Chapter 25
The Politics of Investing in Sustainable Energy Systems
Alan Owen
Leuserina Garniati Centre for Understanding Sustainable Practice (CUSP), Robert Gordon University, Aberdeen, Scotland, United Kingdom
Abstract
Now that the global human population has passed the 7 billion (7 × 109) mark the availability of all resources to provide sufficient resources for everyone—not excess for a few and poverty for the many—and the inextricable bind between food, energy, and water must be respected. While current policies and business models often treat water, energy, and food security separately, issues in one of these sectors must be addressed with the understanding of this interdependence and seek holistic solutions to address the water–energy–food nexus.
If sustainability of the human race is considered to be important then the politics of investing in renewable energy systems is not (whether we like it or not) best served by the post–Industrial Revolution capitalist model. Investment in energy systems must be based on long-term peaceful societal benefit and not “exploitation as usual.” The most significant roles of investment should be for the development of appropriate technology in creating access to sustainable energy for developing nations to benefit their local population and, wherever possible, there should be universal access to knowledge of developing sustainable energy technologies for locally appropriate use.
Continued linear exploitation of resources will only undermine our long-term survival; there is no magic solution that will allow us to continue our current usage patterns. In short, capitalism is not sustainable, but the highly indebted nature of overdeveloped nations and the need to service that debt mean that it is a fairground ride that we cannot get off. In addition to a circular economy, our economic model should take into account the need to reduce globalization and increase localization, which often leads to cries of protectionism from those nations wishing to export into the local economy and is in direct opposition to the present investment mantra.
Keywords
sustainability
impact
population
investment
exploitation
globalization
1. Introduction
In the chapter we argue that an entirely new economic and political model is required to address global energy issues in the 21st century.
Renewable energy systems are generally seen as beneficial to the environment, desirable for an advanced society, and/or an expensive indulgence that business cannot afford. The positions of many governments, corporations, and influential individuals (positive or negative) on renewable energy are often based on selective use, misuse, or ignorance of the facts regarding renewable energy and the technologies required to deliver it.
Access to energy resources is largely what is presently used to define an “advanced” nation as opposed to a “developing” nation and is therefore an entirely political component of human civilizations. The terms “advanced,” “emerging,” “developing,” etc. are themselves political statements seemingly designed to determine the rightful place of any given nation as perceived by those nations who consider themselves to be “advanced”. Since the “advanced” nations are largely in debt to the point of no return and whose economies depend entirely on the exploitation of dwindling resources, we would argue that “advanced” nationhood is not sustainable and therefore should not be held up as a desirable way forward. From this we suggest that for the purposes of energy consumption the terms under-developed nation, developing nation, developed nation and over-developed nation are more appropriate.
Noting that there has been little change in ranking between 2003–12 the top 35 nations jointly consume 65% of the world”s primary energy, the next 35 consume 22%, nations ranked from 70–105 consume 9%, and the lowest 35 consume 4%. Based on Table 25.1, if we assume (somewhat simplistically, it is recognized) that the average is about right, then the average is ranked at 47th in the world (in both 2003 and 2012). Assuming reasonable equity for social and political purposes then around 4.3 billion people need to improve their access to energy resources, while 2.7 billion, that is, the developed and overdeveloped nations, need to reduce their consumption, some by significant amounts. Since fossil fuels are a diminishing resource and access to nuclear is a contentious issue, then the only mechanism for long-term energy equity is increased access to renewable energy.
Table 25.1
Examples of National Energy Consumption Per Capita (ca) Per Annum (a)
| Example classification | Nation | Rank (2003) | kW h ca–1 a–1 (2003) | kW h ca–1 a–1 (2012) | Rank (2012) |
| Overdeveloped nations | Iceland | 1 | 22 477 | 23 640 | 2 |
| Trinidad & Tobago | 2 | 21 187 | 19 140 | 3 | |
| Qatar | 3 | 17 041 | 24 622 | 1 | |
| Kuwait | 4 | 16 248 | 14 177 | 4 | |
| Luxembourg | 5 | 11 107 | 9 755 | 8 | |
| Developed nations | Slovakia | 35 | 4 367 | 4 162 | 35 |
| United Kingdom | 36 | 4 332 | 3 960 | 37 | |
| Ireland | 37 | 4 284 | 3 877 | 38 | |
| Libya | 38 | 4 011 | 3 710 | 40 | |
| Israel | 39 | 4 001 | 4 099 | 36 | |
| Average | 47 | 3 374 | 3 419 | 47 | |
| Developing nations | Indonesia | 90 | 1 153 | 1 151 | 91 |
| Dominican Republic | 91 | 1 118 | 979 | 97 | |
| Ecuador | 92 | 1 113 | 1 239 | 88 | |
| Armenia | 93 | 1 052 | 1 333 | 85 | |
| Zimbabwe | 94 | 1 017 | 930 | 103 | |
| Underdeveloped nations | Senegal | 132 | 362 | 400 | 130 |
| Haiti | 133 | 304 | 532 | 122 | |
| Bangladesh | 134 | 278 | 285 | 134 | |
| Eritrea | 135 | 188 | 173 | 135 | |
| Afghanistan | 136 | 119 | No data |
World Bank (2003, 2012).
We also argue that sustainability in its true sense should be used to describe sustainability of the human population; in effect, the Earth as a support system is ambivalent about the existence (or otherwise) of any one particular species, and human beings have no particular claim to exclusivity. Renewable energy is promoted as being part of the “Save the Earth” movement, but the Earth will continue to exist (and flourish) long after Homo sapiens has starved to death, dehydrated, or created some apocalyptic disaster that effectively removes the species completely or reduces its influence considerably. At present it is suggested that 1.5 Earths [1] are required to meet sustainably the existing resource demand and that 2 will be needed by 2030; obviously this is not possible and the politics of reducing demand by (50–70)% or reducing the human population by the same amount is not being addressed by anyone. Additionally, it is unlikely that the solution to this issue can be generated by using the same 200 year old investment model built on the European Industrial Revolution and colonial exploitation that has created the problem. For the human population to be sustainable, it must be able to provide sufficient resources for everyone—not excess for a few and poverty for the many. Now that the global human population has passed the 7 billion mark the availability of all resources becomes more acutely focused, and the inextricable bind between food, energy, and water must be respected.
Water and energy are needed to grow food, to drive the associated processing, and preservation activities, and energy is required to treat and transport water. The relationships and tradeoffs within this triangle of resources iterate that food, water, and energy are inextricably interdependent. While current policies and business models often treat water, energy, and food security separately, issues in one of these sectors must be addressed with the understanding of this interdependence and seek holistic solutions to address the water–energy–food nexus.
2. Sustainable energy systems policy and politics
Geospatial regions, nations, and districts have different requirements for energy due to variations in environmental, economic, social, and political constraints, which influence demand profiles and generation capacities. Hence, these constraints determine the policy development and implementation priorities for sustainable energy consumption, generation, and distribution.
Sustainable energy systems discussed in the following sections consist of:
1. Sustainable energy consumption, which is understood as energy conservation measures including energy use reduction and energy efficiency.
2. Sustainable energy generation, which is understood as renewable energy provision.
3. Sustainable energy distribution, which is understood as equal and secure access to energy resources.
A sustainable energy future sees the spread of energy services to reach disadvantaged populations, the practice of rational pricing strategy, and actions for structural reform to ensure facilitation and financing of technology transfer [2]. The social component of sustainable energy can be expanded to cover community involvement, affordability, social acceptability, lifestyles, and aesthetics [3].
Sustainability requires that the four legs—economic, political, social, and environmental—are considered to be equally important, thus sustainable energy resources must be economically viable, politically supported, socially equitable, and environmentally acceptable. We therefore define sustainable energy as any economically viable energy resource (not only electricity) that is not, in its lifecycle, a net contributor to climate change and does not have a substantially negative environmental or social impact (actual or potential). It follows from this that just because an energy resource can be defined as renewable does not make it necessarily sustainable. For example, palm oil, a significant component of biodiesel, is frequently grown on plantations created by clearing rainforest, displacing indigenous people and wildlife. The CO2 impact of felling, clearing, and burning alone is more than the CO2 emissions saved by adding a small percentage of palm oil to road fuels [4].
Sustainable energy requires a balanced composition between energy security, economic development, and environmental protection [5]. It encompasses energy systems, which are based on three core dimensions: energy security, social equity, and environmental impact mitigation [6]. A large component of this would be the incorporation of renewable energy into the existing energy mix, but it does not eliminate the efficient use of conventional sources to ensure sustainable energy security [7]. The term also takes into account the issues of creating an internal energy market and coordinating international collaboration, which in itself constitutes the efforts of efficiently managing energy consumption and energy distribution.
Meanwhile, policy is described as sets of decisions toward a long-term approach to a particular problem, which in governmental scopes are usually embodied in legislation and real, driven actions to achieve its objectives [8]. Therefore, for the purpose of this review, sustainable energy policy can be understood as sets of decisions, which encourage investments from private sectors, present clear business cases to its strategies, and are developed in a participatory, transparent, and accountable way, to achieve energy use, generation, and distribution practices, which are economically viable, environmentally responsible, and socially acceptable for the long term.
The available literature on sustainable energy policies has been found to be extensively documented surrounding economically developed countries and those countries emerging as so-called new industrialized countries (NICs). It is however the contrary for those that are considered countries with developing economies. These limited publications have been captured by an article which provides an overview of energy for sustainable development in developing nations [9], but policy types and sectors in the category are only briefly and broadly touched upon. Global reports on specifically applied policies on sustainable energy have also been produced by the International Energy Agency (IEA) [10] and the World Energy Council (WEC) [11], but as highlighted earlier for peer-reviewed literature, not all of these reports have specifically addressed those country groups with developing economies.
In many developing nations, due to financial and time constraints, policy formulation is often superseded by direct technology implementation without any robust, strategic planning. Lack of political foresight to support policy making creates unclear and insufficiently embedded organizational structures of implementing agents and procedures for appropriate technology utilization. The process then creates energy generation, distribution, and utilization systems, which are not thoroughly planned and often temporarily designed to quick-fix major problems. The process is also more negatively influenced by changes of people, roles, and positions. Politics should instead act as the persistent but subtle force in shaping ideal environments for:
• evaluations on agent of change and initiator of policy modification
• decisions on startup programs for modifying existing policies
• identification (or facilitation/creation if necessary) of timeframe for modifications of existing policies based on local political atmosphere and social readiness to accept changes
• ensuring process design’s flexibility and robustness for transfer of knowledge and paradigm between governments.
3. Implications for investment in sustainable energy systems
In the next decade the global food production system will come under increasing pressure, along with water scarcity and deforestation, due to exponential population growth [12]. Forest products contributed US$100 × 109 a–1 ($100 billion per year) to the global economy between 2003–07 and the value of nonwood forest products (mostly food) was estimated at US$18.5 × 109 ($18.5 billion) in 2005, yet approximately 40% of the world’s natural forests have disappeared in the last 300 years [13] and are predicted to decline by 13% from 2005–30, mostly in South Asia and Africa [14]. Along with forest degradation the rate of natural ecosystem loss continues unabated [15]. While palm oil, rubber, and pulp-based economic activities provide people with short-term income, they also accelerate greenhouse gas emissions, increase air pollution, and harm the forests that Indonesians and the rest of the global population depend on. The signs of ecosystem breakdown and stress have illustrated how dependent livelihood and business operations are on the critical services these ecosystems provide as the decline in ecosystems is:
1. making natural resources scarcer and more expensive
2. increasing the costs of water
3. escalating the damage caused by invasive species to sectors including agriculture, fishing, and food production.
Therefore, by definition, the current use of the word “investment” must mean something different to future generations than to those of the last 50 years. Investment in energy systems must be based on long-term peaceful societal benefit and not “exploitation as usual.”
4. Technology selection
Currently, technology selections are made based on the emphasis of efficiency, for example, technologies developed in industrialized countries are designed primarily for capital intensive and labor minimization [16]. However, societies with developing economies have different supply and demand requirements for renewable energy, thereby often creating a mismatch between the proposed technology to be implemented and the technology that will create optimum impact. Adapting complex and sophisticated technologies within a local context remains a challenge. On the other hand, the engineering capabilities of the indigenous communities to design, manufacture, install, operate, and maintain their own tailor-made technologies for their specific contexts are also still very limited, especially in the most vulnerable regions of the developing world. These two contradictory issues have become the precursor for addressing the needs and priorities of appropriate technology.
The most significant roles of investment should be for the development of appropriate technology in creating access to sustainable energy for developing nations to benefit their local population and, wherever possible, there should be universal access to knowledge of developing sustainable energy technologies for locally appropriate use. These technology systems must be developed with the desire to encourage independence, not just for financial gain, thus ensuring that the skills for developing technologies are available to all, and any restrictions due to economics/politics are removed. Access to energy, which is reliable and affordable, will potentially increase economic activities and thereby reduce the potential for social/political conflict in these vulnerable regions.
In summary, sustainable energy technical resources have outlined issues related to energy in societies with developing economies in a way that may not be immediately obvious to a Western, educated, industrialized, rich, and democratic (WEIRD) mindset. It is clear from field experience that simply transferring complex technology is of little help without indigenous skillsets being developed to support subsequent service life. Substantial indigenous wisdom exists which can be used if the external fieldworker takes the time to engage and form constructive relationships with local communities.
Correct timing and accurate actor identification, encapsulated as the politics of policy making in the sector, are also prerequisites to ensuring policy goals in sustainable energy access are practiced at ground levels. Politics as the fourth component of sustainable energy systems in practice needs to understand how technology works; how devices are manufactured, operated, and maintained; and how engineering systems affect its social/natural surroundings. It needs to value how community functions and interact with its social/natural surroundings. Politics needs to be aware of how the natural environment behaves, dictates limiting factors, and sets boundaries to constraints.
5. Transition
The economic and political challenges of transitioning to a sustainable energy future require that making money in large quantities is no longer the motivating factor and recognition of the fact that sustainable energy supplies are themselves a potential point of conflict. As an example, it may be seen that using renewable energy technology to replace diesel generation in remote areas is a good thing to do; it reduces CO2 emissions, reduces energy costs to the local community, and reduces dependency on dwindling fossil fuels. However, what is often not recognized is that the diesel fuel currently used in that location is part of an existing supply chain and will represent a number of business investments, individual livelihoods, and income-generating practices. If diesel generation is removed or reduced then a conflict will arise between the existing energy provider and the new one. If the existing energy provider is to become the new energy provider, then who will provide the additional investment, training, and product support—not to mention writing off the existing supply chain infrastructure?
Equally, many companies and individuals in the United Kingdom have invested, with the support of government-funded feed-in tariffs, in wind, solar, and other forms of renewable energy technology. However, due to peak-loading needs, inequity between availability and demand, and existing grid capacity constraints, these energy supplies are often curtailed or, put more simply, not used but still paid for. If renewable energy sources are for operational purposes unable to supplant the existing systems, how is the transition to sustainable energy systems to be made?
6. Global implications
It is unfortunate that most of the world’s influential governments are tied to, and funded by, large corporate interests who will fight any attempt to change their commercial and financial models which are based on linear exploitation, that is, resource extraction, application of energy, product manufacture, sale, use, and disposal. This linear approach ensures constant demand for new products but fails to take into account a finite and dwindling supply of resources to meet that demand. Continued linear exploitation of resources will only undermine our long-term survival; there is no magic solution that will allow us to continue our current usage patterns. In short, capitalism in its current form is not sustainable, but the highly indebted nature of overdeveloped nations and the need to service that debt mean that it is a fairground ride that we cannot get off.
Already mass economic migration between Africa and Europe is creating additional economic pressures that cannot be withstood. Lack of human equity across the globe, much of which is ultimately traceable to access to energy, will only exacerbate the situation, while the stripping of the planet for the purposes of monetizing natural resources only damages our own life support systems.
Having said that, it is difficult to envisage a global system that does not recognize the need for a business case; every operation must make business sense, otherwise it fails the economically viable test of sustainability. The primary requirement is that simply operating energy systems as a means of profit is not sufficient.
7. The circular economy
As a potential solution to the linear economy the concept of a circular economy attempts to manage our economic activity in the same characteristic style of the circulatory systems of the global environment. It requires that demand for resources, including energy, are reduced and that everything should be designed for reuse and recycling—effectively zero waste. A report from the Ellen MacArthur Foundation estimates [17] that $2 × 1012 (2 trillion USD) is wasted and that this is potentially a new economic opportunity. However, referring back to the remote diesel example given earlier, if the recycling market is potentially worth $2 × 1012 (2 trillion USD) then that must, under current circumstances, be able to replace $2 × 1012 (2 trillion USD) of existing resource consumption, that is, an excellent plan in terms of global resource use, but someone’s existing investment is going to be threatened. The report’s key findings suggest that:
• Household food waste: an income stream of $1.5 × 109 ($1.5 billion) could be generated annually in the United Kingdom alone for municipalities and investors by collecting household food waste and processing it to generate biogas and return nutrients to agricultural soils.
• Textiles: revenue of $1975 t–1 (USD 1975 per tonne) of clothing could be generated in the United Kingdom if collected, remade, and sold at current prices, comfortably outweighing the cost of $680 (USD 680) required to collect and sort each tonne.
• Packaging: a cost reduction of 20% hL–1 (20 percent per hectoliter) of beer sold to consumers would be possible across all markets by shifting from disposable to reusable glass bottles, which would lower the cost of packaging, processing, and distribution.
It is estimated that 75% of our global energy resource is used for raw material production and processing contributing significantly to CO2 emissions. In many developing nations manpower is used where overdeveloped nations would simply apply energy-intensive equipment. For example, at Soekarno Hatta Airport in Jakarta (Indonesia), the authors observed 6 men pushing a line of some 50–60 trolleys back to the baggage carousels, while on the same trip one man drove an electric “tractor” at Schiphol Airport, Amsterdam towing fewer than 10 trolleys.
One of the biggest factors in energy use and, therefore, energy reduction is global transportation of goods, many of which are exported from a country while similar goods are being imported into the same country from elsewhere or domestic suppliers are unable to compete. As an example, one tonne of shipping from Australia or New Zealand requires around 10 MW h of energy to reach the United Kingom, yet UK producers such as farmers often find it difficult to sell into their own domestic markets. It is however difficult to make an investment case for not using energy as part of global trade.
Therefore, in addition to a circular economy our economic model should take into account the need to reduce globalization and increase localization, which often leads to cries of protectionism from those nations wishing to export into the local economy and is in direct opposition to the present investment mantra.
8. Conclusions
The authors apologize for the somewhat gloomy energy investment prospectus outlined in the chapter and for raising more questions than we can answer. However, it is clear to us that “investment” in the accepted sense of the word is no longer appropriate for the situation that the human population finds itself in. For sustainable energy and the renewable energy systems that must be part of such a concept a new model of investment is required, one that places the emphasis on community benefit and equity rather than just maximizing profit for a few, but this is a very difficult political argument to make.
The inequality of access to energy resources between underdeveloped, developing, developed, and overdeveloped nations must be addressed, and quickly, to avoid significant global movement of people trying to extricate themselves from where they are to where they perceive to be a better place, even if it is a false dawn built on borrowed money.
The biggest single economic and energy-related challenge is to persuade the top 25% of energy-consuming nations that they are not entitled to 65% of the world ’s primary energy supply no matter what their relative economic advantage. Not only must these nations reduce their consumption, they must support the lowest 50% of energy-consuming nations to improve their access to energy beyond the existing figure of 13%.
If sustainability of the human race is considered to be important, then the politics of investing in renewable energy systems is not (whether we like it or not) best served by the post–Industrial Revolution capitalist model. Similar sentiments have been expressed in Ref. [18].
..................Content has been hidden....................
You can't read the all page of ebook, please click here login for view all page.