The coming energy revolution

Posted: July 2009

"I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait till oil and coal run out before we tackle that."
Thomas Edison

By 2030, global energy consumption is projected to be 55 per cent higher than it is today due to population growth, continued urbanisation, and economic expansion. The largest share of this growth will almost certainly occur in the developing world, with most of the additional energy currently projected to come from fossil fuels. But renewable energy technologies are now ready for use on a large scale and have the potential to meet world energy demand many times over, as Janet Sawin reports in this specially commissioned Overview.

In September 2007, Prime Minister Helen Clark of New Zealand announced that her nation had set a target of becoming "the first truly sustainable nation on earth," with a goal of reducing all greenhouse gas emissions, in part through a significant increase in the use of renewable energy. New Zealand now aims to get 90 per cent of its electricity from renewable sources by 2025.

Increasingly, countries around the world are turning to renewable energy to reduce the risks posed by climate change, rising oil prices, energy security concerns, and a host of other challenges. According to the Renewables 2007 Global Status Report, renewable energy (including large-scale hydropower) now accounts for 16.5 per cent of world primary energy and 19 per cent of electricity production. "New" renewables, which exclude large-scale hydropower and traditional biomass, represented about 6 per cent of global installed electric capacity, and that share is rising. Wind and solar power are the fastest-growing energy sources in the world, experiencing rates of growth and technology advancement comparable to the electronics industry (see Figure 1), with other renewables growing rapidly as well.

Average annual global growth rates of various energy sources, 2001-2006
Figure 1. Average annual global growth rates of various energy sources, 2001-2006. Source: Worldwatch Institute, BP.

It has been about a century since the world has had a comparable opportunity to change its energy system. Much of the system now in place was created in an explosion of invention that began around 1890, and was largely finished by 1910. Cities the world over were transformed as horse-drawn carriages and gas lamps were replaced with automobiles and electric lights. Technologies that had prevailed for centuries became obsolete in a matter of years, and the 20th century emerged as the age of fossil fuels. With the political will and the right policies, we again have the potential to dramatically change the way in which the global economy is fuelled by moving renewable energy into the mainstream.

The need for renewables

Today, new renewable resources provide only a small share of global energy production (see Figure 2). Yet the advantages of - and urgent need for - shifting away from fossil fuels and nuclear energy and toward greater reliance on renewables are numerous and enormous. Our fossil fuel based energy system represents one of the central vulnerabilities of modern civilization, and the environmental, health and security costs associated with our current energy system are immense.

Composition of total primary energy supply
Composition of total primary energy supply
Figure 2: Composition of total primary energy supply. 'Other' includes biomass and waste combustion, geothermal, and wind power. Total primary energy consumption was 12,210 tons of oil equivalent in 2006. Source: Calculated by Worldwatch Institute with data from BP, IEA, REN21, F.O. Licht.

Global production of oil, the world's dominant energy source, is expected to peak in the next 10 to 20 years. But of greater concern to many is not when or if economically recoverable fossil fuel reserves will be depleted, but the fact that the world cannot afford to use all the conventional energy resources that remain.

Global climate change is perhaps the costliest impact. A 2006 report compiled for the UK government and led by Sir Nicholas Stern estimated that under business as usual the economic costs of climate change could equal the loss of 5-20 per cent of gross world product (GWP) each year, whereas the cost of efforts to avoid the worst impacts can be limited to about 1 per cent of annual GWP. Already, global economic losses due to natural disasters, which are in line with events anticipated to result from global warming, appear to be doubling with each decade, and annual losses from such events are expected to approach $150 billion within the next few years.

Worldwide, there is a growing realization that climate change, caused primarily by the burning of fossil fuels, is a more serious threat to the international community than terrorism. In early 2007, UN Secretary-General Ban Ki-moon warned that the threat of climate change is as dangerous as war and that, in fact, upheavals due to impacts of climate change ranging "from droughts to inundated coastal areas and loss of arable land are likely to become a major driver of war and conflict."

Scientists have concluded that global carbon dioxide (CO2) emissions must be reduced at least 50-60 per cent by mid-century to avoid catastrophic change. In late 2007, NASA climate scientist James Hansen warned that atmospheric concentrations of CO2 are already too high, and the world should be aiming to reduce them below current levels.

The dramatic reductions in emissions required are not possible without significant and rapid improvements in energy efficiency and a shift to renewable energy. In fact, renewable energy and energy efficiency improvements are the only technologies that can achieve the emissions reductions required over the next decade to help stabilize the global climate.

Renewable energy offers tremendous potential and, combined with improvements in energy efficiency, could fuel the economy of the future. Renewable energy can generate electricity, can heat and cool space, can do mechanical work such as water pumping, and can produce fuels - in other words, everything that conventional energy does.

Wind Park, Jutland, Denmark © Jorgen Schytte/Still Pictures
Wind Park, Jutland, Denmark © Jorgen Schytte/Still Pictures
Wind Park, Jutland, Denmark © Jorgen Schytte/Still Pictures

Renewable resources are generally domestic, pose no fuel or transport hazards, and are far less vulnerable to terrorist attack than conventional energy sources. They can be installed rapidly and in dispersed applications - getting power quickly to areas where it is urgently needed, delaying investment in expensive new electric plants or power lines, and reducing investment risk. All renewables except biomass energy avoid fuel costs and the risks associated with future fuel price fluctuations.

Using renewables stimulates local economies by attracting investment money and by creating employment. Renewable energy provides more jobs per unit of output and per dollar spent than conventional energies do. Economic woes and high unemployment rates influenced Spain's 1994 decision to invest in renewable energy. Distributed renewable power generation can also improve reliability of the electric grid and reduce risk of blackouts due to massive grid failures. In developing countries, where an estimated 1.6 billion people lack access to electricity, renewables can provide power more cheaply and quickly than the extension of transmission lines and construction of new plants, and can aid in economic development, while avoiding the need to spend precious export earnings on imported fuels.

Technologies and markets

Technical progress of many renewables - particularly wind power - has been faster than was anticipated even a few years ago, and this trend is expected to continue. Wind remains the cheapest "new" renewable resource for electricity generation. The US National Renewable Energy Laboratory found that US wholesale wind costs in 2007 ranged from 2.5-6.4 cents per kilowatt-hour (including available state and federal subsidies).

Globally, wind installation costs have increased in recent years due to rising materials costs (driven by rising demand for steel and concrete) and a general shortage of wind turbines. In the United States, costs have also been pushed up by the need to import turbines from overseas (market uncertainty due to inconsistent policies has limited domestic manufacturing), while the value of the dollar has declined. Yet wind power remains competitive because costs are rising for all power technologies.

Costs of other technologies are falling rapidly with technological advances, learning by doing, automated manufacturing, and economies of scale through increased production volumes.

Solar photovoltaic (PV) cells, which generate electricity directly from sunlight, are now the cheapest option for many remote or off-grid functions, and are now competitive on-grid at all times in Japan and at peak demand times in California. Thanks to the development of advanced technologies and the emergence of China as a low-cost producer, the solar PV industry is now poised for a rapid decline in costs that will make it a mainstream energy source within the next few years.

In 2007, the wind power industry added about 18 gigawatts (GW) of new capacity (see Figure 3), compared to 1 GW of new nuclear power capacity that came online the previous year. Global wind capacity grew an average of more than 24 per cent annually between 2002 and 2007, with more than 93,000 MW of turbines spinning worldwide by the end of that period - enough to meet the needs of about 44 million European homes (or about 21 million homes in the United States). Wind power capacity additions have been second only to new natural gas-fired capacity for several years running in the United States and the European Union. At least 70 countries now use the wind to generate electricity.

Global Wind Capacity, 1990-2007
Global wind capacity, 1990-2007 (Gigawatts). Source: REN21 Renewables 2007 Global Status Report

Experts estimate that on- and off-shore wind resources could provide many times global electricity consumption. A 2005 Stanford University study found that even if 20 per cent of the world's wind resources of class 3 and greater (over 6.9 metres/second) could be tapped, the wind would meet 100 per cent of the world's energy demand for all uses, or more than seven times total global electricity needs. While some of that potential is too costly to exploit today, the promise of large amounts of wind power at competitive prices is enormous.

Solar photovoltaics (PV) have rapidly become one of the world's fastest growing industries; the US National Renewable Energy Laboratory expects that PV has the "potential to become one of the world's most important industries" as well. PV market options range from consumer products (such as calculators and watches) and remote stand-alone systems for electricity and water pumping to grid-connected systems on buildings and large-scale power plants.

PV technology has advanced to the point where it can be literally integrated into structures, in roofing tiles and shingles, glass windows, outer walls; as a result, it can provide shade and shelter as well as power.

While PVs account for a small share of global electricity generation, global PV capacity has increased at an average annual rate exceeding 36 per cent between 2002 and 2007, with grid-connected PV growing even more rapidly during that time (at an average of more than 58 per cent annually) (see Figure 4). Well over a million households in the developing world have access to electricity for the first time thanks to solar PVs, while hundreds of thousands of households in industrial countries supplement their utility power with PV systems.

World solar PV capacity, 1990-2007
Figure 4: World solar PV capacity, 1990-2007 (Megawatts). Source: REN21 Renewables 2007 Global Status Report

Solar thermal power offers another promising technology for future electricity generation. Most of the world's concentrating solar power (CSP) capacity is now operating in the Mohave Desert in California, were it was erected in the late 1980s and 1990. But government incentives and technology advances are bringing about a renaissance, and CSP is now the fastest growing utility-scale renewable technology after wind power. The two countries with the most development underway today are Spain and the United States, but Italy, France, Portugal, and Greece in Europe, and parts of the Middle East and North Africa are also working on CSP developments. By some estimates, there are now some 5,800 megawatts of projects in the pipeline that are expected to come online by 2012.

solar power tower
EU's first commercial concentrating solar power tower near Seville, Spain (Photo courtesy Abengoa)

The sun is also used to heat space and water, and the solar heating market is growing at 15-20 per cent annual rates. Rooftop solar collectors now provide hot water to about 50 million households worldwide; about 80 per cent of these are in China. In parts of China, solar thermal system costs are competitive with those of electric water heaters, and their owners aren't burdened with electric bills from month to month to obtain their hot water. Elsewhere, costs are coming down and solar systems can pay for themselves in a few short years, with time range depending on local solar resources; the payback period will continue to shorten as conventional fuel costs rise.

Geothermal heat is found deep in the earth, and new technologies allow it to be used directly or tapped for electricity generation by channeling the steam to drive a turbine. By the end of 2007, global geothermal power capacity reached about 10 gigawatts. Geothermal can also be used for heat. There is evidence that high-temperature geothermal water was used to heat buildings in ancient Pompeii. Today such sources are tapped for district heating systems in cities from France to the United States to Turkey. Geothermal energy currently heats most of Iceland's buildings.

Around the world, people can also tap into the insulating properties of the ground beneath their feet. Heat pumps use the near-constant temperatures of the earth or groundwater as a heat sink in summer and heat source in winter to cool and heat water and space. An estimated two million heat pumps are now in use in more than 30 countries, primarily in Europe and the United States.

As Denmark has shown, biomass provides another ready source of energy. Agricultural wastes ranging from sugar cane to rice hulls, can be burned directly or gasified and turned into electricity or combustible fuels. Power generation from biomass continues to increase in more than 40 countries around the world, and installed capacity reached an estimated 44 gigawatts by the end of 2006. Biomass-fueled heating is also growing rapidly and now provides far more heat worldwide than do solar and geothermal combined.

Biomass can also be used to produce biofuels, which continue to grow worldwide at a rate of 15-20 per cent annually (see Figure 5). In 2006, the surge in production of ethanol (derived mainly from sugar or starch crops) and biodiesel (made from vegetable oil or animal fats) - the two most common biofuels - accounted for 17 per cent of the increase in supply of all liquid fuels that year. Growth is driven primarily by the United States, which surpassed Brazil in 2005 to lead the world in ethanol production; Germany is the world leader in biodiesel production.

Global biofuels production, 1990-2007
Figure 5: Global biofuels production, 1990-2007 (billion litres). Source: REN21 Renewables 2007 Global Status Report

But with this rapid growth have come increasing concerns about the associated social and environmental impacts of biofuels. First-generation biofuels - particularly ethanol derived from corn and biodiesel made from palm oil - can cause significant environmental damage to soil and water quality, habitats and biodiversity. Over their lifecycle, biofuels can actually increase greenhouse gas emissions associated with the transport sector if, for example, corn ethanol is refined with energy from coal, or if palm oil plantations displace tropical forests in Southeast Asia.

Efforts to develop international sustainability standards for biofuels are currently underway to address these issues, and it is expected that second-generation fuels - that will rely primarily on organic wastes and algae - will have far lower environmental impacts. Depending on the selection of feedstocks and how they are grown and processed, who owns the farms and processing facilities, etc. biofuels could provide major environmental and social benefits. Thus, it is critical to speed the development and commercialization of more-sustainable advanced biofuels.

Industrial and developing countries alike, from Austria to Nepal, are increasingly focusing their hydropower development on smaller-scale projects. Small-scale hydropower plants (up to 10 MW), if responsibly implemented, create relatively small social and environmental impacts, while providing people with power and related economic benefits. Globally, an estimated 73 gigawatts of small-scale hydropower capacity were installed by the end of 2006.

The energy embodied in the oceans' tides, waves, currents and temperature differentials can also be tapped. While most such technologies are still at the experimental stage, Scotland and Australia are among a growing list of countries investing in ocean energy technologies and some sizable installations are already in place or underway in several places around the world.

Investment trends

Renewable energy has come of age. As a result of technological advances, rising fossil energy prices, increasing concern about climate change and strong government policies to drive markets, renewable technologies are now attracting the funds of venture capitalists and multinational corporations alike.

After more than a decade of double-digit growth, renewable energy is a multibillion-dollar global business, with wind power leading the way. Major corporations - including Royal Dutch/Shell, BP, Mitsubishi, and General Electric - are investing hundreds of millions of dollars in renewable energy development. Investing in renewable energy today is no longer just about doing the right thing and being green, but also about making green, and global investment trends reflect this thinking.

Investment in new renewable energy capacity (excluding large hydropower) in 2006 came to about $55 billion, and is expected to exceed $66 billion in 2007 (see Figure 6). And this is on top of tens of billions of dollars in capital investments in new plants and equipment, and public and private research and development - for a total investment flow for all renewables exceeding $100 billion in 2006. Emerging markets, particularly China, India and Brazil, are capturing increasing shares of the investment flows in new capacity.

Investment in new renewable capacity, 1995-2007
Figure 6: Investment in new renewable capacity, 1995-2007 (est.), (billion USD, excluding large-hydro). Source: REN21 Renewables 2007 Global Status Report

If current growth rates continue, economies of scale and additional private investments in research and development and in manufacturing capability will achieve further dramatic cost reductions, making renewable energy even more affordable. A classic example of the impacts of scale economies and learning is Ford's Model T car, which declined in price by two-thirds between 1909 and 1923 as production increased from 34,000 to 2.7 million. There are examples in the renewables industries as well: for instance, Sharp reduced its per unit costs of PV production by 30-35 per cent several years ago by scaling up to a 200 megawatt manufacturing plant that allowed for increased automation and bulk purchases of inputs such as glass.

Policies to promote renewable energy

In its World Energy Outlook 2007, the International Energy Agency projects that global energy use will increase by 55 per cent between 2005 and 2030. Fossil fuels will continue to dominate the energy mix with an 80 per cent share, with coal use growing most rapidly. While renewable energy use will continue to grow over the coming decades, fossil fuels will account for an estimated 84 per cent of the increase in global energy demand over this period. As a result, the IEA projects that global carbon dioxide emissions associated with energy use will rise by 57 per cent by 2030, dramatically increasing the threat of catastrophic climate change. But such projections assume that the world will continue with business as usual.

If, on the other hand, a range of new energy and environmental policies are widely implemented, including policies to dramatically improve energy efficiency, the share of renewables will increase significantly. This is highly possible as political support for renewables is rising worldwide in response to increasing demand for energy, rising concerns about fuel supplies and global security, growing threats of climate change and other environmental crises, and significant advances in renewable energy and understanding of the benefits they offer.

By the end of 2007, at least 58 countries around the world had national targets for renewable energy, and at least 56 had enacted policies to promote renewable energy, according to the REN21 Renewables 2007 Global Status Report. Renewable Portfolio Standards (or some sort of quota system) are now being used in at least 38 countries, states and/or provinces, with Feed-in Policies in use in at least 36 countries, and 10 states and provinces. (For examples, see Table 1.)

Table 1. Renewable energy targets and recent totals in selected countries

Country/RegionTargets for renewable energyRecent totals
AustraliaIncrease renewable electricity by 9.5 Gigawatt-hours (GWh) per year between 2000 and 2010N/A
Brazil3.3 Gigawatts (GW) of electricity (from wind, hydropower and biomass) by 2016N/A
California, US20% of electricity mix by 2010; 33% by 202010.9% (of in-state mix) in 2006
China 15% of total primary energy by 2020 8% in 2006
European Union 20% total energy by 2020 7% in 2007
Germany 27% of electricity by 2020; at least 45% by 2030 About 14% at end of 2007
India 10% of added electric capacity during 2003-2012 (10 GW expected) N/A
Mali 15% of energy by 2020 N/A
New Zealand 90% of electricity by 2025 70% in 2007
Philippines Increase of 4.7 GW by 2013 N/A
South Africa 10 Terawatt-hours added by 2013 N/A
Spain 12% of primary energy by 2010 6.9% in 2004
Thailand 21.2% total energy by 2011 19.8% (2001)

Mandated targets, fair access to the electric grid, standard pricing for renewably-produced electricity, investment and production incentives, and public awareness programmes are some of the policies that have already led to dramatic growth in renewable energy markets in an increasing number of countries including Germany, Spain, several US states, and China. Such policies are most successful when they are consistent and sustained over the long-term, providing certainty and predictability in the marketplace.

It is thanks mostly to Germany's feed-in law (EEG) that the share of electricity from renewable sources increased in that country from 6.3 per cent in 2000 to 12 per cent in 2006; it was expected that renewable energy would provide about 14 per cent of Germany's gross electricity consumption by the end of 2007. As a result of this success, in 2007 the German government increased national targets for renewables to 27 per cent of electricity by 2020 (up from 20 per cent) and 45 per cent by 2030.

China has rapidly become a major user and producer of renewable energy thanks in great part to a renewable energy law adopted in 2005. If current trends continue, China could soon lead the world in renewable energy production and use. China has set a target of getting 20 per cent of its primary energy from renewable sources by 2020, up from 8 per cent in 2006. The country continues to lead the world in production and use of solar thermal for water heating, with more than 65 per cent of global capacity by the end of 2006. China's wind power capacity is expanding rapidly, and the nation is seeing the emergence of a dynamic PV manufacturing industry.

Even in the United States, despite the lack of strong policies to promote renewables at the federal level, many states - including Arizona, California, Nevada, New York, and Texas - have enacted pioneering laws, and more and more governors are professing the benefits of renewable energy for their states, from energy security and jobs to reduced dependence on imported oil. As a result, in 2007 the United States led the world for the third year running in installation of new wind power capacity and PV capacity is rising in an increasing number of states.

Around the world, cities are also investing in renewable energy and establishing targets and policies to achieve them. For example, Rizhao, a city of almost 3 million people in northeastern China, powers most of its outdoor lighting with PV and heats almost all of its water with the sun. The city's leaders view solar energy as a starting point for sparking social, economic and cultural development through a cleaner environment, and they are already seeing significant benefits.

From Portland, Oregon to New York City in the United States, from Adelaide in Australia to Vancouver in Canada, and from Cape Town in South Africa to Daegu in Korea, cities are going green and turning to renewable energy. They are doing this thanks to the growing realization that through their energy choices they can achieve a number of goals, including: creating local jobs, ensuring more secure and reliable energy supplies, reducing the threat of climate change, and improving the natural environment and health of their citizens.

Unlocking our energy future

PV panels power the Mars rover allowing it to explore the Red Planet. Photo: NASA
PV panels power the Mars rover allowing it to explore the Red Planet. Photo: NASA
PV panels power the Mars rover allowing it to explore the Red Planet.© NASAIn early January 2004, the U.S. unmanned rover Spirit touched down on the surface of Mars and within days began relaying to Earth dramatic photographs of a red, rock-strewn surface, distant hills, and a rust-coloured sky from 170 million kilometres (106 million miles) away. It was soon joined by its twin, Opportunity. Humanity has clearly established a presence on two planets - and one of them is powered primarily by renewable energy.

Nearly four years later, PV modules continue to enable Spirit and Opportunity to roll across the planet's surface, operate sophisticated equipment, analyse material, and send valuable data and photographs back to Earth. In fact, without energy from the sun and high-tech, reliable renewable technologies such as PV, space exploration would be impossible.

It will be a long time before renewables achieve the penetration level on Earth that they currently enjoy on Mars, but renewable energy is coming of age even on our planet.

Despite the substantial strides being made in technology, investment, and policy, many people remain unconvinced that renewable energy could one day be harnessed on a scale that would meet most of the world's energy needs. But, in the words of Paul Appleby of BP's solar division, "the natural flows of energy are so large relative to human needs for energy services that renewable energy sources have the technical potential to meet those needs indefinitely."

Not only is renewable energy alone sufficiently abundant to meet all of today's energy needs many times over (see Figure 7), harnessing it is not particularly land- or resource-intensive. All US electricity could be provided by wind turbines in just three states-Kansas, North Dakota, and South Dakota. Farming under the wind turbines could continue as before, while farmers enjoyed the supplementary revenues from spinning wind into electricity. In cities around the world, much of the local power needs could be met by covering existing roofs with solar cells - requiring no land at all. Additional energy will be provided by wind and ocean energy installations located several kilometres offshore, where the energy flows are abundant.

potential of renewable resources
Figure 7. Current technical potential of renewable resources relative to world energy consumption.

And the transition to renewables can happen relatively quickly, with the political will and the right policies, as experiences in Germany and elsewhere have demonstrated. A report produced by REN21 for the G8 Gleneagles summit in September 2007 concludes that by 2050 renewable energy could contribute from up to 50 per cent (in China, for example) to more than 90 per cent (Australia) of national electricity demand, and in the range of 40 per cent (Germany) to 80 per cent (Indonesia) of national heating supply.

Although many argue that it will be difficult or expensive to find an alternative to oil and coal, and that we should delay the transition for as long as possible, this position ignores the high costs of the current energy system and is based on a technological pessimism that seems out of place today. The first automobiles and computers were difficult to use and expensive, but pioneers persevered and ultimately triumphed in the marketplace.

A century ago, petroleum represented 2 per cent of the world's energy supply - about the same share that new renewables provide today. Just as automobiles followed horses, electric lights replaced gas lamps and, more recently, computers displaced typewriters, so can technological advances make today's smokestacks and cars look primitive, inefficient, and uneconomical. The challenge of the next decade is to accelerate this emerging energy revolution, and the key is ambitious, forward-looking and consistent government policies that drive demand for renewable energy, and create a self-reinforcing market.

And while the road will not be easy, the benefits will be many and great. Renewables are already providing enormous benefits to millions of people around the world, in addition to the energy that they produce. Worldwide, more than 2.5 million people now have jobs in the renewable energy sector. In 2006, approximately 230,000 people were employed in renewables industries in Germany alone.

A July 2007 draft report by the German government estimates that renewable energy avoided the release of more than 100 million tons of carbon dioxide (CO2) in Germany in 2006 - the equivalent of taking more than 18 million U.S. cars off of that nation's roads. In addition, the German government estimated in 2007 that the net economic benefits of renewable electricity to German consumers now amount to about 6 billion euros per year. In other words, the benefits of fuel-import savings, environmental and health benefits of renewable electricity, and an associated decline in wholesale electricity prices all far exceed any additional costs to consumers of producing and using renewable power. Renewables provide a host of other benefits as well, by helping to advance rural development in industrial and developing countries alike, improving energy security, and providing cleaner air and water and improved human health.

We have a brief window of opportunity to start down the path to a more sustainable world - one in which rising demand for energy is met without sacrificing the needs of current and future generations and the natural environment. If the world is to achieve this goal - which it must - countries need to begin today to make the transition to a renewable, sustainable energy future.

Janet L. Sawin is a Senior Researcher and the Director of the Energy and Climate Change Program at the Worldwatch Institute. She has a doctorate in international energy and environmental policy from the Fletcher School of Law and Diplomacy at Tufts University, where her thesis focused on the impact of government policies on the development and diffusion of renewable energy technologies. She currently writes about energy and climate change issues, with a focus on renewable energy.

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