Rationale for renewables

Climate change, pollution, and energy insecurity are significant problems, and addressing them requires major changes to energy infrastructures.^[22] Renewable energy technologies are essential contributors to the energy supply portfolio, as they contribute to world energy security, reduce dependency on fossil fuels, and some also provide opportunities for mitigating greenhouse gases.^[5] Climate-disrupting fossil fuels are being replaced by clean, climate-stabilizing, non-depletable sources of energy:

...the transition from coal, oil, and gas to wind, solar, and geothermal energy is well under way. In the old economy, energy was produced by burning something — oil, coal, or natural gas — leading to the carbon emissions that have come to define our economy. The new energy economy harnesses the energy in wind, the energy coming from the sun, and heat from within the earth itself.^[23]

In international public opinion surveys there is strong support for a variety of methods for addressing the problem of energy supply. These methods include promoting renewable sources such as solar power and wind power, requiring utilities to use more renewable energy, and providing tax incentives to encourage the development and use of such technologies. It is expected that renewable energy investments will pay off economically in the long term.^[24]

EU member countries have shown support for ambitious renewable energy goals. In 2010, Eurobarometer polled the twenty-seven EU member states about the target "to increase the share of renewable energy in the EU by 20 percent by 2020". Most people in all twenty-seven countries either approved of the target or called for it to go further. Across the EU, 57 percent thought the proposed goal was "about right" and 16 percent thought it was "too modest." In comparison, 19 percent said it was "too ambitious".^[25]

As of 2011, new evidence has emerged that there are considerable risks associated with traditional energy sources, and that major changes to the mix of energy technologies is needed:

Several mining tragedies globally have underscored the human toll of the coal supply chain. New EPA initiatives targeting air toxics, coal ash, and effluent releases highlight the environmental impacts of coal and the cost of addressing them with control technologies. The use of fracking in natural gas exploration is coming under scrutiny, with evidence of groundwater contamination and greenhouse gas emissions. Concerns are increasing about the vast amounts of water used at coal-fired and nuclear power plants, particularly in regions of the country facing water shortages. Events at the Fukushima nuclear plant have renewed doubts about the ability to operate large numbers of nuclear plants safely over the long term. Further, cost estimates for "next generation" nuclear units continue to climb, and lenders are unwilling to finance these plants without taxpayer guarantees.^[26]

The 2014 REN21 Global Status Report says that renewable energies are no longer just energy sources, but ways to address pressing social, political, economic and environmental problems:

Today, renewables are seen not only as sources of energy, but also as tools to address many other pressing needs, including: improving energy security; reducing the health and environmental impacts associated with fossil and nuclear energy; mitigating greenhouse gas emissions; improving educational opportunities; creating jobs; reducing poverty; and increasing gender equality... Renewables have entered the mainstream.^[27]

Growth of renewables

Renewable energy capacity has steadily grown, led by solar photovoltaic power.^[28]

Clean energy investment has benefited from post-pandemic economic recovery, a global energy crisis involving high fossil fuel prices, and growing policy support across various nations.^[29]

The countries most reliant on fossil fuels for electricity vary widely on how great a percentage of that electricity is generated from renewables, leaving wide variation in renewables' growth potential.^[30]

In 2008 for the first time, more renewable energy than conventional power capacity was added in both the European Union and United States, demonstrating a "fundamental transition" of the world's energy markets towards renewables, according to a report released by REN21, a global renewable energy policy network based in Paris.^[31] In 2010, renewable power consisted about a third of the newly built power generation capacities.^[32]

By the end of 2011, total renewable power capacity worldwide exceeded 1,360 GW, up 8%. Renewables producing electricity accounted for almost half of the 208 GW of capacity added globally during 2011. Wind and solar photovoltaics (PV) accounted for almost 40% and 30%.^[33] Based on REN21's 2014 report, renewables contributed 19 percent to our energy consumption and 22 percent to our electricity generation in 2012 and 2013, respectively. This energy consumption is divided as 9% coming from traditional biomass, 4.2% as heat energy (non-biomass), 3.8% hydro electricity and 2% electricity from wind, solar, geothermal, and biomass.^[34]

During the five-years from the end of 2004 through 2009, worldwide renewable energy capacity grew at rates of 10–60 percent annually for many technologies, while actual production grew 1.2% overall.^[35][36] In 2011, UN under-secretary general Achim Steiner said: "The continuing growth in this core segment of the green economy is not happening by chance. The combination of government target-setting, policy support and stimulus funds is underpinning the renewable industry's rise and bringing the much needed transformation of our global energy system within reach." He added: "Renewable energies are expanding both in terms of investment, projects and geographical spread. In doing so, they are making an increasing contribution to combating climate change, countering energy poverty and energy insecurity".^[37]

According to a 2011 projection by the International Energy Agency, solar power plants may produce most of the world's electricity within 50 years, significantly reducing the emissions of greenhouse gases that harm the environment. The IEA has said: "Photovoltaic and solar-thermal plants may meet most of the world's demand for electricity by 2060 – and half of all energy needs – with wind, hydropower and biomass plants supplying much of the remaining generation". "Photovoltaic and concentrated solar power together can become the major source of electricity".^[20]

In 2013, China led the world in renewable energy production, with a total capacity of 378 GW, mainly from hydroelectric and wind power. As of 2014, China leads the world in the production and use of wind power, solar photovoltaic power and smart grid technologies, generating almost as much water, wind and solar energy as all of France and Germany's power plants combined. China's renewable energy sector is growing faster than its fossil fuels and nuclear power capacity. Since 2005, production of solar cells in China has expanded 100-fold. As Chinese renewable manufacturing has grown, the costs of renewable energy technologies have dropped. Innovation has helped, but the main driver of reduced costs has been market expansion.^[51]

See also renewable energy in the United States for US-figures.

Economic trends

Costs of producing renewable energy declined significantly,^[52] with 62% of total renewable power generation added in 2020 having lower costs than the cheapest new fossil fuel option.^[53]

Renewable energy technologies are getting cheaper, through technological change and through the benefits of mass production and market competition. A 2011 IEA report said: "A portfolio of renewable energy technologies is becoming cost-competitive in an increasingly broad range of circumstances, in some cases providing investment opportunities without the need for specific economic support," and added that "cost reductions in critical technologies, such as wind and solar, are set to continue."^[54] As of 2011, there have been substantial reductions in the cost of solar and wind technologies:

The price of PV modules per MW has fallen by 60 percent since the summer of 2008, according to Bloomberg New Energy Finance estimates, putting solar power for the first time on a competitive footing with the retail price of electricity in a number of sunny countries. Wind turbine prices have also fallen – by 18 percent per MW in the last two years – reflecting, as with solar, fierce competition in the supply chain. Further improvements in the levelised cost of energy for solar, wind and other technologies lie ahead, posing a growing threat to the dominance of fossil fuel generation sources in the next few years.^[37]

Hydro-electricity and geothermal electricity produced at favourable sites are now the cheapest way to generate electricity. Renewable energy costs continue to drop, and the levelised cost of electricity (LCOE) is declining for wind power, solar photovoltaic (PV), concentrated solar power (CSP) and some biomass technologies.^[55]

Renewable energy is also the most economic solution for new grid-connected capacity in areas with good resources. As the cost of renewable power falls, the scope of economically viable applications increases. Renewable technologies are now often the most economic solution for new generating capacity. Where "oil-fired generation is the predominant power generation source (e.g. on islands, off-grid and in some countries) a lower-cost renewable solution almost always exists today".^[55] As of 2012, renewable power generation technologies accounted for around half of all new power generation capacity additions globally. In 2011, additions included 41 gigawatt (GW) of new wind power capacity, 30 GW of PV, 25 GW of hydro-electricity, 6 GW of biomass, 0.5 GW of CSP, and 0.1 GW of geothermal power.^[55]

Three generations of technologies

Renewable energy includes a number of sources and technologies at different stages of commercialization. The International Energy Agency (IEA) has defined three generations of renewable energy technologies, reaching back over 100 years:

• "First-generation technologies emerged from the industrial revolution at the end of the 19th century and include hydropower, biomass combustion, geothermal power and heat. These technologies are quite widely used.^[5]
• Second-generation technologies include solar heating and cooling, wind power, modern forms of bioenergy, and solar photovoltaics. These are now entering markets as a result of research, development and demonstration (RD&D) investments since the 1980s. Initial investment was prompted by energy security concerns linked to the oil crises of the 1970s but the enduring appeal of these technologies is due, at least in part, to environmental benefits. Many of the technologies reflect significant advancements in materials.^[5]
• Third-generation technologies are still under development and include advanced biomass gasification, biorefinery technologies, concentrating solar thermal power, hot-dry-rock geothermal power, and ocean energy. Advances in nanotechnology may also play a major role".^[5]

First-generation technologies are well established, second-generation technologies are entering markets, and third-generation technologies heavily depend on long-term research and development commitments, where the public sector has a role to play.^[5]

Biomass

Biomass, the burning of organic materials for heat and power, is a fully mature technology. Unlike most renewable sources, biomass (and hydropower) can supply stable base load power generation.^[56]

Biomass produces CO₂ emissions on combustion, and the issue of whether biomass is carbon neutral is contested.^[57] Material directly combusted in cook stoves produces pollutants, leading to severe health and environmental consequences. Improved cook stove programs are alleviating some of these effects.

The industry remained relatively stagnant over the decade to 2007, but demand for biomass (mostly wood) continues to grow in many developing countries, as well as Brazil and Germany.

The economic viability of biomass is dependent on regulated tariffs, due to high costs of infrastructure and ingredients for ongoing operations.^[56] Biomass does offer a ready disposal mechanism by burning municipal, agricultural, and industrial organic waste products. First-generation biomass technologies can be economically competitive, but may still require deployment support to overcome public acceptance and small-scale issues.^[5] As part of the food vs. fuel debate, several economists from Iowa State University found in 2008 "there is no evidence to disprove that the primary objective of biofuel policy is to support farm income."^[58]

Hydroelectricity

The 22,500 MW Three Gorges Dam in the People's Republic of China, the largest hydroelectric power station in the world

Hydroelectricity is the term referring to electricity generated by hydropower; the production of electrical power through the use of the gravitational force of falling or flowing water. In 2015 hydropower generated 16.6% of the worlds total electricity and 70% of all renewable electricity^[59] and is expected to increase about 3.1% each year for the next 25 years. Hydroelectric plants have the advantage of being long-lived and many existing plants have operated for more than 100 years.

Hydropower is produced in 150 countries, with the Asia-Pacific region generating 32 percent of global hydropower in 2010. China is the largest hydroelectricity producer, with 721 terawatt-hours of production in 2010, representing around 17 percent of domestic electricity use. There are now three hydroelectricity plants larger than 10 GW: the Three Gorges Dam in China, Itaipu Dam across the Brazil/Paraguay border, and Guri Dam in Venezuela.^[60] The cost of hydroelectricity is low, making it a competitive source of renewable electricity. The average cost of electricity from a hydro plant larger than 10 megawatts is 3 to 5 U.S. cents per kilowatt-hour.^[60]

Geothermal power and heat

One of many power plants at The Geysers, a geothermal power field in northern California, with a total output of over 750 MW

Geothermal power plants can operate 24 hours per day, providing baseload capacity. Estimates for the world potential capacity for geothermal power generation vary widely, ranging from 40 GW by 2020 to as much as 6,000 GW.^[61][62]

Geothermal power capacity grew from around 1 GW in 1975 to almost 10 GW in 2008.^[62] The United States is the world leader in terms of installed capacity, representing 3.1 GW. Other countries with significant installed capacity include the Philippines (1.9 GW), Indonesia (1.2 GW), Mexico (1.0 GW), Italy (0.8 GW), Iceland (0.6 GW), Japan (0.5 GW), and New Zealand (0.5 GW).^[62][63] In some countries, geothermal power accounts for a significant share of the total electricity supply, such as in the Philippines, where geothermal represented 17 percent of the total power mix at the end of 2008.^[64]

Geothermal (ground source) heat pumps represented an estimated 30 GWth of installed capacity at the end of 2008, with other direct uses of geothermal heat (i.e., for space heating, agricultural drying and other uses) reaching an estimated 15 GWth. As of 2008, at least 76 countries use direct geothermal energy in some form.^[65]

Solar heating

Solar energy technologies, such as solar water heaters, located on or near the buildings which they supply with energy, are a prime example of a soft energy technology.

Solar heating systems are a well known second-generation technology and generally consist of solar thermal collectors, a fluid system to move the heat from the collector to its point of usage, and a reservoir or tank for heat storage. The systems may be used to heat domestic hot water, swimming pools, or homes and businesses.^[66] The heat can also be used for industrial process applications or as an energy input for other uses such as cooling equipment.^[67]

In many warmer climates, a solar heating system can provide a very high percentage (50 to 75%) of domestic hot water energy. As of 2009, China has 27 million rooftop solar water heaters.^[68]

Photovoltaics

Nellis Solar Power Plant at Nellis Air Force Base. These panels track the sun in one axis.

President Barack Obama speaks at the DeSoto Next Generation Solar Energy Center.

Photovoltaic (PV) cells, also called solar cells, convert light into electricity. In the 1980s and early 1990s, most photovoltaic modules were used to provide remote-area power supply, but from around 1995, industry efforts have focused increasingly on developing building integrated photovoltaics and photovoltaic power stations for grid connected applications.

Many plants are integrated with agriculture and some use innovative tracking systems that follow the sun's daily path across the sky to generate more electricity than conventional fixed-mounted systems. There are no fuel costs or emissions during operation of the power stations.

Wind power

Wind power: worldwide installed capacity^[69]

Landowners in the US typically receive $3,000 to $5,000 per year in rental income from each wind turbine, while farmers continue to grow crops or graze cattle up to the foot of the turbines.^[70]

Some of the second-generation renewables, such as wind power, have high potential and have already realised relatively low production costs.^[71][72] Wind power could become cheaper than nuclear power.^[73] Global wind power installations increased by 35,800 MW in 2010, bringing total installed capacity up to 194,400 MW, a 22.5% increase on the 158,700 MW installed at the end of 2009. The increase for 2010 represents investments totalling €47.3 billion (US$65 billion) and for the first time more than half of all new wind power was added outside of the traditional markets of Europe and North America, mainly driven, by the continuing boom in China which accounted for nearly half of all of the installations at 16,500 MW. China now has 42,300 MW of wind power installed.^[74] Wind power accounts for approximately 19% of electricity generated in Denmark, 9% in Spain and Portugal, and 6% in Germany and the Republic of Ireland.^[75] In Australian state of South Australia wind power, championed by Premier Mike Rann (2002–2011), now comprises 26% of the state's electricity generation, edging out coal fired power. At the end of 2011 South Australia, with 7.2% of Australia's population, had 54% of the nation's installed wind power capacity.^[76]

Wind power's share of worldwide electricity usage at the end of 2014 was 3.1%.^[77]

The wind industry is able to produce more power at lower cost by using taller wind turbines with longer blades, capturing the faster winds at higher elevations. This has opened up new opportunities and in Indiana, Michigan, and Ohio, the price of power from wind turbines built 300 feet to 400 feet above the ground can now compete with conventional fossil fuels like coal. Prices have fallen to about 4 cents per kilowatt-hour in some cases and utilities have been increasing the amount of wind energy in their portfolio, saying it is their cheapest option.^[78]

Solar thermal power stations

View of Ivanpah Solar Electric Generating System from Yates Well Road, San Bernardino County, California. The Clark Mountain Range can be seen in the distance.

Solar Towers from left: PS10, PS20.

Solar thermal power stations include the 354 megawatt (MW) Solar Energy Generating Systems power plant in the US, Solnova Solar Power Station (Spain, 150 MW), Andasol solar power station (Spain, 100 MW), Nevada Solar One (USA, 64 MW), PS20 solar power tower (Spain, 20 MW), and the PS10 solar power tower (Spain, 11 MW). The 370 MW Ivanpah Solar Power Facility, located in California's Mojave Desert, is the world's largest solar-thermal power plant project currently under construction.^[79] Many other plants are under construction or planned, mainly in Spain and the USA.^[80] In developing countries, three World Bank projects for integrated solar thermal/combined-cycle gas-turbine power plants in Egypt, Mexico, and Morocco have been approved.^[80]

Modern forms of bioenergy

Neat ethanol on the left (A), gasoline on the right (G) at a filling station in Brazil

Global ethanol production for transport fuel tripled between 2000 and 2007 from 17 billion to more than 52 billion litres, while biodiesel expanded more than tenfold from less than 1 billion to almost 11 billion litres. Biofuels provide 1.8% of the world's transport fuel and recent estimates indicate a continued high growth. The main producing countries for transport biofuels are the US, Brazil, and the EU.^[81]

Brazil has one of the largest renewable energy programs in the world, involving production of ethanol fuel from sugar cane, and ethanol now provides 18 percent of the country's automotive fuel. As a result of this and the exploitation of domestic deep water oil sources, Brazil, which for years had to import a large share of the petroleum needed for domestic consumption, recently reached complete self-sufficiency in liquid fuels.^[82][83]

Information on pump, California

Nearly all the gasoline sold in the United States today is mixed with 10 percent ethanol, a mix known as E10,^[84] and motor vehicle manufacturers already produce vehicles designed to run on much higher ethanol blends. Ford, DaimlerChrysler, and GM are among the automobile companies that sell flexible-fuel cars, trucks, and minivans that can use gasoline and ethanol blends ranging from pure gasoline up to 85% ethanol (E85). The challenge is to expand the market for biofuels beyond the farm states where they have been most popular to date. The Energy Policy Act of 2005, which calls for 7.5 billion US gallons (28,000,000 m³) of biofuels to be used annually by 2012, will also help to expand the market.^[85]

The growing ethanol and biodiesel industries are providing jobs in plant construction, operations, and maintenance, mostly in rural communities. According to the Renewable Fuels Association, "the ethanol industry created almost 154,000 U.S. jobs in 2005 alone, boosting household income by $5.7 billion. It also contributed about $3.5 billion in tax revenues at the local, state, and federal levels".^[85]

New bioenergy technologies

According to the International Energy Agency, cellulosic ethanol biorefineries could allow biofuels to play a much bigger role in the future than organizations such as the IEA previously thought.^[88] Cellulosic ethanol can be made from plant matter composed primarily of inedible cellulose fibers that form the stems and branches of most plants. Crop residues (such as corn stalks, wheat straw and rice straw), wood waste, and municipal solid waste are potential sources of cellulosic biomass. Dedicated energy crops, such as switchgrass, are also promising cellulose sources that can be sustainably produced in many regions.^[89]

Ocean energy

Ocean energy is all forms of renewable energy derived from the sea including wave energy, tidal energy, river current, ocean current energy, offshore wind, salinity gradient energy and ocean thermal gradient energy.^[90]

The Rance Tidal Power Station (240 MW) is the world's first tidal power station. The facility is located on the estuary of the Rance River, in Brittany, France. Opened on 26 November 1966, it is currently operated by Électricité de France, and is the largest tidal power station in the world, in terms of installed capacity.

First proposed more than thirty years ago, systems to harvest utility-scale electrical power from ocean waves have recently been gaining momentum as a viable technology. The potential for this technology is considered promising, especially on west-facing coasts with latitudes between 40 and 60 degrees:^[91]

In the United Kingdom, for example, the Carbon Trust recently estimated the extent of the economically viable offshore resource at 55 TWh per year, about 14% of current national demand. Across Europe, the technologically achievable resource has been estimated to be at least 280 TWh per year. In 2003, the U.S. Electric Power Research Institute (EPRI) estimated the viable resource in the United States at 255 TWh per year (6% of demand).^[91]

There are currently nine projects, completed or in-development, off the coasts of the United Kingdom, United States, Spain and Australia to harness the rise and fall of waves by Ocean Power Technologies. The current maximum power output is 1.5 MW (Reedsport, Oregon), with development underway for 100 MW (Coos Bay, Oregon).^[92]

Enhanced geothermal systems

As of 2008, geothermal power development was under way in more than 40 countries, partially attributable to the development of new technologies, such as Enhanced Geothermal Systems.^[65] The development of binary cycle power plants and improvements in drilling and extraction technology may enable enhanced geothermal systems over a much greater geographical range than "traditional" Geothermal systems. Demonstration EGS projects are operational in the US, Australia, Germany, France, and the United Kingdom.^[93]

Advanced solar concepts

Beyond the already established solar photovoltaics and solar thermal power technologies are such advanced solar concepts as the solar updraft tower or space-based solar power. These concepts have yet to (if ever) be commercialized.

The Solar updraft tower (SUT) is a renewable-energy power plant for generating electricity from low temperature solar heat. Sunshine heats the air beneath a very wide greenhouse-like roofed collector structure surrounding the central base of a very tall chimney tower. The resulting convection causes a hot air updraft in the tower by the chimney effect. This airflow drives wind turbines placed in the chimney updraft or around the chimney base to produce electricity. Plans for scaled-up versions of demonstration models will allow significant power generation, and may allow development of other applications, such as water extraction or distillation, and agriculture or horticulture. To view a study on the solar updraft tower and its affects click here^[94]

A more advanced version of a similarly themed technology is the Vortex engine (AVE) which aims to replace large physical chimneys with a vortex of air created by a shorter, less-expensive structure.

Space-based solar power (SBSP) is the concept of collecting solar power in space (using an "SPS", that is, a "solar-power satellite" or a "satellite power system") for use on Earth. It has been in research since the early 1970s. SBSP would differ from current solar collection methods in that the means used to collect energy would reside on an orbiting satellite instead of on Earth's surface. Some projected benefits of such a system are a higher collection rate and a longer collection period due to the lack of a diffusing atmosphere and night time in space.

Wind power companies

As of 2010, Vestas (from Denmark) is the world's top wind turbine manufacturer in terms of percentage of market volume, and Sinovel (from China) is in second place. Together Vestas and Sinovel delivered 10,228 MW of new wind power capacity in 2010, and their market share was 25.9 percent. GE Energy (USA) was in third place, closely followed by Goldwind, another Chinese supplier. German Enercon ranks fifth in the world, and is followed in sixth place by Indian-based Suzlon.^[96]

Photovoltaic market trends

The solar PV market has been growing for the past few years. According to solar PV research company, PVinsights, worldwide shipment of solar modules in 2011 was around 25 GW, and the shipment year over year growth was around 40%. The top 5 solar module players in 2011 in turns are Suntech, First Solar, Yingli, Trina, and Sungen. The top 5 solar module companies possessed 51.3% market share of solar modules, according to PVinsights' market intelligence report.

2013 Ranking	Solar Module Company	Change from 2012	Country
1	Yingli Green Energy	–	China
2	Trina Solar	+1	China
3	Sharp Solar	+3	Japan
4	Canadian Solar	–	Canada
5	Jinko Solar	+3	China
6	ReneSola	+7	China
7	First Solar	−2	United States
8	Hanwha Solarone	+2	South Korea
9	Kyocera	+5	Japan
10	JA Solar	−3	China
Sources:[97][98]

The PV industry has seen drops in module prices since 2008. In late 2011, factory-gate prices for crystalline-silicon photovoltaic modules dropped below the $1.00/W mark. The $1.00/W installed cost, is often regarded in the PV industry as marking the achievement of grid parity for PV. These reductions have taken many stakeholders, including industry analysts, by surprise, and perceptions of current solar power economics often lags behind reality. Some stakeholders still have the perspective that solar PV remains too costly on an unsubsidized basis to compete with conventional generation options. Yet technological advancements, manufacturing process improvements, and industry re-structuring, mean that further price reductions are likely in coming years.^[99]

Shifting taxes

Tax shifting has been widely discussed and endorsed by economists. It involves lowering income taxes while raising levies on environmentally destructive activities, in order to create a more responsive market. For example, a tax on coal that included the increased health care costs associated with breathing polluted air, the costs of acid rain damage, and the costs of climate disruption would encourage investment in renewable technologies. Several Western European countries are already shifting taxes in a process known there as environmental tax reform.^[114]

In 2001, Sweden launched a new 10-year environmental tax shift designed to convert 30 billion kroner ($3.9 billion) of income taxes to taxes on environmentally destructive activities. Other European countries with significant tax reform efforts are France, Italy, Norway, Spain, and the United Kingdom. Asia's two leading economies, Japan and China, are considering carbon taxes.^[114]

Shifting subsidies

Just as there is a need for tax shifting, there is also a need for subsidy shifting. Subsidies are not an inherently bad thing as many technologies and industries emerged through government subsidy schemes. The Stern Review explains that of 20 key innovations from the past 30 years, only one of the 14 was funded entirely by the private sector and nine were totally publicly funded.^[117] In terms of specific examples, the Internet was the result of publicly funded links among computers in government laboratories and research institutes. And the combination of the federal tax deduction and a robust state tax deduction in California helped to create the modern wind power industry.^[115] At the same time specifically US tax credits systems for renewable energy have been described as an "opaque" financial instrument dominated by large investors to reduce their tax payments while greenhouse gas reduction targets are being treated as a side effect.^[118]

Lester Brown has argued that "a world facing the prospect of economically disruptive climate change can no longer justify subsidies to expand the burning of coal and oil. Shifting these subsidies to the development of climate-benign energy sources such as wind, solar, biomass, and geothermal power is the key to stabilizing the earth's climate."^[115] The International Solar Energy Society advocates "leveling the playing field" by redressing the continuing inequities in public subsidies of energy technologies and R&D, in which the fossil fuel and nuclear power receive the largest share of financial support.^[119]

Some countries are eliminating or reducing climate-disrupting subsidies and Belgium, France, and Japan have phased out all subsidies for coal. Germany is reducing its coal subsidy. The subsidy dropped from $5.4 billion in 1989 to $2.8 billion in 2002, and in the process Germany lowered its coal use by 46 percent. China cut its coal subsidy from $750 million in 1993 to $240 million in 1995 and more recently has imposed a high-sulfur coal tax.^[115] However, the United States has been increasing its support for the fossil fuel and nuclear industries.^[115]

In November 2011, an IEA report entitled Deploying Renewables 2011 said "subsidies in green energy technologies that were not yet competitive are justified in order to give an incentive to investing into technologies with clear environmental and energy security benefits". The IEA's report disagreed with claims that renewable energy technologies are only viable through costly subsidies and not able to produce energy reliably to meet demand.^[54]

A fair and efficient imposition of subsidies for renewable energies and aiming at sustainable development, however, require coordination and regulation at a global level, as subsidies granted in one country can easily disrupt industries and policies of others, thus underlining the relevance of this issue at the World Trade Organization.^[120]

Renewable energy targets

Setting national renewable energy targets can be an important part of a renewable energy policy and these targets are usually defined as a percentage of the primary energy and/or electricity generation mix. For example, the European Union has prescribed an indicative renewable energy target of 12 percent of the total EU energy mix and 22 percent of electricity consumption by 2010. National targets for individual EU Member States have also been set to meet the overall target. Other developed countries with defined national or regional targets include Australia, Canada, Israel, Japan, Korea, New Zealand, Norway, Singapore, Switzerland, and some US States.^[121]

National targets are also an important component of renewable energy strategies in some developing countries. Developing countries with renewable energy targets include China, India, Indonesia, Malaysia, the Philippines, Thailand, Brazil, Egypt, Mali, and South Africa. The targets set by many developing countries are quite modest when compared with those in some industrialized countries.^[121]

Renewable energy targets in most countries are indicative and nonbinding but they have assisted government actions and regulatory frameworks. The United Nations Environment Program has suggested that making renewable energy targets legally binding could be an important policy tool to achieve higher renewable energy market penetration.^[121]

Levelling the playing field

The IEA has identified three actions which will allow renewable energy and other clean energy technologies to "more effectively compete for private sector capital".

• "First, energy prices must appropriately reflect the "true cost" of energy (e.g. through carbon pricing) so that the positive and negative impacts of energy production and consumption are fully taken into account". Example: New UK nuclear plants cost £92.50/MWh,^[122][123] whereas offshore wind farms in the UK are supported with €74.2/MWh^[124] at a price of £150 in 2011 falling to £130 per MWh in 2022.^[125] In Denmark, the price can be €84/MWh.^[126]
• "Second, inefficient fossil fuel subsidies must be removed, while ensuring that all citizens have access to affordable energy".
• "Third, governments must develop policy frameworks that encourage private sector investment in lower-carbon energy options".^[127]

Green stimulus programs

In response to the global financial crisis in the late 2000s, the world's major governments made "green stimulus" programs one of their main policy instruments for supporting economic recovery. Some US$188 billion in green stimulus funding had been allocated to renewable energy and energy efficiency, to be spent mainly in 2010 and in 2011.^[128]

Energy sector regulation

Public policy determines the extent to which renewable energy (RE) is to be incorporated into a developed or developing country's generation mix. Energy sector regulators implement that policy—thus affecting the pace and pattern of RE investments and connections to the grid. Energy regulators often have authority to carry out a number of functions that have implications for the financial feasibility of renewable energy projects. Such functions include issuing licenses, setting performance standards, monitoring the performance of regulated firms, determining the price level and structure of tariffs, establishing uniform systems of accounts, arbitrating stakeholder disputes (like interconnection cost allocations), performing management audits, developing agency human resources (expertise), reporting sector and commission activities to government authorities, and coordinating decisions with other government agencies. Thus, regulators make a wide range of decisions that affect the financial outcomes associated with RE investments. In addition, the sector regulator is in a position to give advice to the government regarding the full implications of focusing on climate change or energy security. The energy sector regulator is the natural advocate for efficiency and cost-containment throughout the process of designing and implementing RE policies. Since policies are not self-implementing, energy sector regulators become a key facilitator (or blocker) of renewable energy investments.^[129]

Energy transition in Germany

Photovoltaic array and wind turbines at the Schneebergerhof wind farm in the German state of Rheinland-Pfalz

Gross generation of electricity by source in Germany 1990–2020

The Energiewende (German for energy transition) is the transition by Germany to a low carbon, environmentally sound, reliable, and affordable energy supply.^[130] The new system will rely heavily on renewable energy (particularly wind, photovoltaics, and biomass) energy efficiency, and energy demand management. Most if not all existing coal-fired generation will need to be retired.^[131] The phase-out of Germany's fleet of nuclear reactors, to be complete by 2022, is a key part of the program.^[132]

Legislative support for the Energiewende was passed in late 2010 and includes greenhouse gas (GHG) reductions of 80–95% by 2050 (relative to 1990) and a renewable energy target of 60% by 2050.^[133] These targets are ambitious.^[134] The Berlin-based policy institute Agora Energiewende noted that "while the German approach is not unique worldwide, the speed and scope of the Energiewende are exceptional".^[135] The Energiewende also seeks a greater transparency in relation to national energy policy formation.^[136]

Germany has made significant progress on its GHG emissions reduction target, achieving a 27% decrease between 1990 and 2014. However Germany will need to maintain an average GHG emissions abatement rate of 3.5% per annum to reach its Energiewende goal, equal to the maximum historical value thus far.^[137]

Germany spends €1.5 billion per annum on energy research (2013 figure) in an effort to solve the technical and social issues raised by the transition.^[138] This includes a number of computer studies that have confirmed the feasibility and a similar cost (relative to business-as-usual and given that carbon is adequately priced) of the Energiewende.

These initiatives go well beyond European Union legislation and the national policies of other European states. The policy objectives have been embraced by the German federal government and has resulted in a huge expansion of renewables, particularly wind power. Germany's share of renewables has increased from around 5% in 1999 to 22.9% in 2012, surpassing the OECD average of 18% usage of renewables.^[139] Producers have been guaranteed a fixed feed-in tariff for 20 years, guaranteeing a fixed income. Energy co-operatives have been created, and efforts were made to decentralize control and profits. The large energy companies have a disproportionately small share of the renewables market. However, in some cases poor investment designs have caused bankruptcies and low returns, and unrealistic promises have been shown to be far from reality.^[140] Nuclear power plants were closed, and the existing nine plants will close earlier than planned, in 2022.

One factor that has inhibited efficient employment of new renewable energy has been the lack of an accompanying investment in power infrastructure to bring the power to market. It is believed 8,300 km of power lines must be built or upgraded.^[139] The different German States have varying attitudes to the construction of new power lines. Industry has had their rates frozen and so the increased costs of the Energiewende have been passed on to consumers, who have had rising electricity bills.

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