Business World Online
Posted on August 31, 2011 10:25:40 PM
A minor but loud ruckus recently broke out in the local press between my colleagues in the Foundation for Economic Freedom and advocates of so-called renewable energy: that vision of power sources that are both clean and unlimited, somewhat like previous conjurations of cold fusion or, even earlier, perpetual-motion machines.The criticisms from FEF centered on the schedule of feed-in tariffs recently drafted by Department of Energy officials for public discussion. These “reverse tariffs” will be added to consumers’ power bills to subsidize various renewable energy technologies, until they become cheap enough to compete with carbon-based fossil fuels (oil, coal, natural gas). But why the rush? After all, these new technologies will naturally become cheaper over time, with greater usage and continued technical advances.
This reawakened interest in renewable energy is another throw-off from the Philippines’ extraordinarily high level of concern for its environment. This concern, fed by the indefatigable gadflies of civil society, has already led to economically objectionable government policies like wide-ranging restrictions on mining, logging, and other forms of exploiting nature for human benefit. The Church has generally supported such restrictions, at times veering perilously close to the pagan heresy of deifying Nature at the expense of the creature who was created in God’s image.
On her watch, former President Arroyo famously set aside half a day every week for environmental issues, and committed the country to carbon reduction targets even more aggressive than mandated by global protocols. Since our contribution to the global carbon footprint, however, is in fact disproportionately small for our size and population, critics wondered whether such environmental correctness was worth the price to be paid in potentially slower economic growth.
After all, growth will always demand energy—and the faster that growth, the greater the appetite for energy: to power a country’s factories, keep its cars on the roads, and sustain the amenities of modern life to which modern consumers aspire. Thus, among developing countries--where growth is mandatory if populations are to lift themselves from poverty and stay ahead of their own increasing numbers―there has to date been little sympathy for the angst in the developed world over what is seen there as unacceptable environmental costs of growth.
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One definition of RE talks about the potential sources of energy that are readily found in nature―the sun, the wind, the ocean waves and tides, running water, geothermal reserves―and that are clean and renewable, i.e. either inexhaustible or naturally replenished. This definition generally also includes biomass and biofuel, which unlike the others do add to the carbon footprint, but presumably in amounts that are much less than the burning of fossil fuels.
What about nuclear energy? It’s virtually inexhaustible; it does not add to the carbon footprint; and it supplies enough dependable power to serve as the mainstay of baseload (24 x 7) power generation capacity. In fact, I would stand foursquare behind well-known advocates like former Congressman Mark Cojuangco that nuclear energy, by all the traditional standards, has got to be the crown jewel of renewable energy. And it’s something we can put in place during the term of this President: within five to seven years if we start from scratch, three to five years if we retrofit used plants for sale from Korea, two to three years if we simply fire up the Bataan plant.
Of course, the real problem with nuclear energy is that it suffers from a bad rep, mostly the product of perennial hype rather than proven hypotheses. It also carries its own unique challenges, such as how to dispose of nuclear waste (spent nuclear fuel and cooling water) and the minimal, though still nonzero, risk of catastrophic damage (the partial meltdown of the Fukushima nuclear power plant in Japan after the recent tsunami). None of these challenges are insurmountable, but the bad rep remains smelly enough for nuclear to be excluded from politically correct discussions of renewable energy.
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Regardless of the soundness of the economic and financial thinking behind renewable energy, what’s undeniable is the rosiness of its commercial prospects. Over the last five years, the various RE technologies grew capacity by average annual rates of 15 percent to 50 percent, with wind power adding the most capacity and now present in over 80 countries. Solar photovoltaic capacity was added in over 100 countries last year alone. Globally, over 3.5 million direct jobs have been created in RE, half of them in the biofuels sector.
As a booming new industry, manufacturing leadership in RE is now shifting from Europe to Asia (China, India, South Korea). One UN agency estimates that the Asia-Pacific will need to invest up to $600 Billion until 2050 in order to reduce greenhouse gases in the region to desired levels. China is expected to account for more than half of this new investment, followed by India with 17percent.
Last year, renewable energy investments worldwide reached $211 billion, a third higher than the $160 billion a year before. This excludes some $15 billion in (unreported) investment in solar hot water collectors, plus another $40 billion to $45 billion in large hydropower projects. And for the first time ever, the share of developing countries in RE exceeded that of developed countries in 2010, with China accounting for over a third of total renewable energy investments the second year in a row.
This bright future now being predicted for renewable energy in the region is certainly worth taking a closer look at by businessmen and other interested readers. For more detailed analysis of the global picture, technology background, and Philippine situation of renewable energy, you can subscribe to upcoming issues of The Censei Report, our online weekly digest of news analysis. Just email me at my address below.
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