Renewable promises

Tuesday, October 14, 2008

The EU needs to invest more in research if it is to meet its climate-change targets.

The world will need to generate 50% of its electricity from renewable sources by 2050 to minimise climate-change impacts, the International Energy Agency (IEA) has said, an awesome challenge that once again underlines the importance of investing in the next generation of renewable energy.

It is a challenge to which the EU is so far failing to rise, and it will not if it continues to invest as little into research as it currently is. The first review of EU energy policy by the IEA, published on 4 September, found that in 2007, the EU spent just €234 million on research into renewable energy or energy efficiency.

Though the IEA found the EU energy and climate change policy to be “bold” and “innovative” in many ways, the report shows that the EU has made an unimpressive start to switching to clean energy. At 7%, the EU is, in fact, only slightly ahead of the US and Australia when it comes to the overall share of renewables on primary energy supplies.

Renewables generate just 15% of the electricity consumed in the EU. And, overwhelmingly, this comes from one source of renewable energy whose potential we have harnessed for decades: hydropower generates about two-thirds – or 304 TW/h – of the total. By comparison, the figures for wind (72 TW/h), solar power (10 Tw/h), and geothermal (7 TW/h) are marginal.

These increases in solar and wind power are small in absolute terms, and in relative terms they look even poorer because, between 1990 and 2005, oil consumption in the EU rose 25%.

When we move from the broad canvas to the details of the IEA report, the prospect for reducing fossil-fuel consumption looks unpromising. EU efficiency targets have been neither binding nor tough. As a result, in the transport sector, for example, efficiency improved at an annual rate of just 0.7% between 1990 and 2005. Overall, carbon dioxide emitted by the transport sector rose by 27% over the same period.

Production targets are enjoying some success – the Commission's push for 10% of liquid fuels to come from biofuels by 2020 has contributed to the quadrupling of biofuel production since 2003 (by 2010, the increase should be sixfold). But, even if the target of 10% biofuels is reached, the combination of meagre efficiency gains and bigger and more cars will mean that the overall consumption of oil in the EU will still increase by 18% by 2020. Many scientists also question the merits of biofuels in reducing greenhouse gases.

The European Commission has sought to deal with cost problems and economies of scale by issuing directives to expand the renewables market, introducing renewables feed-in tariffs, or a system of fixed-price contracts, to provide the security needed for long-term investment. This has enjoyed some success: this support framework has been credited with creating a thriving solar industry in Germany in just three or four years. Even so, Germany's solar industry, which uses conventional silicon cells, generates less than 1% of the country's electricity – and could end up costing consumers a €90 billion in subsidies by 2010, sparking a debate about whether the money would have been better invested in research into new solar technologies.

The IEA study spells out just have serious this failure to develop the next generation of cheap and efficient renewable technologies could be: by 2030, the EU will have to import 95% of its oil on current trends, it concludes.

The importance of research
No big breakthrough, then, has yet been achieved. If that big breakthrough is to be technological, investment into research and development is essential. But here too figures in the IEA reveal how poorly the EU is performing.

The EU's budget for research into new renewable technologies under the current research Framework Programme, FP7, which runs between 2007 and 2013, is €2.35 billion – or four times less than the €9.5 billion to be spent on information and communication technology. Moreover, 40% of the energy budget is to be allocated to nuclear fusion, even though that is a technology not expected to contribute to cutting climate-change targets until after 2050, according to the IEA.

Research is capital-intensive. Consider the example of a revolutionary photovoltaic paint being developed at Swansea University, which mimics natural photosynthesis. It is a project that costs a great deal – as much as €100 million might be needed before it is completed, it is estimates – but, once developed, it could be widely applied and generate terrawatts of inexpensive and clean energy efficiently in the near future.

Public-sector investment into renewable-energy research is all the more important because private-sector energy companies have been reducing their R & D budgets since the 1980s, and most European energy firms now spend less than 1% of their net sales on clean-tech innovation, the IEA found. Even the German solar industry invests only about €250 million a year into new solar technology.

As well as reducing the prospect of major breakthroughs on climate-change technology, this failure to invest carries an economic risk to Europe. The IEA warned that Europe will have to import the next generation of renewable energy technology unless it redoubles its research efforts.

Indeed, Europe even invests less on renewable-energy research and technology than the oil-rich Middle East. Abu Dhabi, for example, has teamed up with the Massachusetts Institute of Technology to build a world-class centre for renewable energy research, the Masdar Institute of Science and Technology (MIST). Abu Dhabi's hope is that it will turn itself into “the Silicon Valley of renewables” and with an investment of billions, it just might. At this stage, it certainly has more chance of doing so than the EU.

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