[Green Growth:Korea`s New Strategy (20)]`World should rely more on green energy`

The following is the 20th in a series of articles focusing on the Korean government`s "green growth" strategy. The series will also introduce the increasing efforts of major advanced countries of the world to promote a green economy. -- Ed.





The idea that almost half the world`s electricity needs could come from alternative sources such as wind or solar power would have been deemed unfeasible a generation ago.

But Peter Lund, a professor of advanced energy systems at Helsinki University of Technology believes the global community can indeed rely more on new renewable sources if wealthy nations have the political will.

Lund gave a presentation entitled "Renewable Energies: How Far Can They Take Us?" at the International Scientific Congress on Climate Change in Copenhagen, which was held on March 10-12. There, he said up to 40 percent of global electricity demand could be met by green technology and that those alternative sources could be profitable within a couple decades.

In an email interview with The Korea Herald, Lund, the former chairman of the Advisory Group on Energy for the European Union, outlines his theories and urges countries like Korea to invest in green electricity to secure energy independence and reduce the impact of global warming.

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KH: You recently attended the Climate Change Congress in Copenhagen. How do you assess the meeting?

Peter Lund: The results presented in the Copenhagen Climate Change Congress were in many ways quite dramatic. They show that if the pace of development in global carbon emissions is not reversed, the consequences to our ecosystems may be very devastating. For example, toward the end of this century, 70 percent of the Amazon region may turn into "brown". That is, these rain forests could almost disappear.

It is not exaggerated to say, when we speak about climate change, that it is about the existence of our modern society, perhaps even about the existence of the modern human race. The time to turn the pace of development is getting short and in about 10-15 years the carbon emissions need to be turned into a declining trend. The present trend is just the opposite and the emissions seem to exceed even many of the most conservative estimates so far.

It should be pointed out that the results shown in Copenhagen are based on the latest research outcomes, not yet widely published or known. For example, the last U.N. IPCC report is in practice based on four to five-year old results.

An important observation from the meeting was that the scientific community is unanimous in that it is time for strong actions instead of just talking about climate change. At the upcoming U.N. Climate Summit in December in Copenhagen, the political leaders of the world need to take action now!

If news on the state of the climate and on prevailing trends is pessimistic and depressing, the good news is that clean energy options are developing fast and could start to make significant contributions -- but only if politicians are ready to unite in their opinions and push new energy options to a final breakthrough.



KH: Your presentation there discussed how the world could rely significantly more on green energy if governments took the initiative. Can you elaborate?

Lund: In my talk, I showed that new renewable energy technologies such as wind and solar power could cover around 40 percent of world electricity in 2050. As the power sector is responsible for a large part of carbon emissions, the emission reductions achieved would be significant. However, this would not come by itself but would require strong political commitment and stronger support measures than there are presently. The main finding was that by having the correct policies in place, these new technologies could make a major contribution to the global energy mix.

A few words about the underlying assumptions: we assume in the analysis that new energy technologies would penetrate the market in the same way present energy technologies such as nuclear power did from the 1960s to the early 1990s. That is, assuming the same kind of energy market dynamics.

Secondly, we assume favorable growth conditions, which for solar and wind would mean public financial support to compensate for their higher price at present. But through increasing production volumes, the price of the new technology would drop.

The analysis shows that the costs of wind energy, for example, could breakeven around 2025 after which public aid would not be required. This would in turn further accelerate its penetration. Our analysis shows that the support needed for wind power would be around 300 billion euros ($397 billion) in total and includes both technology development and market deployment measures necessary to push wind power to a breakthrough.

The resource needs for solar power, which is still an embryonic energy technology, are much higher than for wind power, but could be reduced through innovative policies --strong investment in R&D could pay off well.

So basically it is about governments being willing to invest in new energy technologies to make these competitive. This requires, of course, about several hundred billion dollars in total. Yet, spread over a longer period and between many nations, such a "public investment" is realistic. If transferred into the electricity price, the effects would be negligible.



KH: You say there needs to be political will in ensuring an efficient transition away from fossil fuels. Are leading nations showing that political will?



Lund: Experience shows that market forces alone cannot bring new energy technologies fast enough into the market as the hindsight of business is often too short. Therefore a "political will" to move into a clean energy future is necessary. Moreover, this necessitates public support for the new technologies. But it is also equally important for the policy makers to focus on effective measures, and not just to subsidize the new technology. The most crucial point is to get the price of these new technologies down, as the price is the one of the most important factors that influences energy decisions.

Though over 80 percent of world energy is still produced by "dirty" fossil fuels and the new "clean" energy sources represent just a small fraction of world energy, several countries show a strong "political will" toward these clean sources.

The European Union, for one, aims to increase the share of renewable energy from its present 8.5 percent of energy use to up to 20 percent in 2020.

President Barack Obama shows strong leadership in increasing the use of renewable energy in the United States and proposed in his energy program $150 billion for the development of clean energy sources. The recent U.S. economic stimulus package also included $30 billion in different energy measures.

China, now the largest carbon emitter in the world, demonstrates strong efforts in energy efficiency and new renewables.

And in the host country of the Climate Change Congress -- Denmark -- 20 percent of all electricity is already produced by wind power.



KH: Is it really feasible that renewable energy can account for 40 percent of the world`s power by 2050?



Lund: The study estimates that in 2050 the share of wind power of all electricity could reach 25 percent and solar power 15 percent. That means these new renewables could account for 40 percent of the electricity supply.

This is based on two important assumptions. The first is that the new technologies would penetrate markets in the same way the old technologies did over the last half-century. The second is that these numbers are feasible if the new technologies are given a political priority, which includes financial support.

We think these assumptions are reasonable in a historic perspective. The world is now much richer and can afford such investments. The latest "new energy technologies," namely nuclear power, have also received a major level of public support for many years. So, why should the new renewables be different from the old technologies? Why should the new technologies be discriminated against?



KH: But you`ve also pointed out that previous estimates stated 12 percent of the world`s electricity could come from new renewable sources. How do you explain the dramatic jump?



Lund: The possible role of new renewables in the future electricity mix has often been underestimated for several reasons. There may be several factors behind this, but one of the most critical is how we perceive new technologies.

New renewables presently represent just a small percentage of all electricity, which sounds negligible. However, if we look just on the present share this means that we should compare the new technologies to past investments in the power sector over several decades. We cannot naturally change these investments. So the future is determined only by present and future investment.

At present, the share of new renewables receiving annual investments in the power sector is much higher than a few percent. Wind power, for example, ranks number one or two in the new power capacity investments in the EU and United States.

Furthermore, in terms of financing energy technology development and start-ups, new renewables are the top objects for private money. Wind and solar power have witnessed two digit growth for several years and the trend is still positive.

In our analysis, we just reaffirm what is already happening and say that if this positive conditions prevails, new renewables would reach a significant share of all electricity.

The political support is, for the moment, very important as these new technologies are now taking off the ground, the capacities are gearing up, and they are reaching a scale that could be considered relevant in the energy context. Pulling away the support would mean a flat landing. Instead of the 40 percent possible in 2050, we would speak about maybe just 10-15 percent or even lower.

It is important to note that we don`t assume new energy technologies can grow forever with the present growth numbers. Energy history shows that the yearly growth starts to decrease as the share of the new energy source of all energy increases. This is what we also assume will happen with wind and solar power in the mid-term future: the yearly two digit growth numbers now typical will most likely be reduced to one-digit numbers by 2030 when their share of all electricity becomes high. But in spite of this somewhat conservative, but still realistic insight, we arrive in 2050 to a 40 percent share of global electricity.



KH: What has been the response so far to the recommendations you and other scholars made at the Congress?



Lund: I believe that the messages from the Congress will be met positively by governments all over the world. These messages are based on our latest knowledge on climate change and on the possible solutions. The atmosphere of opinion is changing rapidly -- for example the United States is making a 180-degree turn in its climate policy and is capturing the global leadership in these questions including alternative energy. The signals from China and the European Union are positive, not to mention many other countries as well.

Governments are also starting to understand that the costs of not doing anything will be much higher than acting now.

Investing in clean energy solutions would also have a very positive economic impact in the present economic recession. New energy, for example, requires know-how and is based on innovation -- all requiring a lot of human capital and creating a lot of jobs. Examples from Germany, Denmark, Spain, the United States or China confirm without doubt that clean energy creates new business and working opportunities.



KH: What are some of the risks if the global community does not take these bold actions you prescribe?

Lund: Firstly, it is important to recognize that the future share of alternative energy in world energy production is not so much a matter of technology or money than about political vision and will.

For example, the amount of support needed for making wind power more competitive than traditional energy sources means from an up to five percent extra cost on cumulative power plant investments by 2050. Therefore, alternative energy is a question of policy preferences. Over time these investments will provide a positive return through business creation, better energy security, new jobs, and much less emissions. Thus, the government would act as a long-term patient investor, which we often lack in the markets.

Secondly, a total paradigm shift in our energy thinking is necessary if we are going to reduce carbon emissions to a level that keeps global temperature changes manageable. This necessitates rich countries reducing emissions by 80-85 percent by the middle of the century. To achieve these goals, a massive introduction of clean energy technology is necessary. Alternative energy is in all environmental aspects the best solution, but also in terms of energy security. They are local energy resources that prosper local inhabitants and economy.

We should not forget that most of the future energy demand growth and emissions comes from the less developed world and there are around two billion people without electricity services. Without solving the energy issues of these emerging economies simultaneously, we cannot see any positive outcome in climate change mitigation. In this respect, alternative energy accompanied with efficient use of energy, would be a strong and truly sustainable final solution to the energy and climate issues.



KH: What should a country like Korea, which is planning a substantial investment in "green growth," do to aid in these efforts?

Lund: Climate change mitigation will be one of the largest technological changes in industrial history. Combating climate change will require huge investments in clean energy globally, but in particular in emerging economies. The investments required over the next 50 years could be around $50 trillion.

In the light of such huge sums, there will naturally be losers and winners. Those who see climate change as a threat will probably be among the losers, but those who see here an opportunity will be among the winners. Technology and innovations are key words for success and those countries who are able to acquire leadership in certain technology areas may find new prosperity. It has been said that clean energy will represent the new technology wave, as did information technology in the past.

For countries like Korea, I see good prospects based on its high knowledge level and long research tradition, strong industrial base, and the size of the domestic and surrounding markets. A key question though will be which kind of policies and measures are chosen. My own research shows that the choice of commercialization and innovation strategies for alternative and clean energy may considerably influence the outcome and the costs -- optimal strategies could cost just one tenth of a less effective strategy but yield the same results.

Home markets, for example, are an important element for success as also the balance between market deployment and technology development measures.

Clean energy solutions for the urban and built environment will be of high importance as close to half of all energy and emissions comes from here. In this regard, eco-cities or ecological buildings will be an important future trend to meet the environmental goals in many countries. I foresee Korea as a potentially strong actor in these fields.

It has been said that the solution to our global climate problems lies in "thinking globally and acting locally". Highly industrialized countries like Korea are a focal point in driving the development into right direction. Through strong efforts into a green economy, I believe Korea could meet its own targets in carbon emission reductions, but also become an internationally recognized "light-house" for clean energy showing many other countries the way towards sustainability. I would also encourage the Korean government to pursue an active role on international arenas, for example in the forthcoming UN Climate Summit in December, but also for example to form stronger Asia-Europe energy technology collaboration.

I have given several times lectures on clean energy to Korean business people. At these occasions, I have learnt about the sensitivity of Koreans to respect nature and willingness to build a better future. These are the kind of inherent characters and qualities that we all need to save our common plant in the coming decades.



KH: Any final comments?

Lund: I would like to point out that the financial support needed to bring new and renewable energy solutions into a commercial breakthrough and mass market should be seen more as an investment into future than as a "sunken" support only. There will be a return on these investments in the form of new business, new jobs, better environment, and also cheaper energy in the long-term. I`m convinced -- based on my own analysis and supported by other research -- that these outcomes pay well off the upfront investment that we need. The elements in this economic equation are such that it requires the governments to step in.

By Henry Shinn



(henryshinn@heraldm.com)