This is essentially a battle for hearts and minds. Changing perceptions can be very difficult but it can be done through reasoned debate on energy production and consumption and true costs and risks of alternatives.
At a project level, we can increase public appetite with full and proper consideration in the early stages, learning from previous projects, modifying designs and effective stakeholder engagement. The most successful developers know this, and invest accordingly. Furthermore, as the sector matures, we know more about how to protect wildlife and the environment and minimise impacts on communities. Project planning and delivery is ever-more sophisticated, and outcomes superior – leading to falling costs and greater energy productivity. While the sector continues to recognise and mitigate these challenges, supported by an increasingly broad range of expert services, the upsides will overwhelmingly outweigh the perceived problems.
3. Which energy technologies have the most potential to accelerate global decarbonisation?
One of the most exciting things about technology is that the most disruptive one may prove to be one that we do not yet know about. This is true for renewable energy, but equally there are a number of highly promising technologies that look set to have a major impact on the global energy mix. Obviously, the high potential technologies vary from region to region, because of the difference in natural resources and the optimum environment conditions are not available to all nations. As a result some nations have a mixed renewable energy mix, while others have only one or two potential natural resources. In the last decade, wind and solar photovoltaics (PV) have clearly taken a lead but it is evident that countries do best by focusing on technologies that suit the resources available and the expertise available for development, delivery and operation.
Taking a global view on innovative technology, research published this year by Lloyd’s Register, the Technology Radar – Low Carbon, identified three key areas where renewable energy technology is expected to have a transformative impact in the short to medium term.
- Energy storage – such as electrical technologies, which will radically speed up charging times for large batteries, particularly impacting the energy mix, heavy industry and transportation. Concentrating solar power (CSP), tidal, wave and other emerging technologies all have their own challenges, but also incredible potential if technology and cost can develop to properly harness the available energy (such as batteries, stored heat or pumped hydro).
- Grid and infrastructure software – particularly solutions for balancing network requirements for reliable generation and demand side management, including enabling blockchain, which may well transform the way we think about power transmission and distribution.
- Solar cell advances – the relatively low cost and risk associated with solar technologies are likely to drive continued growth on a global basis. In the last 10 to 15 years, solar PV has managed to improve reliability and efficiency while costs have plummeted. CSP has seen less growth but emerging energy storage technologies may well unlock the potential in the mid-term future.
The common theme is increased energy productivity – for example, technologies that enable better use and management of energy resources.
4. What policy recommendations would you make to encourage more institutional investment in clean energy in Asia?
Most Asian governments remain steadfastly committed to the intended nationally determined contributions (INDCs) agreed at COP 21. In practice, this means a policy environment that fosters the speedy and dramatic transition to a low carbon fuel mix, although transportation and energy-intensive industries are also targets.
Without question, this depends on a steady flow of investment into technologies that facilitate large-scale and reliable low carbon energy sources. Experience from global markets tells us that strong political messages are essential to providing investor confidence. So then, the most critical task of governments is to create a supportive policy framework that enables, incentivises and rewards investment, both local and overseas. This includes price support mechanisms such as tariffs, subsidies, reverse auctions, R&D grants. Although they all have their place, the key is having reliable, bankable contracts, counterparties and clear mandates for growth in renewables.
Ultimately, investors need confidence over the security of their returns so while policy instruments vary, they share a common goal: to align profitability with sustainability, so that profitability is achieved as a natural partner of sustainability, rather than an adversary.
- Critical success factors include:
- Clear political objectives
- Clear long-term policies
- Well defined and time-limited planning policy
- Financial support to kick start renewable programme
- Foreign investment opportunities
- If required, national grid improvement works to strengthen networks in tandem with renewables programmes – an integrated approach
5. What are your thoughts on the SIEW 2017 theme of “Rethinking Energy; Navigating Change”?*
This is a key time for rethinking. The climate continues to change, and this will cause ongoing problems for our societies. The faster we can adapt and diversify our generation and use of energy, the more chance we have of maintaining our way of life.
The threat of climate change is becoming a major driving factor across global economies but the urgency is diluted by the immediacy of other critically important social and economic issues. This creates ambiguity and uncertainly – both of which serve to limit the flow of investment into low carbon technologies and projects. We can only resolve this by creating policy and investment environments that stitch profitability and sustainability together – so that one cannot be achieved without the other. There are plenty of good and bad examples of navigating change to energy systems, and learning from those is essential to support an effective transition to clean energy.