DAN O’BRIEN

The relationship between energy and the environment — a defining issue

THE relationship between energy and the environment will be one of the defining issues of the 21st Century. Climate change has led to growing calls for action to be taken to halt it. The most recent major effort was last year’s global Climate Change Conference in Paris. There, world leaders agreed to reduce emissions to stop global temperatures rising by 2 degrees centigrade, an ambitious target given current trends. Ireland pledged to do its bit by slashing greenhouse gases by at least 40pc by 2030, a tall order too.

Renewable energy is not only central to reducing the risk of runaway climate change, it is also a matter of energy security. Ireland is one of the most dependent countries in Europe on imported energy. While importing anything is not bad per se, security of supply is an issue given the depletion of the North Sea reserves which account for most of our imports.

Geopolitical tension tends to stalk the sources of global energy, whether in the Middle-East, Africa or Russia, making its availability uncertain. No one ever believed there would be a credit crunch of the kind experienced after 2008. It would be wrong to dismiss the risk of an energy supply crunch in the future. That gives further reason to develop clean, competitive domestic energy sources.

To do this — in Ireland and globally — big money will be required. This was a topic in the OECD’s recent Business and Finance Outlook 2016*.

It’s not all doom and gloom. The study points out that there is no shortage of good news on the renewable energy front and that the many positive trends of recent decades are set to continue.

Consider a technology as old as the humble windmill. A single wind turbine can now generate 100 times more power than the best of breed 30 years ago.

And then there’s the ultimate source of all our energy — the sun. Prices of solar components are just 1pc of their level 35 years ago, and are still plummeting as innovation continues apace.

With the cost of a unit of renewably generated energy declining, prices of renewables relative to those of fossil fuels have been trending downwards — and it cannot be stressed enough that relative prices are what matter more than anything else when it comes weaning the planet off oil, coal and gas.

The hope is that research and development will conjure up new technologies we have not even thought of yet. But there is plenty of scope to squeeze more from existing technologies.

Carbon capture, storage and demand management through smart grids could all make renewables more viable. They could also make them more reliable — wind and solar cannot be depended upon for an uninterrupted supply, thanks to the ever-unpredictable nature of the weather.

Switching from finite and dirty energy sources to renewable and clean ones will of course require investment. How to raise the needed funds is a huge and complex question. Where to deploy them is no less challenging.

Consider the world’s biggest and most innovative economy. Funding for basic research on (non-defence) energy by the US federal government sources was budgeted at $7bn in 2015, and only a slice of it goes on renewables. That compares with $30bn on medical research and $70bn on defence research.

On the private side energy firms are attached to existing fuels and technologies and have been reticent to spend big on new technologies with unclear gains.

An example of failure has been wave and tidal power. Lots of money has been ploughed into harnessing the awesome power of the sea — yet everyone who has done so has lost money. Tidal and wave technologies are... well, dead in the water.

During 2015 a total of $286bn was invested globally on renewable energies — an all-time high, according to the OECD report. Driven by growth in Asia and Europe, wind power was the largest sector. Solar power was not too far behind in second, while other sectors, such as biomass and waste-to-power, remain much smaller.

Initially clean energy projects were funded by the big utility companies. However, in the past five years more banks, private funds and state-backed ‘green’ banks have piled in. This is in spite of still considerable barriers that disincentivise investment, the OECD notes.

The main barrier the Paris-based think tank identifies is the lack of coherent and stable positions by governments. Countries can and have changed their policies at a whim: retrospective changes in solar subsidies in several countries, for instance, have damaged investor confidence in the sector.

For advocates of green industrial policies there are ready solutions. Setting a longterm price for carbon would send signals to investors and producers. This can be done through a carbon tax or emission-trading schemes. But easier said than done, as Europe’s quite disastrous emissions trading scheme has shown.

There has also been criticism of clean energy policies. Solar and wind energy are cheap once up and running, but subsidies to reach that point may have distorted markets in a way that goes against long-term sustainable solutions.

In Germany, for example, low prices for heavily subsidised renewables have been blamed in undercutting cleaner, but more expensive natural gas in favour of cheaper, but dirty coal.

Other forces working against the shift to renewables include vested interests and concerns about competitiveness.

Companies heavily invested in traditional energy sources still provide the vast majority of the world’s electricity and fuel. They include many big employers that have lots of clout, so there is a substantial lobby that doesn’t benefit from change.

Another barrier is countries’ fears that they will become uncompetitive in the short run if they impose carbon taxes and tariffs, which push up energy costs for businesses operating in their jurisdictions relative to their competitors.

Ireland faces much the same forces of resistance as most other countries, even if there is not a sizeable cohort of climate change deniers (apart from an occasional backwoodsman in the Dail).

The agriculture sector accounts for one-third of Ireland’s greenhouse emissions. It remains to be seen whether European and international bodies will give Ireland leeway on food security grounds not to force the sector into cutting emissions.

Opposition to the erection of wind turbines was an election issue. Local problems with energy infrastructure is not only to do with renewables. It has been evident in Corrib gas field, fracking and pylons. While Nimby-ism may be a factor, not keeping locals in the loop has been at fault too. The Programme for Government recognises that there is a need for much better engagement with citizens and communities about energy policy.

The government is due to publish a National Mitigation Plan on climate change in the coming months. The challenges ahead will no doubt leave the new Minister for Communications, Climate Change and Natural Resources Denis Naughton with plenty of work to do.

‘Initially clean energy projects were funded by utility companies. However, more banks, private funds and state-backed “green” banks have piled in. ..’