Developing Renewables

Developing renewables
Renewing development
Energy has once again become the focus of
Towards clean, safe
international debate. The current energy
and fair energy
system generates serious economic and
strategic-political conflicts and it is one of
the greatest causes of environmental dete-
rioration. It is an essentially unfair system
that marginalizes an enormous part of the
global population to poverty. Renewable
energies are being called upon to play a
central role in the new model of develop-
ment: development that is clean, self-suffi-
cient and fair. Developing renewable
energies can also renew development.
Under the sponsorship and collaboration of

Paginas0:Maquetación 1 18/4/08 10:23 Página 1
DEVELOPING
RENEWABLES
RENEWING
DEVELOPMENT
Towards a clean,
secure and fair energy
Produce by: Sustainlabour
Authors: Sustainlabour Foundation. Anabella Rosemberg, Laura Martin Murillo, Laura Maffei.
Coordinator of the Collection: Manuel López Quero
Chair University-Entreprise-Trade unions: Labour, Health and Environment of the Universidad Politécnica
de Madrid.
Editorial Board: Sophie Dupressoir, Responsible of Climate Change in the European Trade Union Confed-
eration, Michael Renner, Worldwatch Institute, Manuel Garí Ramos, Head for Environment, Instituto Tra-
bajo Ambiente y Salud, ISTAS, Gonzalo Sáenz de Miera, Head of the Prospective Department-Iberdrola
Renewable Energies, Gonzalo León Serna, Vice-chancellor of Research at the Polythenic University of
Madrid, Joaquín Nieto, Confederal Secretary for Environment, Comisiones Obreras, Chowdhury Repon,
Executive Director of the Bangladesh Occupational Safety, Health and Environment Foundation (OSHE),
Antonio Ruiz de Elvira, Professor of Physics at the University of Alcala and member of Scientifics for the
Environment (CIMA), Xavier Viteri, Head of Renewable Energies, Iberdrola, Peter Poschen, International
Labour Office (ILO), Manuel López Quero, Chair University-Entreprise-Trade unions: Labour, Health and
Environment, Escuela Superior de Ingenieros de Montes.
Under the sponsorship and collaboration of Iberdrola Renovables.
Special thanks to Carlos Gascó Travesedo y Yeray Fernández Díaz
Published by Paralelo Edición, SA
ISBN: 978-84-612-3489-9
Legal Deposit: M-19917-2008
Printed in Recycled Paper

CONTENTS
INTRODUCTION ...................................................................................... 7
PART ONE
Renewable Energies: present energies ........................................................ 9
1. A QUESTION OF NEED - The international energy debate: securing supply

and energy dependency, climate change and access to energy ............... 9
• Security of supplies and energy dependency ...................................... 10
• The Greenhouse effect and climate change ....................................... 11
• A task for this century: extending access to energy ............................ 14
2. Developed countries and the sustained growth of renewable energies ... 15

• Reasons for developing renewable energies ...................................... 15
• What has been needed: investment tendencies of developed countries ... 16
• What lies ahead for the developed world? How much energy do we
need? .............................................................................................. 20
• What implications DO renewable energies have for job creation? ...... 20
3. Economics today: towards a true estimation of costs .............................. 23

• Subsidies .......................................................................................... 24
• Environmental and sanitary costs ...................................................... 25
• Political and Institutional costs .......................................................... 27
4. Energy transitions in the world: different roads leading to a common fu-

ture ................................................................................................. 28
• Developed countries: the transition that is leading the way ................ 28
• Developing countries: a transition to be agreed upon ........................ 30
• Starting on the right foot: prioritising access to renewable energies ... 36
PART TWO
Development and the role of renewable energies ........................................ 39
1. The relationship between economic development and energy ................ 39

• Are growth, energy and the environment natural enemies? ............... 40
2. Poverty and access to energy ................................................................. 43

• Energy and poverty ........................................................................... 43
• Energy and the Millennium Development Goals ................................. 47
3. Supporting a qualitative jump in development: sustainability and renewable

energies ................................................................................................ 49
• Supporting an autonomous development .......................................... 51
• Supporting fair and just development ................................................ 53
• Supporting a clean development ....................................................... 55
PART THREE
Renewable energies and other vectors of development: participation and in-
stitutional quality ....................................................................................... 59
1. Renewables and participation: correlative or independent dynamics ....... 59

• Access and democracy, linking theory and practice ............................ 61
• When democratic expression does not push sustainability forward? ... 63
• Positive tendencies for paths that are not always juxtaposed ............. 64
2. New institutions for new energies ......................................................... 67

• A broad vision of institutions and their role in economic development .. 67
• Renewable energies: the importance of regulatory frameworks and the
differences between existing models ................................................. 69
• A much needed regulatory framework for renewable energies in devel-
oping countries ................................................................................ 79
CONCLUSION .......................................................................................... 83
PART FOUR
Developing renewable energies: a look at good practices and their respective
contexts ..................................................................................................... 85
• INDIA ............................................................................................... 85
• MEXICO ........................................................................................... 96
• SOUTH AFRICA ................................................................................. 106
INTRODUCCIÓN
Insecure supply. Climate change. 1.6 billion people without proper access to electricity. When
looking at energy, its sources and its uses, no longer are we questioning the need to change
our energy model or whether it is possible to do so. The necessity for changes in the current
model is no longer debatable. We can only decide on the timeline for their implementation,
meaning that in the short run we must agree on when we will go about them; when we will
shift from an energy model based on fossil fuels to one based on renewable energies, a model
which will be strongly oriented towards efficiency and rationality in energy use.
This book explores the reasons for making decisions that are capable of ensuring a fair, se-
cure and clean future for humanity, and how these decisions are closely related to transfor-
mations in the energetic model.
Decisions will vary depending on geopolitical, economic and social contexts. The transition
from the ‘fossil’ to the ‘renewable’ model will imply different paths depending on whether
it takes place in a developed country – where energy demand is covered and stable -, in an
emerging economy – where demand is not satisfied and growing -, or in a country affected
by poverty, and with little perspectives for growth in the medium run – where a new source
of energy can be a vector for development.
These three scenarios are analyzed in this study; three transitions with a common conclu-
sion: there is no development without energy and neither will there be development if the
energy base is finite and costly – in a large sense of the term, taking into account economic,
environmental but also the political costs of depending on traditional energy sources.
This work analyzes the many consequences of the current energy model and identifies dif-
ferences with one based on the development of renewable energies. It also looks at the strate-
gies that are implemented to promote renewable energies and provides evidence of the rel-
ative efficiency of regulatory mechanisms over market mechanisms.
The first part introduces current debates surrounding the energy question, strongly influenced
by issues such as climate change, security of supply or energy dependency. It also analyzes
7
the state of renewable energies in developed countries and proposes a calculation of their
real cost. Finally, it drafts different pathways which could be taken by developed countries,
emerging economies or least developed countries to advance towards a sustainable energy
model.
The second part deals more specifically with the linkages between development and energy,
the tight relationship between energy access and the fight against poverty, and the quali-
tative jump renewable access to energy could represent for the poorest countries and com-
munities.
The third part explores linkages between renewable energies and other essential issues for
the strengthening of development patterns, such as improved popular participation or the
quality of institutional setups. In the first case, both positive outcomes as well as challenges
that are derived from the development of renewable energies at all levels – from public poli-
cies to local forms of democracy - are studied. Regarding the quality of institutional setups,
the importance of regulatory frameworks in the development of renewable energy is ana-
lyzed and some possible forms of regulation for developing countries are suggested.
The fourth part is a selection of good practices for the development of renewable energies.
In this section, explanations are given with regards to its characteristics as well as the en-
ergy policy context within which they were developed.
This study seeks to promote the development of renewable energies as a means for coun-
tering the negative effects of the current energy model, but also as a means for tackling other
present-day issues such as the lack of access to energy. It seeks to demystify the obstacles
that are associated with a transition which is not only necessary but urgent. The coming years
will determine whether or not our society is capable of voluntarily succeeding in undertak-
ing this transformation, which implies significant changes in our ways of consuming, pro-
ducing and distributing the wealth generated by society. This work is a modest contribution
to the global debate on the type of society we would like to build and transmit to future gen-
erations.
8
PART ONE
RENEWABLE ENERGIES: PRESENT ENERGIES
1. A QUESTION OF NEED - THE INTERNATIONAL ENERGY DEBATE: SECURING

SUPPLY AND ENERGY DEPENDENCY, CLIMATE CHANGE AND ACCESS TO ENERGY.
Yet again, energy has become the focus of international debate and it is not difficult to men-
tion at least three reasons for this. First, analysts coincide in pointing out that the relative
stability of oil prices came to an end with subsequent crises in 1973-1974 and 1978. Trans-
formations have also taken place in the markets of other fossil fuels, such as gas, which have
become the currency with which to resolve or accentuate geopolitical conflicts. Second, the
environmental consequences of using oil and other fossil fuels have slowly but firmly trans-
formed the centre of a debate over the survival of contemporary society itself. It is evident
that climate change is a political problem of the first order. Finally, there is an increasing recog-
nition of the need to guarantee millions of people access to energy services which are es-
sential for fostering economic and human development. In the context of the current energy
model, this would generate additional pressure on already scarce fossil fuels, together with
the environmental consequences we have already briefly mentioned. To summarise, the cur-
rent energy system generates grave economic and political conflicts; is one of the most im-
portant causes of environmental degradation; and is, in essence, unfair because it margin-
alises and condemns a large part of the world’s population to poverty.
Securing energy supplies is once again a geopolitical priority for developed countries but also
for developing countries. These countries are witnessing the increasing burden of energy im-
ports in their payment balances and are aware that, under current consumption patterns,
the cost of expanding and guaranteeing access and service quality to those citizens who are
not yet connected to any network will be prohibitively expensive.
In addition to this dependency and its associated costs there is another dimension which has
gained increasing attention in the last years: climate change. Climate change makes evident
that developed countries need to reduce their fossil fuel consumption (and thus, their carbon
9
Developing renewables. Renewing development
emissions) by an even greater degree in order to create some manoeuvring space for those na-
tions that have historically consumed far less. Its potentially devastating effects have forced us
to re-examine the costs associated with the use of fossil fuels. Taking these true costs into ac-
count no longer means that the use of fossil fuels implies only the short-term costs such as those
associated with possible imbalances of national budgets. Instead they also carry the weight of
more serious costs (economic, environmental and social) in the medium and long term, which
put at risk the very means of subsistence of a country’s population.
Faced with this scenario the most common practice is to look for alternatives such as other
available energy supplies. The search for alternative energy sources (where renewable en-
ergies have their main appeal) must count on trustworthy information of a technical and eco-
nomic nature. In particular, the latter must include an estimate of the real costs and allow
for the alteration of the parameters on which these estimates are traditionally based.
Security of supplies and energy dependency
The constant increase in energy demand, mounting evidence that we have reached a peak
in oil production1 and that global reserves are decreasing, dependency on fossil fuel imports
from countries that are often politically unstable, and the volatility of international fossil fuel
prices (which have risen steadily from 35 USD, breaking the symbolic barrier of 100 USD in
2007) have made energy security a priority on national and international political agendas.
Developing countries are in a particularly vulnerable situation. A large part of their popula-
tions do not even have basic access to energy. Thus, projections for these countries must en-
visage an increase in energy consumption due to their obligation to extend access to their
entire populations.
What then are the options? It is logical to think of technological solutions such as renew-
able energies, in particular the newest generations of wind, solar and biomass technologies.
One attractive characteristic of these energy sources is that they are less vulnerable to in-
stabilities in the energy market.
1
Oil is being consumed four times faster than the time it takes to discover reserves, and this gap is getting larger every
year. The current rate of extraction is very close to its maximum possible level.
10
Renewable energies: present energies | Part one
In a report published in 2006, the International Energy Agency (IEA) considered that, apart
from the environmental benefits of developing renewable energies, these
“… present certain characteristics that allow them to mitigate the risks associated with the
provision of energy such as market instabilities, faults in the system, external threats and ex-
treme climatic events. With regard to risks to supplies, the consequences of fluctuating oil
and gas prices for the world economy, and developing countries particularly, is evident. The
poorest economies, which import fossil fuels, are especially vulnerable to increase in prices
which could affect their balances of payments.
Renewable energies can contribute to the energy security as well as environmental objec-
tives at the national, regional and global level. Though in many cases environmental objec-
tives might be given a higher value, governments and industries will also have to bear in mind
the benefits in terms of security when designing their policies2.”
The Greenhouse effect and climate change
There are no longer any doubts that increases in the concentrations of carbon dioxide (CO2)
and other Greenhouse Gases (GHGs), caused mainly by the massive consumption of fossil
fuels, are in great measure responsible for the observed changes in climate, the consequences
of which we are starting to see evidence.
More developed countries have taken advantage of the diffusion of climate change in space
and time to water down their responsibilities. The most immediate consequences will not be
felt by nations originally responsible for global warming, but by countries which due to their
geographical characteristics (such as the islands of the Pacific, whose very territory is threat-
ened) or their levels of development (as is the case with African countries who will suffer
the consequences of droughts and floods - particularly those which are still dependent on
dry land agriculture and lack the necessary infrastructures) are more vulnerable. It is these
countries which will in the short-term pay the costs of developing countries not taking timely
action.
2
IEA, Contribution of Renewables to Energy Security. April 2007, pg 7.
11
As scientific evidence of the problem has mounted, it has been more and more difficult to
maintain positions of denial. This progressive acceptance first led to the signing of the UN
Framework Convention on Climate Change which was agreed upon at the Rio Earth Sum-
mit in 1992. What are the fundamental issues established in this convention? The Conven-
tion acknowledges, amongst others, the common responsibility of all countries to combat
climate changes and its consequences, but also their differentiated responsibilities. The Con-
vention establishes as its aim the stabilisation of greenhouse gases at a level that “prevents
dangerous anthropogenic interferences with the climate system”3. In 1997 the Kyoto Pro-
tocol was agreed upon establishing the concrete commitments of the Convention. Countries
thus, committed to individual targets for the reduction and limitation of GHG emissions, sanc-
tionable by law. The protocol establishes a total reduction of 5.2% with respect to 1990 lev-
els for the period 2008-2012.
TABLE 1 OBJECTIVE
COUNTRY (1990*–2008/2012)
EU-15*, Bulgaria, Czech Republic, Estonia, Latvia, Liechtenstein,

Lithuania, Monaco, Romania, Slovak Republic, Slovenia, Switzerland............... -8%
United States of America**............................................................................ -7%
Canada, Hungary, Japan, Poland .................................................................... -6%
Croatia .......................................................................................................... -5%
New Zealand, Russian Federation, Ukraine ..................................................... 0
Norway ......................................................................................................... +1%
Australia***.................................................................................................. +8%
Iceland .......................................................................................................... +10%
* The 15 States that were members of the EU in 1990 share their objectives among themselves, under a so called
“bubble scheme”, in which countries have different individual objectives, but which combined add up to the ob-
jective stipulated in the Protocol.
** The United States has not ratified the Kyoto Protocol, this is not an objective for fulfilment.
*** Australia signed the instrument of ratification of Kyoto on December 2007.
Source: CMNUCC
3
United Nations Framework Convention on Climate Change (UNFCCC), article 2.
12
However, the Protocol has suffered a series of set-backs. Most notably the United States’ re-
fusal to ratify the protocol, despite having only 5% of the world’s population and produc-
ing close to a quarter of global GHGs. Additionally, civil society has denounced that some
of the countries which have ratified this treaty claim difficulties in reaching targets of na-
tional emission reduction
Nevertheless, it should be pointed out that awareness of the need to take action against dan-
gerous climate change has increased substantially in recent times. The succession of extreme
climatic events – not necessarily related with climate change, but examples, nevertheless,
of situations which could be aggravated by it – and the publication of reports and the re-
lease of documentaries dealing with the issue – An Inconvenient Truth, The Stern Report,
and The 4th Report of the Intergovernmental Panel on Climate Change4, each one target-
ing different audiences - have helped create a drive for governmental and public decision-
making on the issues.
This has somehow been reflected in the last UNFCCC conference, in 2007 in Bali, where the
process for negotiating the next agreement on emission reductions was launched.
In the context of making progress to refute doubts about the existence of and the gravity
posed by climate change, there is an enormous need to promote policies that separate or
de-couple energy consumption from the emission of GHGs. How we go about achieving this
has also centred the debate on the costs we will have to face if we do not take the politi-
cal decisions necessary to stop the exponential growth of CO2 emissions.
The generation of electricity, for example, is responsible for 40% of annual CO2 emissions
and, with a projected increase in demand of 50% by 20305, CO2 emissions could increase
55% with respect to 2004 levels.
Taking into account the climate change factor and the cost of maintenance (and, in many
4
When it became aware of the problem posed by global climate change, the World Meteorological Organization (WMO)
and the United Nations Environment Program (UNEP) created the Intergovernmental Panel on Climate Change (IPCC)
in 1988. This was a group open to all members of the United Nations. The function of the IPCC is to carry out an ex-
haustive, objective, open and transparent analysis of the scientific, technical and socioeconomic data relevant to sci-
entifically understanding risks posed by anthropogenic climate change, its possible repercussions and its adaptive and
mitigating options. More than 2,500 scientists took part in its last report, the fourth one from the IPCC.
5
Annual Energy Outlook. 2007.
13
cases, responding to forecasted increases in demand for energy), it seems irrational to in-
crease our consumption of fossil fuels. Especially if we take into account that nowadays we
can find renewable energy sources that are able to respond to the challenge of climate change
and provide other benefits, such as improved air quality in cities, the creation of jobs and
the reduction of energy dependency.
A task for this century: extending access to energy
The importance of energy to human and economic development is well known. In this con-
text it is very important to note that access to energy for those sectors of the population cur-
rently excluded, will be affected by choices in energy policies. e. g., if fossil fuels are chosen
then access will be conditioned by the capacity of that country to finance the import of these
at a constantly increasing price. It can also be conditioned by pressures to control CO2 emis-
sions in emerging economies.
According to UN data, there are currently 1.6 billion people in the world without access to
electricity6, 4/5 of which are in rural areas. In its 2004 report, the EIA estimates that by the
year 2030 half of the population of sub-Sahara Africa will continue to be denied access to
electricity and that Africa will be the only region where the total number of people without
access to electricity will increase with respect to the current number of people without ac-
cess to these services.
The truth is that without the adoption of ambitious policies that tackle this issue, the situation
will not change. It is interesting to note that, despite the importance of access to energy, the
Millennium Development Goals (MDGs)7 do not establish any objectives in this regard. As we
will see in detail further on, in order to meet the other objectives established in the MDGs, gov-
ernments must previously respond to the challenge of guaranteeing access to energy, given its
direct relationship to achieving the MDGs. It is difficult to think how, for example, illiteracy and
child mortality can be reduced if schools and hospitals do not have electricity.
6
The Energy Challenge for Achieving the Millennium Development Goals, 2005.
7
The Millennium Development Goals are a set of 8 goals, approved by 191 member countries of the UN in 2000, to be
achieved by countries by 2015.
14
2. DEVELOPED COUNTRIES AND THE SUSTAINED GROWTH OF RENEWABLE

ENERGIES
In 2005 the global market for renewable energy grew considerably (26% between 2005 and
2006)8. One example is solar photovoltaic energy, which grew 41% in 2006, making for a
nine-fold growth since 20009. Apart from this market growth, 2005 also marked a new record
in renewable energy investments, led by Germany and China (with investments close to six
billion USD each) and followed by the US, Spain and Japan. However, the relative importance
of renewable energies in each of these countries differs in terms:
a) Of the objectives each country is seeking to achieve (be it access to or conversion of cur-
rent energy systems);
b) Of the longevity of the investments and the context in which they are developed;
c) Of their aspirations and goals;
In this section we will examine the state of renewable energies in developed countries, where
they stand as alternative energy sources in an already established energy system and how they
compete after several decades of investment – as is the case with EU member states and Japan,
which have strong CO2 reduction policies and established objectives for the development of re-
newable energies which go back several years.While in developed countries the capacity to ex-
pand the use of renewable energy is important, it tends to be focused in the sector of new re-
newable energy sources (for example, solar and wind energy) as traditional energy sources have
exhausted their capacity to expand (as is the case with large hydroelectric energy sources).
Reasons for developing renewable energies
In developed countries the main motivation driving the growth of renewable energies is the
desire to substitute fossil fuels with cleaner alternatives. Initially this desire was borne out
of the oil crisis of the 70´s and its response to the recognition of the need to escape from
an over-dependency on fossil fuels.
8
Greenpeace, Energy [R]evolution, pg. 5.
9
WorldWatch Institute, Vital Signs 2007-2008, pg.39.
15
In the second stage of expansion (in which we currently find ourselves) one must add the
environment to the list of concerns about the security of energy supplies: clean and renew-
able sources of energy are a means of reducing pressures on our planet, in particular with
regard to CO2 emissions and consequent global warming.
Given that in these countries access to energy is guaranteed, this objectives does not con-
stitute a motivation for the expansion of renewable energies as is the case in developing
countries.
It is also true that developed countries face another challenge which is not related to meth-
ods of energy production. It has to with their capacity to manage energy demand and its
usage. Energy consumption in developed countries accounts for an average of more than
4,600 Kg of oil per person (whereas in developing countries the average is 910 Kg), with
variations ranging from 7,800 Kg in the US to 3,100 Kg in Italy, to give but one compari-
son10. Maintaining these excessive levels of consumption and emission of pollutants is not
possible due to the finite nature of these resources and their contribution to climate change.
Hence the increasing importance of coupling policies aimed at the generation of renewable
energy with plans for a rational and efficient energy use is increasingly important.
What has been needed: investment tendencies of developed countries
The first evidence of the evolution of renewable energies in the developed countries dates
back to the 1970s, when, in the context of political crises and an exponential rise in the price
of oil, governments became aware of the need for a greater energy independence.
“Starting at this point (and a few countries earlier) governments created R&D programs to
develop renewable energy sources as an alternative to fossil fuels. This was followed up with
a series of policies aimed at promoting these technologies, including investment incentives,
taxes and subsidies, with a special focus on new renewable energies11”.
10
Earthtrends, Energy Consumption: Total energy consumption per capita Units: Kilograms of oil equivalent (kgoe) per
person, based on data from International Energy Agency (IEA) Statistics Division. 2006. Energy Balances of OECD Coun-
tries (2006 edition) and Energy Balances of Non-OECD Countries (2006 edition).
11
IEA, Contribution of Renewables to Energy Security. Abril de 2007.
16
According to the IEA12, which analyses the evolution of energy markets in developed coun-
tries, the contribution of renewable energies (including large hydroelectric infrastructures)
to the energy on offer increased from 141.5 Mtoe13 (4.6%) in 1970 to 280.9 (5.5%) in 2001.
In three decades the contribution of renewable energies has increased an average of 2.2%,
while the total energy on offer has increased 1.6% over the same period. Whereas the con-
tribution of mature renewable energies (such as hydroelectric or geothermal) declined, that of
new renewable energies (such as wind or solar) increased by 23% between 1980 and 2001.
The initial drive in the growth of renewable energies in the 1970s and 1980s was the con-
tribution of public funds borne out of the oil crisis of the 70s. IEA governments allocated about
291 billion USD for energy research, development and deployment (RD&D) from 1974 to
200214. In the same period, investments for RD&D in renewable energies in developed coun-
tries amounted to close to 23.55 billion USD, or 8% of the total funds allocated. In the fol-
lowing table we can see the distribution of these investments for each type of renewable
energies.
TABLE 2
Solar photovoltaic.......................................................................................... 2.7%

Biomass ........................................................................................................ 1.6%
Wind energy .................................................................................................. 1.1%
Geothermal ................................................................................................... 0.9%
Solar heating and cooling ............................................................................. 0.7%
Solar thermal electricity ................................................................................. 0.5%
Wave and ocean energy................................................................................. 0.1%
Large hydroelectric infrastructures .................................................................. 0.1%
Small hydroelectric works............................................................................... 0.04%
Source: IEA, Renewable Energy, Market and Policy Trends in IEA countries. 2004, page 53.
12
IEA. Renewable Energy, Market and Policy Trends in IEA countries. 2004, pg 53.
13
Mtoe: Million tons of oil equivalent.
14
IEA. Renewable Energy, Market and Policy Trends in IEA Countries. 2004, pg 54.
17
Nevertheless and despite their success, the aforementioned budgets fell by almost a half at
the end of the 1980s and remained stable until the end of 200015. This reduction is incon-
sistent with the proclaimed intentions of governments to increase their contribution of re-
newable energies to the total amount of energy on offer.
Investment in RD&D for renewable energies increased rapidly at the end of the 1970s and
peaked in 1980, with nearly two billion USD. This investment declined in the mid 1980s and
has remained stable ever since, between 550 million USD and 700 million USD annually. For
IEA member countries the average was 650 million USD from 1990 to 2002, 7.7% of which
was public money. These budgets, even at the 80’s peak, remained weak in comparison with
budgets allocated for RD&D in fossil fuel and nuclear technologies.
FIGURE 1 Presupuesto público en la I+D+D para Energía Milions US$ (2002 prices and exchange rates)
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Other Power & Storage Tech. Nuclear Fusion Nuclear

Tech./Research
Reneweble Energy Fossil Fuels Conservation
Source IEA, Renewable Energy, Market and Policy Trends in IEA countries. 2004, page 55.
15
IEA. Renewable Energy, Market and Policy Trends in IEA Countries. 2004, pg 53.
18
Germany, Japan and the US account for close to 66% of all funds in the period 1990-2002,
followed by Italy, Holland and Switzerland. These six countries together add up to an aver-
age of 531 million USD per year, with the US contributing the largest share, with a budget
of 236.9 million USD per year.
FIGURE 2 Government Renewable Energy RD&D Budgets Milions US$ (2002 prices and exchange rates)
2,500
2,000
1,500
1,000
500
Small Hydro Large Hydro Geoth Bio Oce

(<10MW) (<10MW)
Wind Solar Solar Solar Heating

Thermal- Photo-Electric & Cooling
Source: IEA, Renewable Energy, Market and Policy Trends in IEA countries. 2004, page 55.
But the rate of increase of renewable energies is explained not only by the budgets dedi-
cated to RDI. Their boost is also due to other promotional policies, in particular those aimed
at the expansion and growth of these technologies.
To name but a few examples of policies aimed at the promotion of renewable energies we
can point out the rolling out of demonstration projects (which increase their visibility and
public acceptance), financial incentives for the purchase of infrastructures necessary for the
generation of renewable energy, the establishment of feed-in tariffs, low-interest loans, cap-
ital subsidies and local support for constructions. ,
19
Looking at experiences across a range of countries we can observe that longevity can de-
termine the success of different national policies. Only those that have received constant sup-
port over many years have been able to establish a steady evolution of renewable energies.
“In most cases, tariffs introduced to the network have functioned for periods of 8 to 20 years.
On the other hand, intermittent policies, such as the credits imposed in the US could dam-
age private sector investment due to uncertainties on the medium term.”.
Longevity and predictability of public support are important contributors to the growth in
renewable energies. But it is also necessary to develop other types of non-financial resources.
We are referring to human and technological resources, as well as legal and regulatory in-
struments, which can ensure their advancement and projection into the future.
What lies ahead for the developed world? How much energy do we
need?
According to The Climate Group16, the global installed capacity of renewable energies in 2005
(without taking into account large hydroelectric infrastructures) reached 182 GW, which
meant an increase of 14% with respect to 2004, and 4% of total electricity production. Wind
energy contributed 50% of this figure and solar energy 5%17.
Taking the estimate of this organisation wind generated electricity will need to increase from
90GW to 124GW by 2009, and increase a further 200GW by 2012.
What implications DO renewable energies have for job creation?
Job creation should be one of the most important factors to consider when taking decisions
that affect economic activities. The amount and quality of jobs is an important considera-
tion when choosing between the different energy producing options available.Activities which
16
The Climate Group is a not-for-profit, independent organization, dedicated to encourage governments and businesses
to take action on issues linked to climate change. http://theclimategroup.org/index.php/home/
17
The Climate Group. In the Black: The Growth of the Low Carbon Economy. May 2007 pg. 7.
20
are labour intensive must be a priority. More than 2,200,000 workers are currently employed
in the global renewable energy sector.This number alone is equivalent to the number of work-
ers employed by electricity, gas and water sectors of the EU-25 put together.
According to a World Watch Institute report, undertaken for UNEP18 “globally around
300,000 workers are employed in wind power and more than 100,000 in solar photovoltaics.
In China, the U.S. and Europe more than 600,000 are employed in solar thermal—by far most
of them in China. Almost 1.2 million workers are estimated to be employed in biomass in
just four leading countries, namely Brazil, the U.S., Germany and China. Overall, in countries
where data are available, the number of people employed in renewables is presently around
2.3 million. Given the gaps in employment information, this is no doubt a conservative fig-
ure.”
Germany, Japan, China, Brazil, and the United States play particularly prominent roles in re-
newable technology development, and they have so far garnered the bulk of renewables jobs
worldwide.
Spain had, in 2005, more than 1,300 companies in the sector, employing around 180,000
people. A recent study19 concluded that if the country met its target of generating 12% of
its primary energy production by means of renewable energies by 2010, there would be more
than 100,000 new jobs created in Spain. According to the European Report MITRE, if there
was greater support for this type of energy, up to 200,000 new jobs could be created by 2010
alone.
Most studies conclude that renewables generates more jobs per average megawatt of power
installed than fossil fuel plants. The picture is more mixed with regards to jobs created in op-
erations and maintenance.
18
Michael Renner, Sean Sweeney, and Jill Kubit, Green Jobs. Towards Sustainable Work in a Low-Carbon World. Prelim-
inary report submitted by the Worldwatch Institute to the UN Environment Programme (UNEP/ILO/ITUC Green Jobs
Initiative), December 2007.
19
IDEA. Plan de Energías Renovables. 2005.
21
TABLE 3. AVERAGE EMPLOYMENT OVER LIFE

(JOBS PER MEGAWATT OF AVERAGE CAPACITY)
Manufacturing, construction, Operation and Total

installation maintainance
Solar PV .................................. 5.76-6.21 1.20-4.80 6.96-11.01
Wind power ............................ 0.43-2.51 0.27 0.70-2.78
Biomass .................................. 0.40 0.38-2.44 0.78-2.84
Coal-fired................................ 0.27 0.74 1.01
Natural gas fired ..................... 0.25 0.70 0.95
Source: Michael Renner. Green jobs. Towards Sustainable work in a low carbon world. January 2008.
What kind of jobs are created?
Jobs created by renewable sector are diverse in training capacities and occupational profiles.
They will occur in research and development, in engineering and architecture, project plan-
ning and management, administration, marketing, and blue collar areas.
For example, wind power requires meteorologists, structural, electrical and mechanical en-
gineers to design turbines, generators, quality control personnel and mechanics and tech-
nicians to keep them in good working order20.
Additionally there are other factors to take into account such as worker conditions, salaries
and unionization. To fully adopt and implement renewable opportunities, the involvement
of workers is essential. Unfortunately, many of the existing studies pay no attention to these
dimensions.
The Spanish study mentioned above recommends that progress be made towards better and
more stable jobs rather than the ones currently found in this sector. This could be done
through a sub-sector agreement to bring working conditions in line with those currently in
place for the conventional energy sector. Finally, this study also calls for the training of new
20
Michael Renner. Going to work for Wind Power . World Watch. January February 2001, pag. 26.
22
professionals in the different renewable sectors, and that this takes place in the context of
an adequate training program.
The most recent studies on the expansion of renewable energies throughout the world all
suggest that since 2006 investments by developing countries have overtaken that of devel-
oped countries21. The facts of a rising demand for energy in emerging economies together
with a will to diversify the energy mix, have led many countries to establish targets for re-
newable energies: China, for example, has set itself the target of 30GW of wind generated
electricity by 2020, and will probably surpass its target of 2GW solar electricity for the same
year; India has set itself the target of 70GW of renewable generated electricity by 2012, and
for 2007 alone it is planning to increase its wind energy capacity to 2GW.
3. ECONOMICS TODAY: TOWARDS A TRUE ESTIMATION OF COSTS
The price of fossil fuels has been undervalued and their price deeply distorted as a conse-
quence of direct and indirect subsidies in the shape of research and development (R&D), the
protection of some extractive industries such as coal mining due to political sensitivities, ,
and tax exemptions among others. These distortions are common to most activities, but in
sectors which are considered strategic, their relevance is greater.
More and more, our increasing awareness of the environmental consequences of economic
activities is forcing us to search for more adequate ways of calculating the costs, environ-
mental ones in particular. A real estimate of current distortions will lead us to an economy
that is more real and objective.
To give an example of this, the costs to the environment and to human health of transform-
ing and using fossil fuel energy are completely excluded from the market price. If, in the cost
calculation, we leave out the subsidies and internalize the true environmental and sanitary
costs of using fossil fuels, the price increases considerably and renewable energies immedi-
ately appear competitive.
21
UNEP and New Energy Finance – Global Trends in Sustainable Energy Investment 2007.
23
Subsidies
Myers and Kent developed a global estimate of subsidies given to fossil fuel and nuclear en-
ergy (119 and 12 billion USD per year respectively), and their externalities (more than 200
billion USD per year). Van Beers & De Moor estimated global subsidies for all fuels (250 bil-
lion USD per year, with more than 60% accounted for by fossil fuels), but did not include
externalities.
Subsidies to fossil fuels are complex and take place at different moments of their produc-
tion and trading cycles. They tend to focus around:
• Pre-production - research and development, and prospecting.
• Production - extraction, conversion/generation, and distribution to consumers.
• Consumption - generally classified according to three ideas: the fight against poverty, the
fixing of prices below market price and subsidies orientated to a certain type of consumer.
• Post-production - when the government assumes, for example, the costs of dismantling
infrastructures at the end of their working lives, or covers the external costs, which include
pollution, land degradation, health problems, risks of accidents and energy insecurity22.
There are governmental expenditures aimed at covering the problems associated with
some energy resources. These include public financing aimed at protecting energy sources
and related goods, absorbing the costs of covering the health problems of workers, and/or
public subsidies to control pollution.
Other types of subsidies, mainly present in developing countries, are those that leave a le-
gal vacuum, making it impossible to ask for compensation from those responsible for pos-
sible damages and giving space for omissions and malpractices that may provoke additional
damages. These types of subsidies are difficult to quantify, but are definitely a barrier for to
the development of clean alternative energies.
22
REN 21, Removing Subsidies Leveling the Playing Field for Renewable Energy Technologies. March 2004, pg. 753.
24
Environmental and sanitary costs
At a local level, the production and consumption of fossil fuel energy entail air and water
pollution in addition to land degradation. At a regional level, without the necessary precau-
tions, emissions of sulphur and nitrogen are distributed kilometres away from the emitting
power plant On a global scale, GHG emissions emitted during fossil fuel combustion are one
of the main reasons for climate change. While the costs of each of these phenomena are dif-
ficult to quantify, they can be estimated by observing some of their direct impacts. Let us ex-
amine two examples: air pollution and its associated health costs, and climate change with
its wide ranging impacts which are still not entirely quantified.
ENVIRONMENTAL AND HEALTH COSTS
The effects of exposure to high levels of air pollutants, which are the products of fos-
sil fuel combustion, have been documented since the mid-20th century, when European
and American cities experienced periods of air pollution that caused a large number of
deaths and the hospitalization of hundreds of people (as happened in London, in
1952). Today developing countries have recognized the continuous impacts on health
associated with the combustion of fossil fuels, despite lower levels of air pollution and
regulations to tackle the issue.
The highest risks are found in the mega-cities of developing countries, which have reached
or surpassed the levels of pollution found in the first half of the 20th century in industrial-
ized countries.
Air pollution from the combustion of fossil fuels is associated with a wide spectrum of chronic
and acute illnesses, which vary according to the pollutants. Particulate pollution (which is
inhaled and resides in the lungs) is the most serious, causing lung cancer and other deaths
due to cardiopulmonary incidents. Other components, such as lead and ozone, have serious
effects and contribute to aggravating the negative impacts of air pollution. According to WHO,
analysis of particulate pollution suggest they are responsible for 5% of tracheal, bronchial
and lung cancer, 2% of cardiopulmonary deaths and 1% of deaths due to respiratory infec-
tions. This implies about 800,000 deaths a year and the loss of 7.9 million years of good
25
health (Disability Adjusted Life Years or DALY)23. Developing countries support the largest load
of these types of diseases, with 42% of DALYs in the Asian-Pacific region and 19% in the
high mortality rate countries of south-east Asia24.
FIGURE 3 Mortality due to urban air polution, 2000
400
355
350
Deaths (thousands)
300
250
200
150 132
100
51 46
50 28 30 38 32
22 23 18
10 5 8
0
Subregion
Source: World Health Organisation (WHO), Global Estimates of burden of disease caused by environmental and
occupational risks. Results based on the World Health Report 2002.
CLIMATE CHANGE COSTS
The Stern Report on the Economics of Climate Change is perhaps the most ambitious of its
kind. The role of fossil fuels in the increase of CO2 concentrations in the atmosphere has been
known for many years, and has recently been reaffirmed with the latest publication of the
Intergovernmental Panel on Climate Change25. The Stern Report quantified some of the im-
23
World Health Organisation (WHO), Global Estimates of burden of disease caused by environmental and occupational
risks. Results based on the World Health Report 2002.
24
http://www.who.int/whr/2002/chapter4/en/index7.html
25
See footnote 4.
26
pacts of climate change which can be attributed to fossil fuels and are not incorporated in
their current costs.
Stern estimates that global warming can cause a reduction of up to 20% in global GDP, more
than 200 million environmental refugees (as a consequence of droughts and floods), water
shortage for one in every six human beings, and extinction of 40% of species amongst other
effects.
The costs of climate change are also related to the health costs caused by increased expo-
sure to temperature and weather related catastrophes. Additional risks are also due to the
multiplication of areas prone to vector diseases (such as malaria and dengue) and the more
frequent apparition of illnesses linked to poor water and crop quality, plagues, pests, and salin-
isation of fresh water resources due to rising sea levels, to name but a few examples. Ac-
cording to WHO, changes in climate were accountable in 2000 for 2.4% of diarrhoea cases
in the world, 6% of malaria cases in middle income countries and 7% of dengue cases in
some industrialized countries.
Political and Institutional costs
There are other costs for that are not taken on board when counting costs of fossil fuel pro-
duction. Corruption, for example, is highlighted consistently as a barrier to poverty reduc-
tion. Few industries, except perhaps arms, have been as closely linked to corruption as fos-
sil fuels. Since the earliest days of the coal and oil industry, the centralized structures of such
extractive industries lent themselves to what academics call ‘rent seeking’.
According to the United Nations’ specialist body on trade and development (UNCTAD), the
largest share of a relatively small flow of investment heading into regions of low human de-
velopment such as Sub-Saharan Africa goes to oil and mining26. These industries are noto-
rious for passing on only a small share of their economic benefits to local people. The con-
sequences, not least unfair, are also highly divisive. From Angola to Nigeria, oil has been and
remains the source of struggle, conflict, debt and exploitation between rich and poor (See
Box below).
26
See the World Investment Report series, (UNCTAD) Geneva.
27
Nigerian debt is also a consequence of the failure of projects financed with international
loans, which did not work because they depended on foreign products, equipment and
support.
Simultaneously, the costs of environmental degradation in Nigeria – for the most part
in the Niger delta, which was of great interest for a long time to companies like Shell,
Mobil, Texaco and Chevron – have been priced at 5.1 billion USD. Already in 1998, close
to 14,000 compensation claims for damages caused by oil extraction had been made
at Nigerian courts by groups, individuals and communities.
Much harsher are the ethnic tensions which have been exacerbated in areas where there
is oil. During provincial and state elections in 2003, the violence from fights to control
oil resources resulted in hundreds of deaths and hundreds more as refugees.
Source: NEF, The Price of Power: Poverty, climate change, the coming energy crisis and the renewable revo-
lution. 2004, page 12.
4. ENERGY TRANSITIONS IN THE WORLD: DIFFERENT ROADS LEADING TO A

COMMON FUTURE
Having examined the consequences and real costs of fossil fuel use, it is worth noting that
the development of renewable energies is the only way of resolving the contradictory dynam-
ics of access, security of supplies and environmental protection in developed as well as in
developing and economies.
Developed countries: the transition that is leading the way
Despite the progress of renewable energies in developed countries, today oil still provides
43% of the global energy consumed. Apart from being an important resource for energy in-
tensive industries, oil mobilizes 90% of the transport system. Agriculture also needs oil for
fertilizers and pesticides. In the current situation we are confronted with two important con-
siderations:
28
• The last report by the GIEC confirms the need to reduce GHG emissions by 50% to 85%
by the year 2050. In developed countries this reduction needs to be even greater - by at
least 80%.
• Imports of crude oil have increased from 20 to more than 100 USD per barrel in less than
10 years.
While these two elements mark a reductionist tendency, they clearly frame the need for de-
veloped countries to move to an economy that is free of CO2.
FIGURE 4 Total IEA, Average CIF Costs of Imported Crude Oil S/BBL
S/bbl
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
Mar-97 Mar-99 Mar-01 Mar-03 Mar-05 Mar-07
Source:
http://omrpublic.iea.org/pricescif.asp?cifcountry=All+Regions&cifformat=Time+S
eries+10+years&Submit=Submit.
Renewable energies sources are abundant and the technology to make use of some of them
(i.e. wind) is mature. The world is rich enough to put them into use, especially if we start to
transfer resources away from fossil fuel subsidies and to the development and expansion of
renewable energy.
29
Certain countries have already embarked on the path to a low carbon society. The European
Union for example has set itself the target of 20% renewable energy by 2020 (accompa-
nied by a 20% reduction in energy consumption), which is a step in the right direction. There
are even some countries which, while being reluctant to ratify international commitments
to combat climate change, have established targets for renewable energy. Australia for ex-
ample has set itself the target of having an installed capacity of 9,500 GWh by 2010.
Developing countries: a transition to be agreed upon
Because of its very low starting point, the growth of renewable energies in emerging coun-
tries has been and continues to be exponential. In 2005 for example, China invested 7 bil-
lion USD, and India overtook Japan in terms of installed renewable energy capacity. China
comes out as the leader in annual investments, first for solar heated water, third in ethanol
production and fifth in wind energy. India on the other hand is fourth in wind energy and
solar heated water investments. The increase in installed capacity has also been very notice-
able in Brazil (2.4GW installed in 2005).
Of the 43 countries that have national renewable energy targets, eight of them are emerg-
ing economies: Brazil, China, Egypt, India, Malaysia, Philippines, South Africa and Thailand.
Thailand has set itself the target of 8% primary renewable energy by 2011 (excluding tra-
ditional biomass). The Philippines is looking to reach 5GW of renewable energy by 2013 or
at least doubling its current capacity. In 2003, South Africa established the objective of 10TWh
of additional energy from renewable sources by 2013, which would represent close to 4%
of its total energy production. The Mexican government on the other hand is considering new
legislation on renewable energies which might include a quantifiable target.
China is reaching its target of 16% primary renewable energy by 2020, including large hy-
droelectric infrastructures, which today stands at 7.5%. It has also included targets for other
electricity sources to be obtained by 2020: 300GW of hydroelectric, 30 GW of biomass and
1.8 GW of solar.
30
TABLE 4. RENEWABLE ENERGY PRODUCTION TARGETS IN CHINA27
Energy source Unit 2006 actual 2010 target 2020 target
Wind power ..................... Gigawatts 2.6 5 30

Biomass ........................... Gigawatts 2.0 5.5 30
Solar (PV) ......................... Gigawatts 0.08 0.3 1.8
Solar hot water panerls..... * 100 150 300
Ethanol ............................ ** 2 10
* Million square meters ** Million tons
India, apart from its short-term target of 10% renewable energy by 2012, also proposed long-
term objectives by the year 2032 for different categories, including 15% of electricity sup-
ply; the substitution of 10% of fossil fuel consumption by agro, synthetic and hydrogen fu-
els; and 100% solar heated water in all potential infrastructures (including all hotels and
hospitals by 2022).
In emerging economies the increased investment in renewable energies is correlated with

the expected increase in energy consumption. Forecasts indicating a strong growth in
global energy demand in the coming years are based on the sustained growth of the most
important emerging economies (the BRICS: Brazil, India, China and South Africa). Because
the development of these countries is a key factor in the global economic stage, decisions
dealing with their economies and energy markets will have a huge influence on the global
economy in years to come. Some countries have started plans that guarantee a certain
amount of energy sovereignty (as in the case of Brazil and its agro-fuels). However, a great
part of the infrastructures needed to supply the market have yet to be developed.
Many emerging countries have large reserves of fossil fuels and using them to meet their
needs may seem the simplest option. If we also take into account that the historic per capita
consumption for these countries has been and is very low, then we are faced with the ar-
27
Eric Martinot and Li Junfeg. Powering China’s Development: The role of renewable energy. Worldwatch Report. No-
vember 2007.
31
gument of their right to pollute, since developed countries have for centuries used and abused
their own resources and those of other countries. As we will see shortly, there are many en-
vironmental and socially unsustainable options available. However, the choice of a sustain-
able system of energy production is without a doubt the most appropriate for the develop-
ment of emerging economies, as it can also avoid other adverse effects of the traditional
development model, such as hazardous pollution and toxic wastes
The choice for energy sources is not an easy one and there is no one-size-fits-all policy re-
commendation. Sources to be promoted or carefully analyzed will be different depending on
the region and on timing. However, efforts should be undertaken in order to accompany emer-
ging countries in the transition towards a sustainable energy production.
THE TEMPTATION OF NUCLEAR ENERGY
All scenarios examining the progression of energy demand in emerging countries coincide
to a greater or lesser extent in the need for large amounts of investment in the supply of
energy to homes and industry. The amount of money necessary in the short and medium term
will depend to a great extent on the energy options chosen.
This has led many emerging countries to consider or reconsider nuclear energy as an option
to meet increasing energy demands.
It is estimated that close to 25% of the external debt of developing countries is related to
investments in traditional energy sources. Nuclear energy, with its high investment needs,
fluctuating costs and, in particular, end-of-line costs, can only increase this tendency. Addi-
tionally, nuclear energy carries with it the legacy of nuclear wastes, fears of possible acci-
dents, as well as additional risks derived from nuclear proliferation. For developing countries
nuclear energy is an option with high environmental, social and economic costs.
AGRO-FUELS
Agro-fuels are obtained from corn seeds, sugar cane, soya, rape-seed and palm oil. The most
popular are basically ethanol and biodiesel, which can be used in vehicles without substantial
32
transformations. Ethanol (which accounts for 90% of agro-fuel production) is mixed with petrol,
while biodiesel is mixed with gasoil. Global production of ethanol in million litres increased from
17,279 (2000) to 38,200 (2006), biodiesel went from 872 (2000) to 6,153 (2006)28.
This exponential increase and a tendency towards an industrialized production have alarmed
different social actors, who point out the negative impacts on the environment and the wors-
ening social conditions in countries which export agro-fuels.
One advantage biomass has (from which agro-fuels are derived) is that, among the various
means of renewable energy, only it can be stored cleanly and processed in the manufacture
of other solid, liquid or gaseous products. Likewise, this could be of great interest in the si-
multaneous procurement of biological sub-products (feeds, polymers, fertilizers, glycerines,
etc.) as substitutes to the conventional methods of petro-chemistry.
Agro-fuels are substitutes for the fossil fuels used primarily in transport (gasolines and gasoils)
where there are a very limited number of alternative fuels compared with conventional ones,
the majority of which are also produced by means of fossil fuels (natural gas).
Another advantage to agro-fuel use - given that things go well both agronomically and en-
vironmentally –is its neutral or slightly positive effects in terms of greenhouse gases29. The
use of bio-fuels also improves the quality of air in urban areas whilst significantly reducing
sulphur emissions and eliminating benzene and other carcinogens.
According to the World Bank, labour intensity of agrofuels harvesting compares favourably with
conventional fuels.Agrofuels require 100 times more workers per joule of energy. However, oil
palm plantations in Indonesia, for example, appear to offer fewer jobs than former plantations.
Nevertheless, agro-fuels haves shown on numerous occasions to have an unfavourable en-

vironmental and social impact. They carry with them a large consumption of fossil fuels in
the form of derivatives (such as pesticides, which need oil to be produced), they emit SOx
and NOx and foment the expansion of genetically modified seeds, with the subsequent risk
of cross-contamination of seeds intended for human consumption They can also bring
28
WorldWatch Institute, Vital Signs 2007-2008.
29
There is doubt however regarding ethanol from corn and some controversy exists with regards to their greenhouse
gas balance.
33
about such effects as the recent price increases of staple foods derived from seeds that are
used for agro-fuels, added pressures on forests and, as an extension, autochthonous species.
Attention will need to be given to the working conditions entailed in the production of these
energies. As an example, one study carried out by ILO observed “a series of negative impacts
associated with these crops, especially when they expand rapidly. These implications have
to do with working and living conditions, the health of workers and the public at large, dis-
tribution of production benefits, local development and the stability of communities. Con-
flicts over traditional land use rights are frequent, and the communities are in general af-
fected negatively by pressures put on infrastructures and water resources30.”
In those communities where agro-fuels are implanted salaried workers become the domi-
nant generator of income. This is associated with other tendencies observed in the agricul-
tural sector: informal jobs, precarious jobs, low salaries, etcetera.
Deforestation, in order to prepare land for the planting of agro-fuel crops, can increase emis-
sions of CO2 and reduce the capacity of the affected forests to act as drains.
With the technologies currently in place the production and use of agro-fuels in developing
countries is clearly limited and should be contemplated with caution, with priority given to
domestic use over exports, small scale production and a guarantee of sustainable environ-
mental, social and labour conditions, with the corresponding independent audits to certify
that work has been carried out in decent conditions. A good example of this is the Forest
Stewardship Council.
Special attention should be given to the research of second generation agro-fuels with the aim
of finding a solution to the difficulties and adverse impacts of the technologies used today.
THE ENVIRONMENTAL AND SOCIAL IMPACTS OF LARGE HYDROELECTRIC

INFRASTRUCTURES
Hydraulic energy was one of the first renewable energy sources to be commercially exploited
and is, thus, today, after 150 years of development, a technologically advanced and mature
30
Poschen, Peter, ILO, Social Impacts of Biofuel Production at the Micro-level. 2007.
34
industry. Close to 20% of the worlds electricity is of hydroelectric origin. In close to 65 coun-
tries, hydroelectric energy provides more than 50% of the nation’s electricity; more than 80%
in 32 countries and close to 100% of all electricity in 13 other countries.
In the world there are more than 45,000 hydroelectric constructions, which use 60% of the
world’s watercourses.Two thirds of hydroelectric constructions are located in developing coun-
tries.
Hydroelectric production can cause huge environmental and social impacts depending on
their scale.
Large hydroelectric infrastructures could have negative impacts on human health (large pools
of water can cause the outbreak of illnesses) on the environment and biodiversity (changes
to the water regime, displacement of species, destruction of ecosystems), and on the social
and productive lives of communities (the displacement of rural populations to urban cen-
tres).
River use for electricity production will have to take this factors into account and prioritize
those centrals with lesser impacts.
Regarding greenhouse gas emissions, one aspect to monitor is their level of associated GHS
emissions, especially in tropical regions. These emissions result from the decomposition of
forests that are flooded, generating huge volumes of CO2 and NH4.“Gross emissions from
dams could account for between 1% and 28% of the global warming potential of GHG emis-
sions31”.
How can we countearct this logic?
Energy supply systems in emerging economies are on the verge of collapse. The dangerous
combination of underinvestment (as a consequence of privatization processes), increases in
demand and the growing difficulties of managing the geopolitics of supply make these coun-
tries highly vulnerable. In the last years we have seen a considerable increase in black-outs
31
Global Dam Comission -GDC p. 77.
35
and interruptions to electricity supply, frontier clashes due to changes in the conditions of
fuel trades, etcetera.
We need to bear these issues in mind when considering the limits of our current models for
energy supply, the industrial sectors they support, as well as the methods of production which
are, often, far from meeting energy efficiency standards. We also need to reflect about the
type of companies that settle and carry out their business in emerging economies, and in-
vestigate whether, in doing so, they are running away from the more strict regulations of de-
veloped countries and placing unnecessary burdens on the ecological footprint of the coun-
tries they invest in.
As we will see in the examples presented in the fourth section of this book, the potential of
renewable energies in emerging economies far exceeds the current rise in demand. When
compared to non-renewable energies, such as nuclear energy, they also present shorter de-
velopment and construction times.
Starting on the right foot: prioritising access to renewable energies
The cleanest types of renewable energy – including solar, wind, geothermal and wave – rep-
resent today a small fraction of the total energy on offer in developing countries: 0.2% in
Africa; 1.5% in Latin America; and 3% in Asia, excluding China32.
In order to achieve the MDG and improve people’s quality of life, we have to close the gap
between those with access to electricity and those without. However, the prospects of re-
sponding to the needs of the poorest with fossil fuels do not inspire much hope. Expanding
an electrical grid powered by fossil fuels to communities that are far away from large cities
is impractical and burdensome, and thus politically difficult to carry out.
The vulnerability of net importers of fuel to an oil crisis is immense. At the start of 2004 world
oil prices were at 35USD a barrel. A rise of 5 dollars per barrel would increase, under con-
stant demand, the cost of energy for developing countries in 90 billion USD per year33.
32
NEF, The Price of Power: Poverty, climate change, the coming energy crisis and the renewable revolution. 2004, pg.17.
33
NEF, The Price of Power: Poverty, climate change, the coming energy crisis and the renewable revolution. 2004, pg.19.
36
Despite the importance of expanding energy access to the poor, it is clear that the disad-
vantages of fossil fuels in terms of increased costs, health risks and CO2 emissions (with dis-
astrous effect for the climate) are too serious to be ignored. These impacts imply that any
step taken to achieve the MDGs using fossil fuels will result in two steps backwards for the
development of a country.
37
PART TWO
DEVELOPMENT AND THE ROLE OF RENEWABLE ENERGIES
1. THE RELATIONSHIP BETWEEN ECONOMIC DEVELOPMENT AND ENERGY
The relationship between economic development and production structures has been well
studied by authors such as Kuznets34. In the initial phases of economic development, the con-
tribution of agriculture to overall production declines while that of industry increases. In the
following phases, with the increased demand for financial services, communications and trans-
port, the contribution of the service sector also increases and eventually becomes dominant
over that of production.
For neoclassical economics, the changes in the composition of a country’s production have
effects on energy demand. The relative size of agriculture, industries and services determines
an economy’s aggregated demand.
“The processes of industrialization are characterized by a huge increase in energy consump-

tion due to the fact that industry is more energy intensive than agriculture. As development
advances, the production of goods and services starts to dominate overall production, and
the advances in technology allow for greater energy efficiency35.”
Economic development is also characterized by an increased energy demand for transport

and commercial and home use, both of which also reflect a change in consumption pat-
terns.
Household energy demand for transport and other uses (lighting, electrical appliances, heat-
ing and cooling, etc.) requires the development of infrastructures. Because of the simulta-
neous growth in a country’s production and the increased demand for energy, the lack of
sufficient resources can hold back economic progress.The growth in energy demand for trans-
port and other consumption goods increases the need for these resources. The need to sup-
34
Kuznets, Simon: Economic Growth of Nations: Total Output and Production Structure. The Belnapp Press of Harvard
University Press, 1971.
35
Medlock, Kenneth; Soligo, Ronald: The Composition and Growth of Energy Demand in China. Abril de 1999.
39
Developing renovables. Renewing development
ply this demand puts pressure on governments to develop national resources or look to in-
crease national energy dependency by securing resources outside their national borders.
There are other theories that revise the equations underpinning the neoclassical economy
in order to correct the small role this school of thought gives to energy. Alam36, for exam-
ple, considers that the economy can be described as a series of flows of productive and con-
sumptive activities requiring energy.
In this theory, the transition from an economy based on biomass to one based on fossil fu-
els has allowed in the past for land to be made available for the production of other goods,
increasing the capacity for feeding a larger population. In addition, fossil fuel energy also
allowed for an expansion in the offer of construction and machinery, as well as favouring
the never ending race for faster, more powerful and smaller machines in order to substitute
the work variable in the classical economic equation.
Likewise, the author considers that the transition to a fossil fuel based economy was done
with haste. In 1850, biomass fuels accounted for 80% of the fuels used worldwide, a per-
centage which fell to 35% in 1900 and 15% in 1970.
It is interesting to analyze these elements when considering one of the arguments against
the feasibility of a transition to renewable energies. Those who do not consider it possible
disregard the fact that developed countries have already undergone different energy tran-
sitions (from biomass to coal, from coal to oil derivatives) and that these transitions were
carried out swiftly with the help of different market and regulatory incentives.
Are growth, energy and the environment natural enemies?
In the 1960s the environmental consequences of the massive increase in the use of fossil
fuels which we pointed out in the first part of this book (such as air and water pollution),
closely linked to economic growth, led to a series of reflections about the need to revisit ex-
isting development and growth theories in order to avoid the destruction of the planet.
36
Economic Growth with Energy, 2006.
40
Development and the role of renewable energies | Part two
The limits to growth theories that emerged in this period implied a political impossibility which
ENVIRONMENT VS. DEVELOPMENT
was unsustainable because of its unfairness: a developing world did not have room to grow
in Classical
the context of limited
schools natural have
of thought resources. This vision,
suggested however, is wrong
that development if we consider adopt-
and environmental pro-
ingtection
the principles of contraction
are in conflict. Under and
this convergence, according
vision, developing to which
countries tend thetolargest energy on
concentrate con-
sumers reduce their
development, with demand while
a particular transition
focus on socialand
anddeveloping countries increase
economic development, it intheir
because order
to priorities
satisfy anare
internal market
increasing that does
incomes not have access
and improving to energy.by
living conditions In satisfying
a strict energy
basic context,
needs
with high levels of employment. Developed countries on the other hand, have already
achieved industrialization and good living conditions, and so tend to emphasize sustain-
ability and, consequently, focus their policies on the protection of the environment. In
this school of thought, developing countries see the protection of the environment as
a barrier to their development which was never imposed on those countries that have
achieved higher levels of development. Developed countries point out that environmen-
tal protection is an inherently global issue that requires commitments by all countries,
particularly those that are undergoing industrialization.
In this regard, we find, for example, the first theories pointing out the finite nature of
resources and impossibility of allowing the development of the poorest countries.
The book Limits to growth37 was perhaps the first to open up this debate. Based on one
of the first global models of its kind, it attempted to incorporate global problems into
the context of global economic integration. The book gives a bleak forecast of things
to come: scarcity, degradation, poverty, crisis and collapse. The underlying idea is that
the current model of exponential growth is at the root of all problems. Many studies that
followed it questioned its methodology and concepts, pointing out various problems in
its estimates about the economy and existing resources. Nevertheless, the report
opened up a huge debate on economic growth, socioeconomic development and its con-
sequences for natural resources and the environment. Part of the debate focused on the
idea of zero growth, an unacceptable idea for both developing and developed countries.
A new current of thinking emerged out of this opposition focusing on the need to find
37
Limits to Growth. A report to Club of Rome (1972), by Donella H. Meadows, Dennis l. Meadows, Jorgen Randers y
William W. Behrens III.
41
a new development paradigm, which could be environmentally, socially and economi-

cally sustainable.
Recent debates have focused on the concept of sustainable development and the com-
plementary facets of development and sustainability. Currently we have the economic,
technological and human resources necessary to guarantee a model of sustainable de-
velopment that, at the same time, guarantees competitiveness, allows for the preser-
vation of natural resources and the environment, and contributes to solving problems
such as exclusion and poverty, whilst reducing pressures on the environment and im-
proving the health and living conditions of the public at large. Likewise, there is proof
that countries that develop vis-à-vis the environment have done so in a faster and bet-
ter way that those that have followed the path of degradation and subsequent reha-
bilitation of the environment
Concepts such as Factor 4 which deals with efficiency (producing twice as much with
half the resources); the ecological footprint, which looks at “sufficiency” (the environ-
mental impact of a population in relation to available resources); and contraction and
convergence (contraction of developed countries and convergence of developing coun-
tries in order to reach a balanced access to available resources); provide us with the con-
ceptual tools necessary to embark on the path towards sustainable development.
this idea should ideally be accompanied by new clean technologies that use renewable
sources for energy production.
Although the idea of restricting growth has not received wide acceptance, there is never-
theless recognition of the imperative need to reduce energy consumption and increase the
efficiency of productive processes and acts of consumption.
42
2. POVERTY AND ACCESS TO ENERGY
Energy and poverty
Energy plays a key role in the lives of people with scarce resources. As was mentioned at the
Rio Earth Summit (ECO 92) in its Agenda 21 program38, energy is essential for economic and
social development and the improvement of living conditions.
FIGURE 5
1.000.000
Per Capital Energy Consumption
100.000
(Kilograms of Oil Equivalent)
10.000
1.000
100
10
Energy Consumption per Capita by
1 Select Country
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

Human Development Index (HDI)
Source: Energy Challenge, UN Energy.
As we mentioned in the first part of this book, the problem of access to energy is present,
fundamentally in developing countries, where large parts of the population still don’t have
access to energy services.
Energy provides the direct and indirect means of achieving a more decent level of living. En-
ergy services contribute to a reduction of extreme poverty by facilitating economic develop-
38
Also know as Agenda 21.
43
ment, which has an immediate benefit on the lives of the most vulnerable populations. En-
ergy services also improve education perspectives by reducing the time dedicated to cook-
ing or searching for food and thus allowing more time for learning.
Nevertheless, energy services that are badly managed or which don’t allow access to those
most in need can have a negative impact by leading to, for example, social or technologi-
cal exclusion.
The type of access and energy used by a household are determined by its income, the fuel
available, its price, its proximity to a network, demographic distribution and the type of phys-
ical environment – be it rural or urban.
Generally speaking, households will use different types of energy as their incomes increase,
and the use they make of this energy will be progressively more efficient, emit less CO2, SO2
and other particles, and be more capital intensive.
FUGURE 6 The energy ladder
Increasing cleaniness, efficiency, cost, conveniencie
Electricity
LPG, Gas
Kerosene
Charcoal
Wood
Crop waste, dung
Increasing prosperty
Source: Energy, Poverty and Sustainable urban Livelihoods. Meikle y Bannister, 2003, pg 24.
44
While the energy-poverty links tend to be similar between the rural and urban poor, there
are certain differences which are worth noting.
It is worth mentioning that out of the 1.6 billion people in the world without access to elec-
tricity, approximately 82% (1.3 billion) are found in rural areas, and practically all of these
are in the developing world. Close to 1.9 billion people (30% of the rural population) live
in urban areas of developing countries. The percentage of the population connected to the
electricity network in these urban areas is 85%, which means that almost 280 million peo-
ple to do not have access to electric energy39.
When reference is made to the lack of access to energy, the first image that comes to our
mind is that of populations in marginalized territories, typically rural, living from subsistence
agriculture and with limited access (if any) to basic services (water, sanitation, health, edu-
cation, etc). The lack of energy is part of this picture. In the more marginalized rural areas
of developing countries there is a close relationship between energy (in this case, biomass)
and the generation of income, protection of the environment, health and poverty. These syn-
dromes are the consequence of the various barriers preventing access to other forms of en-
ergy.
The fact that many of these populations can only access biomass fuels has a direct impact
on the ability of households to generate income. Many women spend a good portion of their
time looking for, collecting and transporting firewood. This time could be better invested in
more productive activities that help reduce the poverty of these families. This type of fuel also
creates environmental problems (because of the sustained disappearance of forests) and neg-
atively impacts health (because of air pollution inside households).
On the other hand, problems with access to energy are also evident in urban areas. In the
context of an economy which increasingly assigns monetary value to all aspects of life, the
dependency vis-à-vis of infrastructures and the environment, and socially fragmented rela-
tionships, global urban poverty is on the rise. Each one of these characteristics is linked to
a greater or lesser extent with the use of energy and its services. Household energy consump-
tion represents a significant and indispensable expense for this segment of the population.
39
Electricity Access Chapter, World Energy Outlook 2006 - http://www.worldenergyoutlook.org/Electricity.pdf
45
In a study carried out in Ghana, China and Indonesia, Meikle and Bannister40 confirm that
energy related policies have an evident effect on less favoured households. While many of
these policies tried to favour poor households, the majority of them failed. In Ghana for ex-
ample, pricing policies based on the amount of energy consumed (where larger consumers
pay more) were created to favour those people that consumed less resources. This measure
however did not take into account the management of energy carried out by consumers, who
often share a connection to the grid with a number of families to save money. In this way,
the sum of the consumption of many households easily surpassed the ceilings of the poli-
cies and forced those most in need of subsidies to pay higher prices.
It´s also necessary to consider the weight of energy prices in the budgets of the poorest house-
holds. The smaller the income the greater relative cost of energy.This aforementioned study il-
lustrates how the poorest households spent between 30% and 50% of their resources on en-
ergy while households with a medium income spent less than 10%. Most poor households have
little budgetary flexibility, and an increase in prices or a change in energy policies can thus im-
pact them directly and force them to opt for energy payments over other essential goods.
It is important to give consideration to these rises and how they can affect a household’s long
term planning. For developing countries whose access to energy is guaranteed by a model based
on fossil fuels, price increases are certain, and this can put an end to aspirations to educate a
family’s children, look after the old, or improve the day to day living conditions of people. Dras-
tic increases in prices forces households to focus on short-term objectives (having enough food,
energy and clothes to survive as a family). While they focus on survival, the members of a fam-
ily face different pressures (women must work longer hours in the search for cheaper fuels, men
must work longer house in order to be able to pay for the same amount of energy, etc).
Households with scarce resources thus react in three ways to increases in energy prices: first,
they choose an energy source according to its price (this sometimes implies a fall in the en-
ergy scale, see previous page), as observed in households that fall back rather than advanc-
ing up energy ladder; second, households reduce their energy consumption (be it by consum-
ing less energy or by consuming, for example, less nutritious food which requires less energy
to be prepared), going to bed earlier or limiting the use of other electrical appliances; third, they
40
Energy, Poverty and Sustainable urban Livelihoods. Meikle y Bannister, 2003.
46
reduce the consumption of non-energy based goods (for example, by taking their children out
of school, no longer purchasing lasting goods or cancelling all types of leisure activities).
These types of strategies have an effect on the social, human and physical capital of these
communities. Social capital is affected because families no longer have the money to be part
of a network of social activities. So-called human capital is also affected by the loss of health
due to bad nutrition, the inability to purchase medications, a decrease in the number of pre-
pared meals, as well as the long term consequences of taking children out of school. And
finally, physical capital is seriously affected by the poor making use of cheap (biomass) en-
ergy because they cannot pay for other forms of energy.
Energy and the Millennium Development Goals
At the UN Millennium Summit held in September 2000, world leaders came together to es-
tablish the Millennium Development Goals, a set of eight objectives, each with their respec-
tive targets, which should be achieved by the year 2015. These were: eradication of extreme
poverty and hunger; obtaining universal basic education; the promotion of gender equality
and the autonomy of women; reduction of child mortality; improvement in maternal health;
fighting AIDS/HIV, malaria and other illnesses; guaranteeing environmental sustainability; and
establishing a global alliance for development.
Though energy itself does not feature as an objective, in many cases it is a pre-requisite to
achieve the Millennium Objectives. Energy constitutes a fundamental element (in the same
way that access to drinking water or health do, which are also not mentioned) for the con-
secution of these goals, since these cannot be achieved without accessible, trustworthy and
affordable energy services for the poorest people. The importance of energy access to the
Millennium Objectives is also evident when we analyze the set of indicators defined to meas-
ure advances made by countries toward the achieving MDGs41.
If we examine these elements more closely, we can see what energy access means to the
poorest populations, and it impacts the consecution of MDGs directly and indirectly.
41
Together with the approval of 8 objectives and 18 goals, 48 indicators were approved to measure progress made in achiev-
ing the MDGs, by means of a consensus amongst experts of the UN Secretariat, the IMF, the OCDE and World Bank.
47
At the household level, access to energy reduces or eliminates the need to acquire other fu-
els (especially wood and coal) in order to satisfy energy needs such as heating and cook-
ing, and thus frees up time which is dedicated to these tasks. Apart from the time dedicated
to collecting and transporting the fuel, we also need to consider that the employed in many
other household tasks is also reduced with better energy access. Generally speaking, these
tasks exert a greater weight on the women of the household.
Adding together the increase in free time and the reduction in work load for certain tasks,
we can appreciate the huge positive impacts they have on households in terms of health,
especially for women and children, who are no longer exposed to emissions from combus-
tion. According to WHO, this is the fourth largest health risk factor in developing countries.
It is estimated that 1.6 million women and children die every year due to respiratory illnesses
provoked by indoor air pollution.
Another important element is the possibility of extending the day to make use of hours with
scarce natural light, be it for productive activities that can increase household incomes, study
or simply leisure.
The possibility of accessing information through the media and including new communica-
tion technologies is not only an important element for social and public cohesion, but also
a powerful instrument for preventing ill health, integration in the workplace, education, etc.
The “arrival” of energy service to isolated or marginalized communities has deep repercus-
sions to the community as a whole, allowing for the improvement of infrastructures, serv-
ices and public facilities such as public lighting, adequate facilities for schools and hospi-
tals, etc. It also helps to prevent the exodus of professionals and technicians specialized in
areas such as health care and education.
Energy services improve nutrition, increase work productivity, generate employment, improve
agricultural production, allow for the introduction of technology, introduce motorized trans-
port, etc.
The use and production of energy also affects the local, regional and global environment.
Wood and coal used in households and industry are unsustainable when they lead to land
degradation and air pollution, often the result of their combustion.
48
As we have seen, fossil fuel combustion can lead to air pollution, soil and water acidification
and the emission of greenhouse gases. In all these cases, the environmental damage and other
negative impacts can be reduced by improving energy efficiency, introducing newer technolo-
gies for the production and use of energy and by making use of renewable energies.
These and other elements we could mention can provide huge benefits to the lives of indi-
viduals and the public at large and bring about a marked improvement in a population’s qual-
ity of life. Directly or indirectly they have a positive effect on each of the MDGs.
Looking beyond the objectives and targets, we can easily see from the aforementioned el-
ements how access to energy is a fundamental and necessary element if we want to guar-
antee basic universal rights such as education, health, work, a healthy environment, and in-
formation, amongst others.
3. SUPPORTING A QUALITATIVE JUMP IN DEVELOPMENT: SUSTAINABILITY AND

RENEWABLE ENERGIES
The negative consequences for the economy, environment and social development of the cur-
rent energy mix have been clearly demonstrated. Practically all of the 1.6 billion people with-
out access to energy are in developing countries, and 80% of them in rural areas. Renew-
able energies present us with the possibility to solve this problem and, at the same, improve
the economic and environmental conditions necessary for the development of these coun-
tries needs.
The benefits of developing renewable energies can be grouped into three key ideas (presented
here in no particular order):
• Renewable energies grant developing countries an important independence with regard

to one of the most important variables for growth and from the variations in fossil fuel
prices. The latter increases the availability of funds which can be invested in other more
profitable initiatives.
• Renewable energies allow the current model to be balanced, including the need to ac-
knowledge issues of justice in energy policies, and to improve the access to energy of those
49
citizens of the developing world who are still excluded. These people suffer from a lack
of infrastructure and from the market’s prevalent discourse, which has prevented their ac-
cess to more traditional and centralized sources of energy.
• Renewable energies are clean and allow us to approach the concept of development from
a different angle, where intra-generational solidarity (which is covered by the issue of uni-
versal access) also gives way to inter-generational solidarity, by allowing future genera-
tions to enjoy a planet that is diverse and in equilibrium.
Nonetheless, the spending toward fossil fuels is still in the budget of international develop-
ment institutions, export credit agencies and bilateral develoment assistance programs. For
example, World Bank funding in the decade of 2004 (26.5 billion) exceed that for renewa-
ble energy and efficiency (1.5 billion), by a factor of 18, and dwarfed the $650 million allo-
cated by teh Global Environmental Facility to renewable energy projects in developing coun-
tries between 1999 and 2002 42
Similar data it will be found for credit agencies which have provided massive funding for fo-
osil fuel plants. Development Assistance by members of OECD has bveen primarly focused
on hydropower, and the amounts provided fluctuated heavily.
TABLE 5. OFFICIAL DEVELOPMENT ASSISTANCE FOR RENEWABLE ENERGY 1999-2003 (MILLION DOLLARS)
1999 2000 1001 2002 2003

Hydro...................................... 244 368 584 694 239
Geothermal ............................ 33 0.3 0 1.7 0.2
Solar ...................................... 8 13 197 32 50
Wind Power ............................ 33 3 31 53 151
Oceans.................................... 0 0.003 0 0 0
Biomasa.................................. 0.9 8.4 3.8 10.4 1.5
TOTAL .................................... 75 25 232 97 203
Source: REN21. Renewable Energy Policy Network. http://ren21.net/pdf/RE2005_ Notes_ References.pdf
42
Janet L. Sawin, Mainstreaming Renewable Energy in the 21st Century. Worldwatch paper 169. May 2004.
50
Supporting an autonomous development
For developing countries the current model of energy consumption, based on the fossil fuel mar-
ket, has meant an intensification of the problems they face as net importers: low per capita
income and serious redistribution problems, high levels of imports when compared with their
GDPs, serious deficits, high levels of external debt and limited access to financial markets.
This dependency makes them more vulnerable to possible economic shocks resulting from
price volatility, inefficiency due to market distortions caused by oil subsidies and corruption
and/or social instability due to competition for finite resources.
Faced with this situation it is clear that rises in the price of oil reinforce these tendencies and
plunge these countries into a vicious cycle of underdevelopment.
Renewable energies grant the opportunity of braking this vicious cycle because their main
associated cost is the reimbursement of the invested capital and, their use is based on the
indigenous capacity of the territory where the infrastructure is installed. Additionally, these
costs are not based on the fluctuating and changing international price of a resource such
as oil or uranium. Likewise, if we take into account that impacts on health and the environ-
ment are weak, future financial responsibilities are practically eliminated.
On the other hand, the development of renewables and manufacturing equipment will not
be dependant on natural endowment (where the extractable resources are located), but it
will be more dependant on factors as support to technological development or trained and
skilled labor, etc ….
In addition to a country’s dependency with regard to its energy sources, oil imports also have
other consequences for its sovereignty and freedom to make decisions.
According to the New Economics Foundation, the financing of projects related to fossil fu-
els account for about 40% of credits handed out by Export Credit Agencies, which means
that developing country governments are tied to the policies dictated by Multilateral Devel-
opment Agencies or other Agencies of the most important countries of in the OCDE43.
43
NEF, The Price of Power: Poverty, climate change, the coming energy crisis and the renewable revolution. 2004, pg 23
51
As a thought provoking exercise focused on the long-term, let us think about the conse-
quences of a change in the ways that we obtain energy to supply the needs of developing
countries.
If there was a reduction in the costs– and, subsequently, debt – of financing the imports of
energy, there would also be a reduction in the need for currencies through which these ex-
ports are obtained. While recognizing that exports are not carried out with the sole aim of
financing energy imports, a change in the distribution of production in favour of a model that
is less orientated to exports would imply a better distribution of efforts to meet local and
domestic needs. This change would imply, at the same time, a smaller dependency on the
readily available “potential” investors or market capitals. This simplified scenario, which is
based on many assumptions, is far from being a reality. However, the technologies are avail-
able to start meeting demand, and the fulfilment of the assumptions does not depend on
economic theory, but the political will necessary to establish a different energy model.
In this sense even the IEA, in its report on renewable energies and energy security, makes
a call for the development of policies aimed at research, development and expansion of re-
newable energies, which can be beneficiaries of carbon reduction credits44.
In the case of developing countries which are exporters of oil, while the rise in the prices of
crude oil can benefit them in the short-term due to the increase revenues for the same quan-
tity of oil exported, in the long term their dependency on a market that will progressively dis-
appear does not seem to be the best path to guarantee their development. We also need
to factor in the consequences of oil exports for the development of these countries, as demon-
strated by the case study of Nigeria we saw earlier. We can also point to Equatorial New
Guinea as another example of a country where oil exports have lead to a deterioration in
living conditions (including the individual and collective liberties), as has been confirmed by
different international entities45.
44
IEA – Contribution of Renewables to Energy Security – April 2007, pg 8.
45
CCOO, Trabajo y libertades sindicales en Guinea Ecuatorial, 2006.
52
Supporting fair and just development
As we mentioned in the first part of this book, the issue of energy access is a problem for
developing countries. In them, 32% of the population still doesn’t have access to electrical
energy services, as opposed to 0.5% in developed countries46.
The centralized and restricted system of energy services in developing countries is faced with
the inability to provide energy services to the less favoured citizens, and privatization does
not help improve these shortcomings.
This lack of service provision situates them in an even more marginal situation, subjecting
them to an exaggerated load of household tasks during their daily work schedules, favour-
ing unbearable health conditions, limiting access to health and education, etc.
Likewise we must say that the fossil fuel model in place increases the vulnerability of the poor-
est households.When the price of crude oil increases, importing countries have to obtain more
foreign currency to finance it. Bearing in mind the small margin for manoeuvrability at the
international level which developing countries tend to have, due mainly to the international
price of the raw materials they export ( which keeps dropping), their only option is to adapt
by reducing domestic demand. Or in other words, by either directly increasing energy prices
or increasing internal price via new tariffs, taxes, etc. Both of these measures affect less
favoured households first and most acutely.
Renewable energies can not only supply energy to those communities which have up until
now been marginalized, they can also grant them the power to develop, implement and man-
age technologies which are adapted to their needs, capacities and resources.
Small- and medium-scale renewable energies promote development and social justice by giv-
ing people greater control over the energy they need to carry out their daily lives and by pro-
viding them with the electricity which conventional centralized networks could not. They also
create jobs and reduce economic dependency, making it possible for people to carry out a
continuous economic life in rural areas.
46
World Energy Outlook 2006, annex B.
53
Renewable energies allow for a decentralized system of supply and production, in which elec-
tricity generation takes root in the economic activities and respects the local environment.
Energy services then become a resource which local communities own and manage, as op-
posed to imported resources – which increase the vulnerability of communities to interrup-
tions in supply or fluctuations in price.
There is evidence that communities in developing countries who have access to energy serv-
ices through renewable energies have higher levels of autonomy47. The generation of local
electricity not only allows communities and households to improve their quality of life us-
ing the electricity they produce, but also provides opportunities for members of the commu-
nity to receive technical training and strengthens their political will.
Renewable energies have a great potential for job creation in the form of local technicians
and other jobs associated with the production of energy. For example, compared to tech-
nologies associated with fossil fuels, the photovoltaic industry creates 8 more jobs for every
job in the gas and oil sector, 5 jobs more than gas services and 2.5 jobs more that the coal
industry48.
Jobs in the renewable energy sector also tend to be less dangerous and to have fewer neg-
ative impacts on health than jobs in the fossil fuel sector. For example, UNDP estimated that
coal mining alone was the cause of 16,000 deaths per year. Considering that 70% of coal
production is based in developing countries, we can say that at least 11,200 deaths occur
in these countries49.
Favouring renewable energies in the energy mix would obviously reduce this number as well
as the number of job related illnesses linked to gas and oil.
Renewable energy produced and used at the local level provides a high degree of control,
security and trust. The different electricity generation systems and distribution networks for
renewable energy available to communities allow them to have ownership and control over
46
World Energy Outlook 2006, anexo B.
47
NEF – The Price of Power: Poverty, climate change, the coming energy crisis and the renewable revolution – 2004,
pagina 23.
48
http://www.renewableenergystocks.com/PL/News/061906a.asp
49
World energy assessment, energy and the challenge of sustainability 2000.
54
these services and they can still decide to connect to other distribution networks if they so
wish. On the other hand conventional energy production, based on fossil or nuclear fuel, will
always require centralized management and a large infrastructure. Generally these energy
services are also managed or controlled by a small number of countries and companies. For
this reason, centralized systems based on fossil fuels are more vulnerable to problems of se-
curity and interruptions in the supply or system failures.
Supporting a clean development
The environmental benefits of renewable energies have long been the reason for their de-
fence and promotion. All energy use affects the environment, but not all have the same im-
pact. It is obvious that the environmental impacts of small and medium scale renewable en-
ergies are low. In the case of large scale renewable energies, environmental impacts are
inevitable. However, even in these cases, when they are accompanied by measures that min-
imize the impact, renewable energies have less of an impact than fossil fuels in terms of CO2
emission, air pollution and the residence of toxic waste in the environment (be it in water,
earth or air).
As traditional energy resources start to become scarce, the exploitation of new deposits will
be carried out in ecosystems which are further away and more vulnerable (such as the Arc-
tic sea), or by using more aggressive extraction methods. The use of renewable energies re-
duces demand for these resources and, thus, their impacts.
In general terms, when renewable energies are used, there is no impact on water courses,
which does happen with coal and maritime transport of oil. They also don’t require large
quantities of water like nuclear energy, coal mining or oil refineries do. Renewable energies
also don’t produce radioactive wastes or other toxic products such as arsenic, lead or mer-
cury (coal generated electricity is the largest source of mercury in the environment). If renew-
able energies are located properly (solar panels on buildings or agro-fuels on marginal lands),
they do not generate land use conflicts.
Biogas plants reduce the amounts of GHG emissions by transforming agricultural and urban
wastes into electricity. Wind and photovoltaic energy installed in households or businesses
55
can also reduce demand for fossil fuel energy, especially at hours of peak demand. Solar and
geothermal heating can reduce the amount of energy necessary to heat water and start cer-
tain industrial processes, once again reducing the demand for traditional fuels.
Apart from having a clear advantage in terms of emission reduction, renewable energies, and
geothermal electricity in particular, require less land than other forms of fuels such as coal
mining. Wind farms can produce clean energy at a large scale while agricultural activities
continue in the areas surrounding the wind turbines.
Although renewable energies don’t have the same negative impacts on the environment as
conventional energy sources, we do need to point out some concerns about their produc-
tion. The manufacturing of solar panels, for example, uses chemical substances associated
with the computer industry and solar energy is stored in batteries made out of lead.
There have also been arguments about the harm caused to birds by wind turbines. However,
estimates of the number of bird that have died at Altamont Pass, where there are 7.000 wind
turbines, have suggested only 60 birds have died over a two year period. To put this into per-
spective, 3,000 birds died over two days due to collisions with the four chimneys of the Florida
Power Corporation’s Cyrstal River Generating Facility50.
Many of these problems are being dealt with. Innovations in solar technologies are increas-
ing the efficiency of the process while at the same reducing the amount of materials nec-
essary (the manufacturing of new and thinner photovoltaic panels requires less silica than
before). Alternatives to lead batteries are also being developed so they can be recycled. The
design of wind turbines are being modified in response to the problems they cause to the
nesting and hunting habits of birds. The decision process for installing wind turbines now
also takes into account factors such as proximity to migratory routes or the presence of birds
of prey.
Small hydroelectric works can be built in ways that minimize the environmental impact and
take into account the needs of aquatic species, such as salmon or other species that need
to migrate in order to reproduce. Geothermal energy technicians are experimenting with ways
to inject water in order to increase the working life of the hot water deposits they use.
50
http://www.crest.org/articles/static/1/996090105_982708676.html#renf.
56
When compared with conventional energy, renewable energies are part of the long-term sus-
tainable solution needed to prevent the degradation and destruction of natural resources.
A redeployment of subsidies and investments away from fossil fuels and towards renewable
energies is necessary, but not enough, to combat climate change.
Developing countries are reluctant to condition their energy options when developed coun-
tries have been burning fossil fuels for centuries with no restraints. History thus creates a po-
litical obstacle to the wider implementation of renewable energies. For this reason, global
warming has become an issue of environmental justice. As a consequence, each solution re-
quires consideration of the context at play, in which the ecological debts of the most pol-
luting nations are taken into account and guarantees are made for an equal access to global
common goods. This is not about having the right to do things just as badly, but about find-
ing solutions that allow us to improve globally.
57
PART THREE.
RENEWABLE ENERGIES AND OTHER VECTORS OF DEVELOPMENT:
PARTICIPATION AND INSTITUTIONAL QUALITY
1. RENEWABLES AND PARTICIPATION: CORRELATIVE OR INDEPENDENT DYNAMICS
When we talk about the historic opportunity offered by renewable energies, as a means of
tackling or reducing the many negative impacts of conventional types of energies and cli-
mate change in particular, we are not talking simply of substituting (or complementing) en-
ergy sources, but of a complex structural transformation of energy production, distribution
and consumption systems.
This transformation carries with it new ways of formulating energy challenges. From the point
of view of autonomy and self-determination, this implies reducing dependency on fossil fuel
imports and securing supplies. In this regard, we are talking of sovereign and public envi-
ronmental policies with objectives established for a country’s own national interests, and not
imposed by other centres of economic or political power which seek to maximize their ad-
vantages and earnings through this dependency.
From the perspective of access to energy services, we are talking about equity and justice,
and meeting basic needs. The state must have an active role in providing universal access
to energy by means of direct of investment, offering different incentives, and the promotion
and financing of mechanisms for the development of energy sources and technologies that
value local capacity and resources. This cannot happen on its own given the ruling logic of
current economic markets.
With regard to the environmental challenges faced: apart from reducing GHGs, the issue is
also about incorporating the environmental and social costs of each energy option many of
these costs are often experienced by people whose right to power has already been violated)
when evaluating the different options available. It is not only an economic matter, but also
one of intra-generational equity.
For all these reasons, renewable energies, apart from offering the opportunity to “clean up”
the energy matrix, can be a way of defending the sovereignty and self-determination of a
59
country in a sector that is key to its development, while at the same time promoting social
and environmental justice. However we are aware that responsibility for this transformation
cannot lie solely in the hands of well-meaning political authorities. A broad debate is required
with the participation of sectors directly linked to the production and distribution of energy
and the public as a whole.
The participation of society is of fundamental importance in order to ensure this process of

transformation because when energy policies are discussed we are also discussing models
of development. Besides, a new energy model requires that users change their attitudes and
habits, be they individuals, companies or the public administrations.
In order for this to happen, it is indispensable that institutional forums are created that al-
low for an effective participation of the public in processes aimed at decision making, con-
trol and evaluation of energy policies and their programs and projects.
However, the mere existence of institutional forums is not enough to guarantee the partic-
ipation of the public. In order for this to take place there must also be the neutral conditions
to allow citizens to express themselves freely, to access all the information necessary and
to exert their full rights.
Access to energy constitutes a basic right in itself and also contributes to the exercise of other
rights. In this regard, we previously saw how daily and communal lives are positively affected
when opportunities for income generation, education, information, communication, health,
food safety and others are improved.
A society and citizenry whose basic needs are not met, who does not have access to com-
munication and information, or time to socialize, will find huge difficulties in taking part in
participatory forums, due to a lack of resources of every kind.
Changes in habits and attitudes refer not only to the behaviour of consumers of energy serv-
ices, which needs to be more respectful of the needs of others and take better care of the
environment. It also has to do with a re-evaluation of participatory culture and an active cit-
izenship in order to ensure the full exercise of individual and collective rights.
The participation of society in the choice of energy sources must exist in the context of the
local communities which will benefit from access to the energy as well as those who will be
60
Renewable energies and other vectors of development: participation and institutional quality | Part three
affected by the setting up of these energy sources. In the case of hydroelectric energy, the
differences between those sectors that obtain the benefits and those that suffer the nega-
tive impacts of such an installation are, in some cases, evident. For this reason, participation
must keep in mind both sides.
There are other cases in which the energy sources can be proposed as sustainable by dif-
ferent actors but which a deeper analysis would not corroborate The lack of participation or
debate confirms the unjust, unsustainable and undemocratic character of these energy
sources. Nuclear energy, for example, has little, if any, transparency in the choice of meth-
ods for the transport and storage of waste. Additionally, the National Security argument is
often used to prevent the public from accessing information or taking part in decision mak-
ing, management or control.
Access and democracy, linking theory and practice
We have already mentioned various positive aspects of renewable energies over conventional
energy sources. Now we would like to emphasize the need for a more democratic access to
energy and promotion of the public’s participation in the processes of decision making and
management of energy services. The advantages renewable energies have to offer lie fun-
damentally in their local character, especially those at the small- and medium-scale, and the
possibility of working with decentralized systems.
The local dimension is a tangible space for the translation of concepts such as democracy,
inclusion and sustainability into concrete policies. This is because it is a space where partic-
ipation and decision making lie closest to the needs and demands of the public.
If we compare energy systems based on fossil and other conventional sources with renew-
able energies (solar, wind and biomass), we can see that, in the context of renewable ener-
gies, the possibilities for local participation at all stages, from its generation to its distribu-
tion, is much greater.
For example, thermoelectric stations, large infrastructures and nuclear plants need a central-
ized structure and government. The demands of populations that are directly or indirectly af-
fected by these types of energy infrastructure are rarely taken into account by those mak-
61
ing the decisions. Thus these people can find themselves excluded from public forums of de-
cision making and management, as well as from the benefits.
Apart from having significantly lower social and environmental impacts than fossil fuels, re-
newable energies grant the possibility of working with a decentralized system where the gen-
eration of electricity occurs in close proximity to the consumer, thus maximizing the poten-
tial for local communities to produce, manage, and self-regulate their energy.
Local populations can thus define what types of infrastructures are most convenient to meet
their economic, social and environmental needs, through a local evaluation of the opportu-
nities for job creation and education each of these offers.
Renewable energies grant the possibility of generating electricity with small scale units. This
improves the competitiveness of small producers and units of production based on cooper-
ation and fair economy aimed at satisfying local needs, plus it offers them the possibility of
selling any surplus energy to the distribution grid (medium and low tension). However, a solid
grid access law is a condition for long term investments in this sense.
Policies that are designed in ways that include authentic participatory processes have a
greater chance of success. They also help anticipate conflicts of interest that might possibly
arise and ensure the long-term sustainability of the project, and thus guarantee that the peo-
ple benefited also take on responsibility for the techniques and infrastructure used. A good
consultative and participatory process ensures that the interests that are presented during
discussions include the complexities of the economic, social, cultural and political relations
at play, since the interest of the individuals, as human beings and citizens, cannot be reduced
to the mere economic interests of producers and consumers.
The “democratizing” element of renewable energies can be expressed in different ways:
• Democratization of access to energy services, which reduces or eliminates the misbalance

between populations close and far away from centres of economic activity (and thus, from
the distribution network);
• A better distribution of the benefits, since priority can be given to using the energy gen-
erated to meet local needs;
62
• A greater local autonomy to deal with instabilities in supply due to macro-economic,

geopolitical, and other natural phenomena.
• Less bureaucracy, helping facilitate the participation of local communities at different

stages of decision making.
• Greater proximity to local realities and problems;
• Inclusion in public life of sectors which have traditionally been excluded, such as women,
rural and indigenous populations, etcetera.
When democratic expression does not push sustainability forward?
In countries with an urgency to meet the basic needs of their populations (such as food se-
curity, access to water and sanitation, education, health, etc.) environmental issues are of-
ten relegated to second place, and the right to a healthy environment becomes a “luxury”
only affordable to rich countries.
Environmental sustainability is often presented as an obstacle to development by restrict-

ing, for example, the development of certain productive activities requiring the use of more
expensive technologies and imposing limits on the exploitation of resources. These arguments
are also linked to supposed limitations imposed by rich countries in order to perpetuate their
domination over countries that seek to develop themselves.
This dichotomy is of course false, as it is impossible to decouple environmental and social

issues. It is impossible to guarantee the right to a healthy life if the air and water are pol-
luted; it is impossible to guarantee food security if the productive lands are degraded or
eroded due to unsustainable practices or the use of agro-toxic products; there is no long-
term productive project if there is not a rational use of the resources available, etc.
Unfortunately, society does not yet understand the intimate relationship between these two
dimensions. For it to do so requires policies aimed at raising the general public’s levels of
awareness and education through, for example, labor and trade organizations, teachers and
other communicators.
63
Renewable energies have suffered, for example, resistance from some sectors of society who,
while being generally in favour of renewable energies, are opposed to them being installed
in their communities. Yet the contradictions between environmental sustainability and
democracy don’t really exist. If there is a will to inform, educate and transform current land
management thinking, a consensus can be founded around these issues.
With regard to the energy dilemma, we have seen that the negative environmental impacts
of fossil fuel based energy systems are great and not limited to environmental issues, but
also cover the development of society as a whole.
We have seen that global phenomena such as climate change will affect our entire planet
and make no distinctions between those countries that emit large quantities of greenhouse
gases and those that do not. As happens with many environmental problems, the worst con-
sequences will be felt by the most vulnerable populations, who will not be able to deal with
situations of water or food scarcity, or extreme weather events (floods, cold and heat
waves, hurricanes, typhoons, tornadoes, etcetera).
In situations where large conflicts of interest take place, as happens with political decisions
concerning energy, radical positions are exacerbated and sectors which are critical of the en-
vironmental impacts of certain decisions are frequently classified as contrary to national in-
terests or insensitive to the needs of ordinary people.
Positive tendencies for paths that are not always juxtaposed
The progress made by renewable energies and the participation of society in the energy de-
bate cannot be analyzed independently of each other. The analysis of these two variables
are determined by a broader context which includes the democratic expressions of a pop-
ulation, general issues of participation, the trust citizen’s have in their institutions and the
capacity of these to respect the agreements made.
Despite the existence in many countries of laws and forums aimed at guaranteeing public
participation, there are still various challenges that have be overcome before this can be ef-
fective.
64
One of these difficulties is access to information. Despite the existence of laws and legisla-
tion establishing this as a right the reality is far more complicated: often the public is faced
with problems ranging from a lack of or un-precise information, the need to carry out com-
plicated administrative processes to obtain it, or having to pay for the costs of reproducing
the information with money from their own pockets.
In the area of energy policies, the lack of the appropriate techno-scientific knowledge is of-
ten given as a reason to justify limited dissemination of information or to restrict the pos-
sibilities of participation by certain sectors of the population.
Often the information available is presented, intentionally, using a type of language and for-
mat that is hard for the public to understand, so as to leave the discussion in hands of the
experts.
Another of the challenges of participatory processes is the creation of a consensus, which

requires recognition and inclusion of divergent interests into the decision making process.
This implies that considerable more time is needed to take decisions than when these are
made top-down or with limited participation.
Faced with this difficulty, certain sectors will usually play up the urgency of taking a deci-
sion due to the risk of energy deficits (which may or may not be real) or the possibility of
blackouts.
In these situations, populations and sectors that oppose developments on the basis that their
fundamental rights are being violated are discredited as opponents of development and con-
trary to the will of a majority who wish to have a guaranteed energy supply.
Amongst the aspects which must be considered is also the format and functioning of spaces
for the participation and representation of members of the public. Authentic participation
requires not only political will, laws and norms that recognize this right, but also a society
that is mature, organized and conscious of its rights and is willing to exert them.
65
PARTICIPATION AND CLEAN DEVELOPMENT MECHANISMS
Clean Development Mechanisms (CDMs) were designed in the framework of the Kyoto
Protocol as a means of reducing emissions of developing countries. With these types of
projects, countries can count as their own the offsets which are made outside their ter-
ritory, in exchange for the transfer of technologies and proof that the project carried out
contributes to the sustainable development of the area where they are implemented.
To this day, more than 700 projects have been approved and close to 1,400 are wait-
ing for approval.
In the context of these projects, and bearing in mind that the objective to be achieved
is an improvement in development conditions of the country hosting the project, it is
necessary that the social, human and environmental rights of the population as a whole
are respected, beyond the simple reduction of GHGs.
Decision 3/CMP.1 of the Kyoto Protocol regulates the functioning of Clean Development
Mechanisms, their submissions, approval, implementation and subsequent evaluations.
The same decision establishes what entities charged by countries to develop the proj-
ect need to present in order to have the project approved. These include:
“The commentaries by all local interested parties, a summary of the comments made
by each of these and a report by the entity on how those comments were taken into
account during the project51”
It is obvious that this demand places excessive obligations on countries to consult civil
society. To remedy this situation, many developed countries have formed joint commis-
sions for national consultations. However, a greater commitment is needed to ensure
that civil societies in countries where CDMs are developed are consulted, given the true
improvements CDMs can generate in terms of human rights, poverty alleviation, access
to basic services, etc.
51
Decision 3/CMP.1 of the UNFCCC, http://unfccc.int/kyoto_protocol/mechanisms/items/1673.php.
66
2. NEW INSTITUTIONS FOR NEW ENERGIES
A broad vision of institutions and their role in economic development
When we think of institutions, the first thing we think about are organizations. From this point
of view it is evident that without efficient, transparent and responsible organizations it is im-
possible to consider the development of a country and the integration of a societies’ demand.
However, institutions are not only organizations. They are also the sum of the rules and norms
that govern us.And many times it is these rules and norms that determine the type of lifestyles
which citizens of a country can have access to. If they live in a democratic context; if con-
trol of the media does not jeopardize people’s freedom of expression; if the powers of the
state are independent and free from the influence of economic powers; and if a network of
social security is in place that guarantees the basic minimums people need; etc.All these rules,
norms and laws shape contemporary societies and determine their ability to develop. It is
difficult to think of a sustainable development in which, for examples, defenders of people’s
rights cannot express themselves.
While financial institutions and other actors involved in public policies have tried to sepa-
rate development and democratic institutions, we should note that the price of development
in those countries where institutions are not linked to the needs of its people has been the
loss of lives and destruction of the environment.
By analyzing institutions and their links to development we can obtain a historic perspec-
tive of the reasons for its presence or absence (the institutions of a country are the conse-
quence of a long series of events that shape each society). It also means that the analysis
is extended beyond the traditional explanations of capital accumulation, which is still used
today to explain development.
We know that development is a complex concept and that it includes different variables. In
this chapter, we will focus on the link between institutions and economic growth, bearing
in mind that the latter has a particular influence on energy demand, as we saw in part 2 of
this book. However, we should point out from the start that in a society with institutions of
a low quality (that is to say, where one can’t rely on the different norms which have been
established for communities), having clear norms in, for example, a commercial exchange
is unthinkable.
67
Institutions are mechanisms for social order and cooperation that govern the behaviour of a
group of individuals through the use of rules and norms.There are various types of institutions:
• Economic: For example, those related with markets and production, trade unions, com-
mercial organizations, cartels, the structure of property rights and land ownership systems.
• Political: For example, the electoral system, legislative processes, the degree of central-
ization, the political party system;
• Social and cultural: Such as social networks, social norms, those related to family and mat-
rimony, religious followings, and gender relations.
• Legal: Such as the courts or the weight of civil law with respect to customs and precedents.
The institutionalist school of thought considers that the quality of institutions is determined
by the role played by economic growth in the long- and medium-term.
If we consider institutions as the “rules of the game” for a society, then their quality and
successful adaptation to their context is extremely important when we talk about growth
since a good understanding of them creates the foundations for human interaction, allow-
ing economic agents to take decisions and carry out negotiations with a degree of certainty,
and thus obtaining efficient transaction agreements.
There are two direct ways in which the institutional framework affects economic growth: first,
frequent and arbitrary changes in the imposed regime, regulations and other economic poli-
cies make the country dangerous, resulting in low volumes of commerce; second, institutional
frameworks in which economic benefits can be obtained by means of political channels which
force individuals to reassign resources away from economic activities and divert them to po-
litical activities.
We can find this situation in many countries, developing countries in particular, where it is
generally difficult to overcome because certain political or economic groups find in these prac-
tices opportunities for enriching themselves and perpetuating their political power.
To summarize: institutions affect growth because, by modifying the incentives, they deter-
mine how investments take place, what is the level of technological innovation and educa-
tion is to be, what policies are chosen and what factors of production are used.
68
We thus need to reflect on the way in which institutional changes can take place. While it
is not the subject of this publication, we think it is important to note some elements that
could help us to reflect upon how to establish the regulatory frameworks and incentives nec-
essary to establish renewable energies in developing countries, so they may contribute to
their economic growth and improve the living conditions of their inhabitants.
In any case it is necessary to adapt institutions to their particular context, given the failures
that have occurred when trying to transfer institutions from one country to another. Although
this may seem evident, this recommendation has often been ignored when drawing up poli-
cies for international development. An example of this is where aid is conditioned by the abil-
ity of countries to replicate the institutions of those countries which give the aid.
In any case, and bearing in mind what we have mentioned so far, there is a constant which
appears as the basis for economic growth and the strengthening of institutions: the need
to strengthen the State by granting prerogatives that do not depend on the coming and go-
ing of different governments, and the need for a democratic framework in which different
parties can participate under equal conditions.
In general, a successful institutional change challenges established beliefs about the best
ways for institutions to adapt to domestic realities. Institutional changes are the result of the
experimentation by local agents and stakeholders. Finally, institutional changes in the
medium term depend on beliefs, expectations and other behaviours of society.
Renewable energies imply a transformation in the ways that production, consumption and
the planning of our daily lives take place. The transformation of institutions is an indispen-
sable step to favour their implementation.
Renewable energies: the importance of regulatory frameworks and the

differences between existing models
A regulatory framework for renewable energies must take into account the socioeconomic
context, the infrastructures and the environmental conditions of a country. Its objective must
be to generate an environment prone to attract investment, satisfying the demands of users
and meeting local needs.
69
There are various reasons why renewable energies cannot compete with fossil fuel energy
in the current economic market:
• Energy prices do not take into account all the negative environmental and social impacts,
be they global or local;
• Competition is reduced as a consequence of existing monopolies and government sub-

sidies that distort the price of energy;
• The development of renewable energy will not take place quickly enough to mitigate the
impacts of climate change, so their diffusion needs to be linked to a long-term vision that
takes into account the benefits of a change in the energy generation system;
• Markets fail to value the benefits of renewable energies, and thus generate very few in-
centives for private investment in research and development.
To correct these points governments need to establish a regulatory framework that promotes
investment in and the dissemination and use of renewable energies, since the market itself
will not do this.
But, what are we talking about precisely when we refer to regulation? We could define
them as a “a legal restriction promulgated by a governmental agency by means of a law
based on the threat of sanctions or fines, or by means of the corresponding incentives
and subsidies”. The aim of regulations established by a government is to obtain results
which would otherwise not occur or prevent situations which otherwise would occur.
The most common examples of regulations include regulations to control market entries,
prices, effects of pollution, production standards, etc.
The following regulation policies can be carried out in order to promote renewable energies:
• Focused market access policies, including policies aimed at price fixing, setting renewables
quotas, bidding processes, as well as market entry mediation activities, including programs
for small producers, purchase agreements for conventional energy, among others,
• Financial incentive policies, including subsidies, loans, tax credits and support for avoid-
ing carbon emissions,
70
• Public investments;
• Public awareness, vocational training.
Policies in support of renewable energy development

Policy Category Policy Initiatives
Market Access Norms establishing a regulated and fixed price for re-
newable energy generated and which obligate the sys-
tem to pay for all energy produced. Fixed payments, also
known as tariffs, or pricing complements are paid over several
years, and typically decline over time. Costs are covered by energy
taxes or an additional per-kilowatt-hour charge on electricity
consumers.
Germany, Spain, and Denmark have adopted highly successful pric-

ing laws that made them global renewables leaders.
Quota Systems: Governments set renewables targets to energy

utilities, provide renewable certificates to utilities and let the mar-
ket determine prices. The most common forms are the so-called
green certificates or Renewables Portfolio Standard (RPS), in many
US states or certificates’ systems in the UK, Italy or the European
Union. These policies are relatively new and for instance have not
been very effective in comparison with the fixed pricing processes.
Overall, they tend to support less costly technologies and fail to

encourage technologies such as solar, currently more costly that
wind or mini-hydro.
Net Metering can be used in conjunction with quota systems. It

allows households and other energy consumers that install small
renewable systems to sell excess renewable electricity into the grid
at wholesale market prices. Adopted in Japan, Thailand, Canada,
several U.S. states, and some other countries.
71

Financial Incentives A variety of mechanisms to subsidize investment in technology de-

velopment or support power production from renewables—includ-
ing investment subsidies, tax credits, rebates, loans, etc.—have
been used in Europe, Japan, the United States, and India.
California and India underwent wind booms with such policies. But
their experience suggests that a lack of technology standards and
overly-generous tax breaks can lead to fraud and substandard
equipment.
In the United States, Congressional extension of a federal incen-

tive program for wind energy, the Production Tax Credit, to the end
of 2007 brought a much-needed window of stability. (Failure to
enact timely extensions in earlier years—in 1999, 2001, and
2003—had caused a boom-and-bust cycle. The PTC’s expiration
in 2003, for example, led to the loss of more than 2,000 manu-
facturing and construction jobs and more than $2 billion in invest-
ments were put on hold.)
Rebates appear preferable to tax breaks: Japan subsidized invest-

ment through rebates and saw dramatic successes in PV develop-
ment. Some 24 U.S. states offer PV rebates as well.
Low-interest, long-term loans and loan guarantees are essential

to overcome high upfront capital costs, as experience in China, In-
dia, Indonesia, South Africa, the Dominican Republic suggests.
72

Standards Standards are essential to ensure high-quality technologies, reduce

associated €480 billion risks, and attract investors.
Denmark’s 1979 wind turbine standards are credited with mak-

ing the country the world’s leading turbine manufacturer. Ger-
many’s 1991 turbine standards and certification requirements
prevented quality control problems such as those experienced in
California and India.
Building codes can also be designed to require the incorporation

of renewable into building designs. Spain, for instance, instituted
a new building code in 2006 requiring all new large nonresiden-
tial buildings to generate a portion of their electricity with solar
PVs.
Vocational Training Training and certifying workers are essential to ensure that com-
petent people are available to manufacture, install, and maintain
renewable energy systems. Austria, Germany, and India are among
the countries that have established successful training programs.
Sources: Green jobs. Towards Sustainable Work in a low carbon World, and Sustainlabour.
73
There are two main strategies being used to obtain these objectives (see table above) pric-
ing laws or tariffs and quota systems or certificates. The first type of strategy (pricing laws)
uses tariffs or minimum prices for compensating the introduction of renewable energy into
the network (feed-in tariffs) to ensure a reasonable return on investment. Governments es-
tablish the tariffs for each type of renewable energy (higher tariffs for more expensive tech-
nologies). The second type of strategy is the use of market certificates. This strategy implies
setting renewable energies quotas for electricity utilities, letting the market decide the price
which should be paid for renewable energies. The government defines the objective to be
met (guaranteeing it is not surpassed) and facilitates investments in renewables while elec-
tricity providers are obliged to buy certificates from renewable energy producers in order to
reach their quota. Providers have a higher cost which is either paid by the government
through taxes or by final users via more expensive prices.
The pricing laws systems work in a very simple way by which the provider supplies the lo-
cal grid with the KWh produced and for each Kwh charges an amount decided by the gov-
ernment, which could be a fixed or variable rate. The advantages of this system are its cer-
tainty and predictability whilst not being dependent on the market. The disadvantage is the
difficulty in establishing the correct premium to each technology as an under-priced premium
one would fail to take off while excessive premiums would unduly burden the final consumers.
In the green certificate system, the market regulator issues green certificates to those renew-
able producers in relation to their generation capacity. Additionally, a renewable fee is im-
posed on the commercialisers. As an advantage, this system, in principle, promotes greater
efficiency. However, it disadvantageously establishes two markets – one of electricity and an-
other of certificates – which are variable and unstable and little adapted for capital-inten-
sive technologies, such as renewables.
Price details of the introduction of wind energy in the networks of Germany,

Spain and France.
Germany. Support for new turbines in 2005 were 8.53 cents/KW/h. After various years
the price decreases, depending on the quality of the place, down to the current
5.39cents/KW/h. In very good places, this is the case after 5 years.
74
Spain. Wind energy producers can choose from two tariffs: a fixed one (6.1 cents/KW/h
the first 20 years and 7.3 afterwards), or one that is variable. The variable tariff oscil-
lates between 8.5 euro cents/kw/h maximum and 7.1 minimum)
France. In the first five years 8.36 cents/KW/h is paid. After this the price falls depend-
ing on the number of hours of full charge (0-2,000 = 8.38 cents; 2,000 – 2,600 = 5.95
cents; 2,600 – 3,600 = 3.05cents).
These two systems – pricing laws and green certificates- appear the most trustworthy to in-
crease the percentage of renewable electricity generation. However, the decision to choose
one or the other is very significant. There is a general consensus around the idea that the
system of fixed prices is more efficient than the quota or green certificates’ system. Those
countries which have been most successful at increasing the percentage of renewable elec-
tricity generation– Germany, Spain and Denmark – implemented this system. Countries that
implemented a quota system – UK and Italy – have been less successful, both regarding ef-
fectiveness and efficiency.
The European Commission undertook in 2006 a comparative analysis on frameworks for sup-
porting renewables. It was the basis for the EC Communication “The support of electricity
from renewable energy sources”. This report analyses the effectiveness –the outcomes- and
the efficiency – the outcomes’ cost – of feed-in tariffs (pricing laws) and certificates in dif-
ferent EU countries for the 2001-2005 period.
In the study, effectiveness is defined as the ability of a support scheme to deliver additional
renewable electricity assessed against the realistic potential of the country for 2020.
The analysis provides evidence on the higher effectiveness of feed-in tariffs in comparison
with green certificates. Thus, as shown in the chart below, for wind, all the countries whose
effectiveness is higher than the European average use feed-in tariffs as the main tool for wind
technology promotion.
75
FIGURE 7 Supporting framework effect on wind generation in the EU15
12 %
10 %
8%
6%
4%
2%
0%
AT BE DK FI FR DE GR IE IT LU NL PT ES SE UK EU15
Feed-in tariff Quota Tender
Source: EC Communication “The support of electricity from renewable energy sources”, dec 2005.
It also highlights, for instance, that there is no green certificate system capable of promot-
ing renewables and, in particular, wind energy.
The study shows important differences in the support level for renewable energy generation
in the EU member states and proves that, in general, countries with green certificates, the
level of support is considerably higher than in countries with feed-in tariffs.
Thus, differences in support level has little to do with average generation costs, as it is shown
in the chart below, which shows wind generation costs and support level in different coun-
tries.
76
FIGURE 8 Costs and support level to wind generation in the EU
160
Minimun to average generation costs [€/MWh]
140 Average to maximum support level [€/MWh]
120
100
80
60
40
20
AT BE DK FI FR DE GR IE IT LU NL PT ES SE UK
Fuente: Communication from the Commission: «The support of electricity from renewable energy sources», dic 2005.
It is observed that the highest support levels and the greatest differences between support
and costs are found in countries using green certificates, such as the UK, Italy and Belgium.
These higher support levels – which imply a higher cost for consumers- could be due to higher
risk primes requested by investors in these frameworks, to higher administrative costs and,
possibly, to the immature nature of these markets.
EU countries’ installed wind capacity for 2006 also shows a clear advantage for feed-in tar-
iffs.
77
TABLA 6.
Country Support Scheme Total wind capacity 2006 (MW)

Germany Feed-in tariffs. 20621.9
Spain Feed-in tariffs. 11615.1
Denmark Feed-in tariffs. 3136.6
Italy Green certificates. 2123.4
United Kingdom Green certificates. 1962.9
Portugal Feed-in tariffs. 1716.4
France Feed-in tariffs and tendering. 1635
Netherlands Green certificates. 1560
Austria Feed-in tariffs. 964.5
The last years have seen a progression in the regulatory frameworks promoting renewable
energies. Apart from developed countries, many developing countries have adopted policies
and programs to this end: Egypt is working on promoting wind energy; Madagascar esta-
blished a new program for hydraulic energy; Turkey adopted a new law on the promotion
of renewable energies in 2005; Uganda approved a national plan for renewable energies
in 2006; Iran has started to accept the existence of independent electricity producers; India
has announced a new policy of prices that promotes electricity generation with renewable
sources, including quotas, preferential tariffs and norms for small electricity producers; and
the list goes on.
The success of these programs and policies will depend on them taking into account local
needs and their capacities to generate support among the communities which will be us-
ing these technologies.
In the next section, we summarize some of the characteristics necessary to guarantee a suc-
cessful transition to renewable energies.
78
A much needed regulatory framework for renewable energies in

developing countries.
As we argued previously, promoting a greater contribution of renewable energies to the en-

ergy mix requires not only financial, human and technological resources, but also legal and
regulatory instruments that can guarantee the advancement and forward projection in time
of the policies and efforts carried out.
Another fundamental element for the design of renewable energy policies is recognizing the
close link between them and other policies that deal with the environment, urban develop-
ment, transport, housing, agriculture, education, etc.
The design and application of renewable energy policies require the State to take an active
role. This task includes responding to the equity of the system, its environmental sustainabil-
ity and security of supply. It implies integrating long-term social, environmental, technolog-
ical and political challenges, which will not be considered or resolved by the market.
The design of a renewable energy policy must also include a discussion about the distribu-
tion of incomes from the oil sector and how to direct surpluses to the development of re-
newable energies.
For their implementation it´s necessary that structures, traditions and consciousness change;
a challenge that requires the cooperation of, disposition to innovate and the commitment
of consumers, businessmen and political authorities.
We can point out some important elements which should be considered when designing a
renewable energy policy52:
• Guarantee that potential consumers know the technologies and are clear about the ob-
jectives behind their promotion as well as the calendar for their implementation. Efforts
to increase awareness of the advantages of using renewable energies as well as the need
to reduce unnecessary consumption through the adoption of energy efficiency techniques,
must be communicated to household users as well as industry. Awareness campaigns, eco-
52
Namibian directorate of energy, Development of a regulatory framework for renewable energy and energy efficiency
within the electricity sector, January 2007.
79
nomic incentive programs, and advisory services for the incorporation of renewable en-
ergies must be directed to the consumers. This element is also key to ensure a democra-
tization of the energy sector, by allowing citizens to make an informed contribution to plan-
ning and decision making processes.
• Coordinate renewable energy policies with those dealing with transport, housing, rural
development, agriculture and education, as well as those policies dealing with climate
change. Energy policies are an important strategic element in the design of a country’s
development policy. It is a cross-cutting theme which must be coordinated with policies
targeting energy efficiency in transport, industry, housing, rural and urban development,
education, professional development and job creation, etc.
• Create a legal and regulatory framework that allows renewable energies to compete with
traditional energy sources. This framework must include the different activities of the en-
ergy life cycle: exploration, exploitation, transformation, distribution and the final use of
the energy by individuals and businesses. The sum of laws, norms, and economic instru-
ments making up this regulatory framework must ensure the incorporation of externali-
ties at each stage of the process. It must also define clearly what institutions are relevant,
the mechanisms – incentives, norms and general procedures - and key actors and their
roles.
• A progressive tendency to set the price of non-renewable fuels at their real value: clas-
sical economics does not take into account the environmental costs and subsequent dam-
ages to human health thus energy prices are much lower than their real prices which do
not contribute to the market spontaneously assigning the resources necessary for the de-
velopment of alternative energy sources. In this regard, the generation of electricity us-
ing large hydroelectric infrastructures must also take into account the social costs due to
the displacement of populations who must receive fair compensations that guarantee their
economic and physical recovery.
• Provide support programs for renewable energies, gradually eliminating subsidies and re-
ducing the risks associated with dependency on them. Fossil fuels currently enjoy multi-
ple subsidies ranging from exploration to consumption and R&D. This factor also has an
impact on the low costs of conventional energy sources versus renewable energy sources,
80
which don’t have this kind of support. An adequate subsidies policy should serve as an
initial push to ensure the competitiveness and development of alternative sources, but
should also tend to their progressive elimination so as not to encourage dependency. Sup-
port and subsidy policies include supporting new renewable energy ventures.
• At the international level, political agreements must be strengthened to ensure the sup-
port of multilateral and national financial institutions for the transition towards renew-
able energies. Multilateral and international cooperation agencies must clearly incorpo-
rate to their policies and programs the development and dissemination of renewable
energies and reduction of GHGs. The international community must make efforts to keep
decision makers well informed about the challenges posed by climate change and tech-
nologies and markets related with renewable energies.
Measures must be established that promote renewable energies. As these technologies are
relatively new compared to conventional energy sources, such as oil, gas, coal and nuclear,
the political framework must ensure their equal access to the market.
To start with, renewable energy promotion programs must be aggressive, long-term, and with
clear policy lines and the aim of influencing public and private decision makers. All institu-
tions and agencies involved must cooperate more in the development and promotion of re-
newable energies.
Innovative and sustainable financing programs must be created to ensure an expansion in

the use renewable technologies. Of special interest are the financing programs that mobi-
lize local resources and provide small scale credit management.
Strategies for the expansion of renewable energies which have been successful must be
broadly applied. Many strategies are focused on ideas of participation, creation of income
and development of small businesses. There are systems of production, marketing and in-
formation diffusion which must be used as much as possible to reduce costs and ensure the
sustainability of the project.
Renewable energy training programs are essential to develop the critical mass of individu-
als necessary at the local level. Local capacity must be used to the maximum.
Finally, a strong incentive must be given to R&D sectors for the identification and mapping
81
of available renewable energy resources, as well as the development of more appropriate

and locally-adapted technologies.
The adoption of renewable energies’ supporting frameworks requires a political deci-

sion of high importance for the future. These frameworks must be efficient in economic
terms, not only for the electric sector costs, but in a broader social welfare sense. Thus,
when deciding on the framework to be adopted, issues such as economic and social de-
velopment, employment, energy security or the environment, need to be taken into ac-
count.
Regarding regulation, and considering existing experiences, the following conclusions

can be advanced:
• Regulation is, rather than natural resources availability (water, wind, sun) the deter-
mining factor for an adequate development of renewable energies.
• There are two basic regulatory frameworks for supporting these energies: feed-in tar-
iffs (or pricing laws) and green certificates.
• These two systems end in different outcomes: feed-in tariffs systems appear to be
more efficient regarding costs and more effective regarding outcomes than green cer-
tificates’ systems. In fact, to date, there has been no successful green certificate sys-
tem.
• This is the case because feed-in tariffs systems are more predictable and stable than
green certificate systems and they are also the best adapted to the renewables sec-
tor, highly capital intensive and long-term oriented.
82
CONCLUSION
As can be seen throughout these pages, we are currently witnessing a highly interesting mo-
ment. Numerous signs in the last ten years have made us think about the eventual deple-
tion of the current energy model. However, the certainty of just such an event has spread
to various social sectors in just the last few years, where it has finally reached centre stage
of the economic system. The nearly universal acceptance as to the causes of climatic change
as well as the consolidation of volunteer groups in their struggle to limit the harmful effects
of this climatic change have undoubtedly been a driving factor.
If, in years past, the resistance to change was powerful and received support and funding,
we now live at a moment in which there is a diagnostic consensus. The economic develop-
ment model based mainly on fossil fuels has been exhausted, which is not to say that fos-
sil fuels will not continue to be used but rather that fossil fuels´ central and universal role
in energy production will pertain to the past. Now is, undoubtedly, the time for renewable
energies.
As this study clearly shows, we are living during an historic moment of great interest, but
like all historic moments, it will pass quickly. We can now decide which objectives we want
to promote in the new model and how we want that transition managed.
While bearing in mind the necessity and the high costs of such change, should not the in-
vestment we make be an optimal one? There will not be sufficient resources to change the
energy model now and then later bring access to the world´s poor. Justice and equality are
two variables which must be integrated into any new energy model in order for efforts to
be profitable. This is why the concrete proposal we make here is to develop renewable en-
ergies while bearing in mind one clear objective: renewing development.
This study clearly demonstrates renewable energies´ contributions towards clean, fair and safe
development.
Renewable energies are being consolidated in the more industrialized countries and it is those
83
countries which have invested in renewable sources that seem to be better positioned to take
on future challenges. In the industrially emerging countries, renewable energies are experi-
encing exponential growth, allowing countries to increase energy access as well as gener-
ate the technological capacity upon which a greater part of tomorrow´s energy production
will depend. Just to give an idea of the rate of growth on a global scale, the use of renew-
able energies in world energy production increased by 50% between 2004 and 2007.
In every one of these cases, state regulation has been fundamental in the development of
these renewable energies and it demonstrates that regulation and instruments such as pre-
miums are fundamental factors for its consolidation.
Nonetheless, this study clearly illustrates that energy promotion cannot be applied in the same
way in every case. Any energy model shift ought to lead us towards a multitude of coexist-
ing technologies that cover our energy requirements while guaranteeing its accessibility to
everyone. The future energy model must be plural and adapted to local needs and local re-
sources.
The administration of this shift, using a variety of solutions and working towards the objec-
tive of integrating energy access to everyone, is not an easy assignment. Efficiently employ-
ing these multiple solutions can only be guaranteed by citizens´ participation in the decision-
taking process. Due to their mostly decentralized nature, renewable energies present
advantages in passing energy control to the communities which produce the energy and like-
wise, should benefit from it. However, these advantages must be consolidated via institu-
tional channels.
The democratization of energy production and distribution will help avoid repeating the “fail-
ures” of the current model. Managing this transformation must be participative and dem-
ocratic. The fairness of any future energy model will depend, in large part, on our society´s
capacity to demand sustainable environmental and social strategies.
84
PART FOUR.
DEVELOPING RENEWABLE ENERGIES: A LOOK AT GOOD
PRACTICES AND THEIR RESPECTIVE CONTEXTS
INDIA
1. Country data
• Ecological footprint per capita (WW): Position 136 of 180 countries (1 being the worst).
• CO2 emissions per year = 1,102 million tons (2000).
• CO2 emissions per capita = 1.1 tonnes
• Kyoto Protocol – Accession country, without a reduction commitment (Non-Annex 1)
• Consumption = Equivalent to 319,161 million tons of oil.
• Consumption per capita = Equivalent to 309,000 K of oil.
• Electricity consumption = 597,000 million KW/h
• 2006 Human Development Index (HDI-2006) = 0.611; position 126 out of 177 countries
(1 being the best).
2. Context of its energy policies
In India, energy security concerns consequent to the oil crisis of the 70s motivated discus-
sions about policies for the development of renewable energy sources as an alternative to
conventional fossil fuels.
In 1992, the Ministry of Non Conventional Energy Sources was created, which after 2006
became known as the Ministry for New and Renewable Energies (MNRE). This is the body
responsible for designing the country’s renewable energy policies.
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INDIA
India has one of the largest renewable energy programs in the world. Its activities cover the
most commonly available technologies (biogas, biomass, thermal and photovoltaic solar en-
ergy, wind energy, small hydroelectric works and other emerging technologies). In each of
these areas there are programs for evaluation of the resource, research and development,
and technologies for development and demonstrations. Various systems and products asso-
ciated with renewable energies are commercially available, demonstrating their economic
viability versus other options that use fossil fuels, particularly when the environmental
costs are taken into account.
With a solid industrial base and a successful commercialization of wind technologies, pho-
tovoltaic solar panels, small hydroelectric works, biogas and modern biomass burners, India
is in a position to offer the latest technologies to other developing countries and play a lead-
ing role in the development of sustainable energies at an international level.
3. Goals
The over all medium-term goals (2012) established by the MNRE are 24,000 MW of installed
capacity (wind, micro hydro and bioenergy, but excluding solar energy, as its not considered
commercially viable in the medium term) and supplying electricity to 10,000 cities in remote
regions. The proportion for each renewable source is as follows:
Technology Cumulative Capacity (MW) %
Wind ................................ 17.500 73

Micro-hydro ...................... 3.360 14
Bioenergy.......................... 3.137 13
Total ............................ 24.000 100
Source: MNRE, 2007.
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INDIA
A look at good practices and their respective contexts | Parto four
According to information presented by MNRE in Brussels in January 2007, the long-term goals
(2032) are:
• Installed renewable energy capacity: 10%-12% (currently, 7%).
• Electricity generated with renewable sources: 4%-5% (currently 2.5%)
• Vehicles using alternative fuels (hydrogen, syngas and biogas): commercially competitive
vehicles (currently they are not).
• Efficiency of solar modules: up to 30% (currently 14%).
4. The current situation and the potential of renewable energies
Currently, close to 80% of energy consumption in rural areas comes from non-commercial
sources. With regard to electricity access, 84% of cities have electricity whereas in rural ar-
eas only 44% of households have access to electricity supply.
According to MNRE data, the composition of the electric grid is as follows:
Technology Installed Capacity (MW) %
Thermal ............................ 83.772 65

Hidroelectric...................... 33.193 25
Renewable........................ 9.060 7
Nuclear ............................ 3.900 3
Total ............................ 129.925 100
Source: MNRE, 2006.
According to MNRE data, in 2006 the generation of electricity from renewable sources was
14,572 million KW/h (with an installed capacity of 9,000 MW), compared to 11,425 mil-
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INDIA
lion KW/h in 2005 (with an installed capacity of 6,047 MW). Current data reveal the follow-
ing outlook:
Source Estimated Accumulated

potencial at 31/03/2007
Biofuels (agricultural and forestry wastes)................ 61,000 MW 524 MW

Wind ...................................................................... 45,000 MW 7,092 MW
Micro hydro (up to 25 MW) .................................... 15,000 MW 1,975 MW
Biomass / cogeneration bagasse and others .......... 5,000 MW 661 MW
Biogas .................................................................... - 86 MW
Household waste .................................................... 7,000 MW 63 MW
Solar ...................................................................... 50,000 MW 3 MW
Total (MW) .......................................................... 183,000 MW 10,404 MW
Source: MNRE, 2007.
Cumulated 2007 (MW)
524 86 Wind
63
661 Micro Hydro
3 (up to 25 MW)
Solar
1975 Biomass/cogeneration
bagasse & others
Biofuels (agricultural and
forestry waste)
Biogas
7092
Household waste
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INDIA
Instaled capacity and Potential (MW)

70.000
61.000 Potential capacity
60.000
Instaled capacity 50.000
50.000 45.000
40.000
30.000
20.000 15.000
10.000 7.092 8.000

5.000
524 1.975 63
661 3
0
Biofuels
(agroforestry)
Wind
Micro Hydro
Biomass/
Cogeneration
Household
waste
Solar
5. Challenges and strategic paths
ACCESS TO INFORMATION AND RAISING AWARENESS OF PUBLIC OPINION
Working under the premise of transparency and access to information, the MNRE has a di-
vision responsible for its communication strategy. Its communication and awareness cam-
paigns are continuous, and employ different media such as: energy parks, samples, exhibi-
tions and showcases of their renewable energy systems and products throughout the
country, television and radio programs, film productions, etc. The use of Hindi, in the frame-
work of the official language policy, is another important point of the communication strat-
egy. There are also special training programs focused on strategic sectors, such as the press
and teachers of technical education.
PUBLIC PARTICIPATION
District Advisory Committees (DACs) – Starting in 2005, DACs were created in 560 districts.
These are made up of district civil servants, members of Parliament and NGO representatives,
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INDIA
and at least 6 of them must be women. DACs are proving very effective in the promotion
of renewable energies.
Women Unity – Was established by MNRE in 1997. Its function is the revision of the Min-
istry’s plans and programs from a gender perspective, with the aim of ensuring that the rec-
ommendations of the National Plan for Women are implemented.
RESEARCH AND DEVELOPMENT
The MNRE has various R&D support programs for renewable energy technologies. Its cur-
rent emphasis is on the reduction of costs and increases in efficiency. The policies developed
by the Ministry seek the involvement of the industrial sector. An increase in interaction and
cooperation between academic, scientific and research institutions with the industrial and
entrepreneurial sectors is expected.
The R&D projects with direct support from MNRE are: biogas, solar energy (photovoltaic, so-
lar stoves and thermal), photovoltaic, hydroelectricity, wind energy, biomass, cogeneration,
bio-gas, urban and industrial residues, hydrogen, geothermal, wave energy, and international
finance and cooperation.
6. Perspectives on the legal and regulatory framework
• Electricity Law 2003
With the approval of this law in June 2003 an important reform of the sector was initiated,
which was necessary to establish an open and competitive market for the commercialization
of energy. The law consists of institutional and regulatory reforms, including commercializa-
tion with neighbouring countries. It introduced significant changes to in the structure of the
industry, converting it to a commercial system with multiple sales and consumer agents. The
law also clarified the role of the different organizations and regulatory commissions involved,
and established targets and deadlines for the restructuring of the electricity industry.
The objectives are to “consolidate the laws relating to the generation, transfer, distribution,
commercialization and use of electricity, as well as the measures aimed at the development
of the electricity industry, with a particular focus on promoting competition, protecting the
90
INDIA
interests of consumers, the rationalization of tariffs, ensuring the transparency of subsidies,

promoting efficient and friendly environmental policies, establishing a Central Electricity Au-
thority, Regulatory Commissions and an Appeals Tribunal”.
• Related Technical Institutions
These are specialized institutions under the administrative control of MNRE with the impor-
tant role of supporting the technical aspects of the Ministry’s programs: the Solar Energy Cen-
tre-SEC; the Centre for Wind Energy Technology-CWET; and the National Institute of Renew-
able Energy-NIRE, which specializes in bio-energy, including agro-fuels and synthetic fuels.
• Technology Information Forecasting, Assessment & Databank Division

(TIFAD)
This division of MNRE is charged with establishing a Renewable Energy Network (RENET)
and the creation of a Renewable Energy Database (REDB). Both projects are currently in their
second phase of implementation. The division offers nodal agencies in different states sup-
port for the implementation of communication technologies (PCs, servers, software, etc) to
help their integration within RENET.
• Regional offices
MNRE has nine regional offices in the capitals of different states (Ahmedabad, Bhopal,
Bhubaneswar, Chandigarh, Chennai, Guwahati, Hyderabad, Lucknow y Patna) which are
charged with monitoring and supervising the implementation of the Ministry’s programs; car-
rying out communication and awareness tasks; establishing links between different State
Agencies, NGOs, project promoters, etc; and providing on the ground feed-back. A number
of projects and programs are implemented throughout the country by means of an exten-
sive network of institutions that include nodal agencies and departments in each state, NGOs,
research and development institutes, financial institutions and the private sector.
7. Financial instruments
The promotion of different renewable energy technologies has counted with the support of
various government measures to encourage private and international investment, including
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INDIA
fiscal and financial incentives by means of a broad range of programs which have been im-
plemented by MNRE, and the simplifying of procedures for national and international invest-
ment. These policies offer excellent opportunities for investment in the sectors of, techno-
logical improvements, introduction to new technologies, and development of new markets
and promotion of exports.
There are currently many fiscal incentives and specific help available to producers and con-
sumers of renewable energies. These include:
• 100% fiscally accelerated depreciation for project/system installations in the first year
• Reduced border tariffs for equipment and the majority of materials and components;
• Soft credits for manufacturers and user of commercial technologies;
• Tax incentives for five years for energy generating projects
• Fixed prices for buying energy from intermittent sources conected to net.
• financial incentives and subsidies for projects with a high initial cost;
• involvement of women as beneficiaries from and contributors to the implementation of

programs;
Incentives to NGOs and small entrepreneurs;
The MNRE has developed a series of small guides to advise states in the establishment of
incentives for public and private investments. There are currently 17 states which have de-
veloped their own packages of policy incentives.
INDIAN RENEWABLE ENERGY DEVELOPMENT AGENCY (IREDA)
This is a financial institution under administrative control of the MNRE. It was created in 1987
to manage loans and finance renewable energy and energy efficiency projects. The sectors
financed are: hydro-energy; wind energy; bio-energy; solar energy (photovoltaic and ther-
mal); development activities (market development and financial schemes), emerging tech-
nologies, energy efficiency, development for women and association schemes.
The main objectives are:
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INDIA
• operate funds for New and Renewable Sources Expansion (NRSE);
• provide financial support to specific projects and plans for the generation of electricity
and/or energy from renewable sources, and energy efficiency;
• reduce the cost of renewable energy;
• support the technological update through the NRSE;
• develop criteria, systems and concepts for the financing of projects based on New and
Renewable Energy Sources and Energy Efficiency.
Up until 31st March 2007, 1,816 projects had received approval for IREDA funds, which rep-
resents 196 million USD and an energy generation capacity of 2,927 MW (Source: IREDA,
2007).
NON-CONVENTIONAL ENERGY TECHNOLOGY COMMERCIALIZATION FUND (NETCOF)
This fund was created by IREDA and approved for implementation in march 2002. Its ob-
jectives are: support the commercialization of non-conventional technologies in India; sup-
port the installation of pilot-test plants for the manufacturing of Non-Conventional Energy
(NCE) systems and products; support the distribution of NCE technologies for domestic use;
adaptation or modification of processes or products based on imported technologies in or-
der to adapt them to the local market; and development of innovative products and tech-
nologies with potential for growth and return.
The fund gives preference to established companies with the demonstrated capacity to ob-
tain a reasonable benefit. It gives preference to projects that don’t have any sort of finan-
cial support from MNRE.
Indian based companies, R&D institutes and academic institutes in collaboration with indus-
try can access these funds.
93
INDIA
8. Examples of projects under development
RENEWABLE ENERGY PROGRAMS IN THE NORTH-EAST REGION (NER)
The economic development of this region has received special attention from the Indian Gov-
ernment, which assigned 10% of its budget to this region in 2006-2007. Amongst the great-
est achievements during 2006 we can mention the provision of electricity to 262 villages in
remote areas and installation of 1,246 biogas plants for families. Construction has also started
on a biogas system (2x300Kw) in Seppa, East Kamang.
PROJECT FOR THE REMOVAL OF BARRIERS FOR THE GENERATION OF BIOMASS ENERGY.
PART 1.
This project was agreed upon by the MRNE and UNDP in September 2006. Its objective is
to accelerate the development and expansion of environmentally sustainable bio-energy. The
estimated cost of the project is 39.15 million USD of which 5.65 million come from the Global
Environment Facility’s (GEF) mechanisms and 24.82 million as a lloan from KFW. The proj-
ect is being implemented in 8 states.
9. References
• India’s Electricity Act, 2003: Implications for Regional Electricity Trade. USAID
SARI/Energy Program. Septiembre, 2004.
www.sari-energy.org
• MNES. Anual Report 2006-2007.

http://mnes.nic.in/frame.htm?publications.htm
• Indian Renewable Energy Development Agency, IREDA

http://www.ireda.in/default.asp
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INDIA
• Renewable Energy for Distributed Power Generation / Co-generation & Bio-diesel. Pre-
sentación realizada por el MNRE durante el Indo-EU Working Group on Energy Effi-
ciency and Renewable Energy. Bruselas. Enero, 2007.
http://ec.europa.eu/dgs/energy_transport/international/bilateral/india/energy/doc/eu_in
dia_3/res/shukla_re_%20in_india.pdf
• Haribandhu Panda; “Review of Renewable Energy Policy in India”. Sari-Energy. 2004.

http://www.sari-energy.org/rean/Resources/ReviewRenewableEnergyPolicyIndia.pdf
95
MEXICO
MEXICO
1. Country Data
• Ecological Footprint per Capita (WW): position number 52 of 180 countries (where 1 is
the worst).
• CO2 emissions per year = 308,632,000 tons (2000)
• CO2 emissions per capita = 4.3 tons
• Kyoto Protocol: Ratified, with no reduction commitments (Non-Annex 1)
• Consumption = Equivalent to 135,385 thousand tons of oil
• Consumption per capita: Equivalent to 1,331,000 k of oil
• Human Development Index 2006 (IDH-2006) = 0.821; position 53 of 177 countries (where
1 is the best)
The National Development Plan 2007-2012, under the premise of a Sustainable Human De-
velopment and with the perspective of the 2003 plan, recognizes the potential importance
of renewable energies for the country, and considers their integral use a priority. The chal-
lenge is tackled in angles 2, “An economy that is competitive and generates jobs”, and 4,
“Environmental Sustainability” of the plan.
The National Energy Secretariat (SENER) is the organization responsible for the implemen-
tation of Energies Policies.
By no later than 9 months after the publication of the Law for the Use of Renewable Ener-
gies (which is currently being dealt with by the Senate), SENER must present a Program for
the Use of Renewable Energies that establishes concrete targets and specifies the strategies
96
MEXICO
and actions to be carried out. This program will include an up to date inventory of the re-
newable energy sources and take note of the international commitments with regard to re-
newable energy use and climate change.
3. Goals
The forecast for 2012 is that the participation of renewable energies in the generation of
electricity will be around 8%, not taking into account the contribution of large hydroelec-
tric works. Important increases are expected until 2014, driven by SENER, in the hydro-, wind
and geothermal electricity sectors (2,254 MW, 592 MW and 125 MW respectively).
4. The current situation and the potential of renewable energies
In the last years Mexico has been able to lower its energy intensity (primary energy consump-
tion) as well as the intensity of its CO2 emissions. However, fossil fuels (oil and gas) still make
the largest contribution to the country’s total internal supply of primary energy (82%), with
renewable energies making only a small contribution (8% for biomass, and 1% for wind and
geothermal).
Domestic supply of primary energy - 2004
Biomass, 6%
Oil, 54% Geothermal and wind, 1 %
Nuclear, 2 %
Coal, 5 %
Hidroenergy, 4 %
Natural gas, 28 %
*Biomass includes wood and sugarcane bagasse.
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MEXICO
By the end of 2005, 54 permits for the generation of electricity from renewable sources had
been granted. These will be in operation at the end of 2007, by which time there will be more
than 1,400 MW of renewable energy capacity and more than 5,000GWh/year of generated
electricity.
Source Current situation Potential
Solar In 2003 the capacity of photo- By 2013 it is expected that 50MW of

voltaic systems was 15 MW, photovoltaic technologies will be in-
generating more than 8,000 stalled, generating 28 GWh/year.
MWh/year (for rural electrical
supply, water pumps and cool-
ing).
Wind In 2004 there were 3MW in- Studies carried out by various Mexican
stalled, which generated institutions have estimated a potential
6GWh of electricity. of more than 40,000 MW.
Micro hydro There are three small hydro- It is estimated that the national po-
( up to 10 MW) electric stations with an in- tential of hydroelectricity for stations
stalled capacity of 16MW, with capacities below 10MW is
which generates a total of 67 3,250 MW.
GWh/year. In addition there
are three hybrid stations ( mi-
cro hydro and natural gas)
Biomass Biomass represents 8% of pri- The potential is estimated to be be-

mary energy consumption: sugar tween 2,635 and 3,771 petajules/
cane bagasse (for the generation year: 40% from wood fuels, 26%
of electricity and/heat in the from agro—fuels and 0,6% from
sugar industry) and wood (for municipal sub-products.
heating and cooking).
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MEXICO
Biomass In 2005 the Energy Regulatory It´s estimated that making use of 73
Commission authorized the in- million tons of agricultural and
stallation of 19MW of biogas forestry waste with energy potential
to generate 120GWh/year and the solid urban waste of the 10
with biogas, 70MW of sugar- main cities, could provide resources
cane bagasseto generate 105 for the installation of 803MW which
GWh/year and 224 MW of hy- would generate 4,507 MWh/year
brid systems to generate 391 (the electricity is generated from the
GWh/year. thermal transformation of the waste).
Geothermal Mexico is the third country in It is estimated that the potential of

the world in terms of geother- geothermal energy would allow for a
mal energy generation capac- further 2,400 MW to be installed.
ity, with 960 MW installed,
generating more than 6,500
GWh/year
Source Installed capacity Goal Potential

(2005) 2014 capacity
Solar ............................ 15 MW 50 MW —
Wind ............................ 3 MW 595 MW 40,000 MW
Biomass* ...................... 313 MW No data available 803 MW
Geothermal .................. 960 MW 1,085 MW 6,500 MW
* Biomass originating from agricultural, forestry and urban residue.

Source: SENER, 2005.
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MEXICO
Installed capacity and 2014 goal

1200
1085
1000 960
800
MW
595
600
400
313
200
50
15 3 0
0
Solar Wind Biomass* Geothermal
Source
Installed capacity (2005)
Goal 2014
* Biomasa: sin datos para la meta 2014.
5. Challenges and strategic lines
Institutional: Energy planning is based on methodologies that only evaluate the short-
term economic costs of generating electricity. This lack of an evaluation of the benefits
which renewable energies bring to the national economy (long term price stability and a
reduction of supply risks), together with the availability of fossil fuels, mean that policies
and energy outlook continue to be based on fossil fuels.
Legal and regulatory: There are constitutional and legal limitations to private
participation in the energy sector. The Law of Public Electrical Energy Service only allows
individuals to generate their own electricity in very concrete cases. Some limitations could
be overcome if the Law for the Use of Renewable Energy Sources is approved by
members of parliament.
Economic/Financial: Economic and fiscal incentives must be established, as well as
100
MEXICO
financial mechanisms that allow renewable energies to compete with conventional

sources. The Proposal for a Law on the Use of Renewable Energy Sources includes a
broad range of instruments of this kind.
It should be mentioned that parallel to this development, SENER, GEF and the World Bank
are jointly developing a scheme to implement a Green Forum which will give incentives to
independent energy producers who hand over this energy to CFE for public use.
Technicians
Efforts to estimate the potential of renewable energies must be extended to the entire na-
tional territory; other resources must also be quantified, such as wave energy, geothermal
energy and biogas based on urban wastes.
6. Perspectives on the legal and regulatory framework
• Initiative for a Law for the Use of Renewable Energy Sources (LAFRE)
This initiative was approved in December 2005 by the parliament. To this day it has not yet
been approved by the Chamber of Senates (July 2007).
The initiative establishes that by the year 2012 renewable energies (excluding hydroelectric
energy) must contribute at least 8% of the total electricity generated. It establishes that
SENER must elaborate and coordinate the execution of a Program for the Use of Renewable
Energy Sources in order to reach this goal and at the same time promote social participa-
tion in the planning, application and evaluation of the program.
• Contract for the interconnection of intermittent sources
This instrument was approved in 2005 by the Energy Regulatory Authority with the aim of
promoting the development of private energy projects focused on self-supply with intermit-
tent renewable energies. This instrument covers wind and solar energy, as well as hydroelec-
tric energy with limited storage or water. These instruments are meant to allow the supplier
to provide the generated electricity to the grid, so it can be used at centres of consumption
when needed.
101
MEXICO
• Income Tax Law
In the framework of this law there is 100% accelerated depreciation for investments in ma-
chinery and equipment for the generation of energy from renewable energies, which is a very
interesting promotion instrument. A new fiscal stimulus has also been proposed that pro-
motes investment and use of renewable energies in households, which consists of a 30%
fiscal credit for the investments in machines for the generation of energy from renewable
energies.
• Technological development programs
SENER has developed a plan of action to eliminate barriers to the development of wind gen-
erated electricity. The project started in 2005 with financial support from the GEF (UNPD).
The project counts on 4.5 million USD for the development of a regional centre for research
and development of wind technologies in Oaxaca (which is expected to start work in
2007), 2 million USD for the installation of power stations in various points of the country,
and 60 million pesos to execute three wind energy projects.
There is an important renewable energy research network in Mexico which includes public
and private institutions, among them the National Autonomous University of Mexico (Uni-
versidad Autónomoa de México, UNAM) and the Institute for Electricity Research (Instituto
de Investigaciones Eléctricas, IIE). SENER established the political guidelines in terms of re-
newable energy research. The government of Mexico participates in different international
energy organizations with which it develops different renewable energy research projects.
• Large Scale Renewable Energy Projects (Proyecto de ER a Gran Escala,

PERGE)
This project receives funding from GEF, through the World Bank, totalling 70 million USD.
Its objective is to promote the connection of renewable energies to the Mexican grid. The
project will be carried out in two phases. The first phase counts on 25 million USD, of which
20 will be destined to the Venta III wind energy project (101MW), and the remaining five
to technical assistance activities. The incentive will be handed to producers through the Green
Fund (Fond Verde) and will start operations in 2008. The second phase will receive 45 mil-
lion USD, which will all be destined for the Green Fund.
102
MEXICO
7. Financial Instruments
• Trust project
The LAFRE initiative has as its most powerful instrument the creation of a trust which grant
incentives to projects which generate electricity for public services using renewable energies.
The resources necessary for the trust will come from three types of sources: budgetary, which
will be managed by SENER; support instruments derived from the Clean Development
Mechanisms (CDMs) and other international supports; and CO2 emission (or energy consump-
tion) rights, for which a Law Proposal which taxes CO2 emissions is being drawn up.
• International Funds
A search for international support from, for example, the Global Environment Facility (GEF)
is envisaged. This support is for large scale projects for the generation of electricity from
renewable energies (especially wind), as well as for technological research and develop-
ment.
• The PERGE Green Fund
This is a financial mechanism which seeks recognition of the true value of renewable ener-
gies (given their contribution to the reduction of risks in supply and stability of energy prices)
the capacity of the National Electrical System, and potential for reducing environmental im-
pacts. Resources will be dedicated to providing incentives for production and each project
will receive a fixed incentive for each unit of energy generated over 5 years.
8. Examples of projects currently being implemented
• Hybrid Plant at San Juanico, Southern Baja California
This is composed of 17KW of photovoltaic panels, 100KW of wind turbines and 80KW diesel
motor-generator. A combined cycle hybrid plant with a thermosolar component and capac-
ity for 25 MW was commissioned in the north-east of Mexico which is expected to come into
operation in 2008.
103
MEXICO
• Wind Energy
La Venta II, the first large scale wind park (83MW), started operations in 2006. SENER has
programmed the construction of another 505MW of wind capacity (in the category of in-
dependent producer) by 2014. Seven permits have been granted for private self-supply proj-
ect, which contribute a total of 950MW to the National Electrical Grid.
• Small and medium hydroelectric works
In 2003, Comexhidro, a company dedicated to making use of energy from existing irriga-
tion dams, inaugurated its first project: a small hydroelectric dam with 8MW of capacity. In
2005 another small hydroelectric dam came into operation, with a capacity of 14MW. Con-
struction on its most important project, with a capacity of 30 MW, began in 2004.
• Bio-energy
The Nuevo León SA bio-energy Project, in Monterrey, is the first in the country to make use
of bio-gas released from sanitary waste to generate electrical energy, with a capacity of 7MW.
The project was developed with the partial support of GEF. Change to the regulatory and le-
gal framework should allow this project to be replicated at other sanitary cubicles through-
out the country.
The Social Development Secretariat (Secretaría de Desarrollo Social, SEDESOL) offers sup-
port for these types of projects. There are currently four projects with pre-investment stud-
ies and SEDESOL is participating in the development of another six.
9 References
• Consejo Consultivo para el Fomento de las Energías Renovables en México, COFER

http://www.conae.gob.mx/wb/CONAE/CONA_243_cofer
• Plan Nacional de Desarrollo 2007-2012.

http://pnd.calderon.presidencia.gob.mx
104
MEXICO
• Secretaría de Energía, GTZ. Energías Renovables para el Desarrollo Sustentable en

México. 2006.
http://www.energia.gob.mx/webSener/res/PE_y_DT/pub/FolletoERenMex-SENER-
GTZ_ISBN.pdf
• México. Tercera Comunicación Nacional ante la Convención Marco de las Naciones

Unidas sobre el Cambio Climático. Octubre de 2006.
http://www.undp.org.mx/Doctos/Publicaciones/Tercera%20Comunicaci%C3%B3n%20
Nacional.pdf
105
SOUTH AFRICA
SOUTH AFRICA
1. Country Data
• Ecological Footprint per capita (WWF): Position 28 out of 180 countries (where 1 is the
worst).
• CO2 emissions per year = 356,000,000 tons (2000)
• CO2 emissions per capita =4.4 tons
• Kyoto Protocol – Accession country, without emission reduction obligations (Non Annex 1)
• Consumption = Equivalent to 132,916,000 tons of oil.
• Consumption per capita = Equivalent to 2,613,000 K of oil.
• Human Development Index 2006 (IDH-2006) = 0.653; position 121 out of 177 countries
(where 1 is the best)
The White Book on Renewable Energies (November 2003) establishes a strategic program
and action plan for the development of renewable energy sources in South Africa. It´s com-
plemented by the White Book on Energy Policies (DME, 1998), which acknowledges the sig-
nificant potential of renewable energies in the medium and long term.
The Department of Minerals and Energy (DME) is responsible for implementing the program,
in coordination with other key departments: Environmental Issues and Tourism; the National
Treasury; Commerce and Industry; Science and Technology; Housing; Agriculture and Trans-
port; and Water.
The key aim of the program is to create the conditions necessary for the development and
commercial implementation of renewable energies, with a particular focus on technologies
106
SOUTH AFRICA
that are already available and have demonstrated social, environmental and financial ben-
efits for all parties involved.
The program considers that the diversification of the energy matrix is of strategic importance
to ensure supply as well as responding to future restrictions of GHG emissions and grow-
ing environmental concerns.
One point noted by the program is the greater job creation potential of renewable energy
technologies versus conventional ones.
The DME will promote a partnership with key actors: the renewable energy industry, the in-
dustrial sector as whole, independent energy producers, local and regional governments, state
institutions, communities, NGOs and consumer organizations.
3. Goals
The medium term objective of the program (by 2013) is that renewable energies increase
their contribution by 10,000 GWh by means of biomass, wind energy, solar and small hy-
droelectric installation. This energy will be used to generate electricity and for non-electri-
cal technologies, such as water heating and agro-fuels. This would represent approximately
4% (1,677 MW) of the electrical demand expected for 2013 (41,539 MW).
Without prejudice against normal procedures of monitoring and evaluation, there will be a
revision of the program after its first five years of implementation (2008) that will allow for
any changes or adaptations considered necessary, bearing in mind the goals to be achieved
and possible changes in the national and international context. This revision will be carried
out using the criteria for long-term economic, environmental and social sustainability.
4. The Current situation and the potential of renewable energies
The main sources of energy are fossil fuels (90%), 75% of which are coal. Only 9%
(111,278 GWH/year) of the energy generated comes from a mix of renewable energies, mainly
wood and handled in an unsustainable manner, which are used for domestic heating and
107
SOUTH AFRICA
cooking. This type of use occurs mainly in regions that are far away from the network or in
poor communities.
Source Contribution
Coal.................................. 71%
Oil .................................... 20%
Biomass ............................ 5%
Nuclear ............................ 3%
Natural gas ...................... 1%
Source: Department of Minerals and Energy, 2000.
Annual energy consumption from renewable energies is estimated at:
Source Consumption
Wood (households) .............................................. 52,889 GWh

Commercial, exploitation bagasse, paste, pulp ...... 65,010 GWh
Wind .................................................................... 32 GWh
Solar .................................................................... 532 GWh
Total .............................................................. 118,463 GWh
Source: DME, 2006.
In the generation of electrical energy, 91% correspond to coal and less than 1% of the to-
tal comes from renewable energies (NER,2000). The installed capacity for electricity gener-
ation from renewable sources is 896 MW, with an average production of 1,800 GWh/year.
The installed capacity for the generation of thermal energy is 378 MW, with an average pro-
duction of 500 GWh/year (excluding wood).
108
SOUTH AFRICA
Coal combustion is the main source of CO2 emissions in South Africa. Although it has no ob-
ligations to reduce emissions, it is among the 10 countries with the highest levels of CO2 emis-
sions per capita (7.4 tons).
All estimations point out that the electrical grid is vulnerable. This situation could be avoided
with the construction of power generating plants, bearing in mind that the program high-
lights that the construction of renewable energy plants take considerably less time (one to
three years, depending on the size) than conventional plants based on coal (5 years).
POTENTIAL
The South African Renewable Resources Data Base (RRDB) is based on the analysis of data
that cover the entire national territory. Taking into account the physical characteristics and
the power generation potential, the most appropriate electricity generating technologies to
be developed and implemented in the medium term (up to 10MW) are solar and bio-mass.
With regard to this last one, the program highlights the risk of possible competition with the
production of food.
In the long term, viable energies sources include waves, tides and marine currents, for which
technologies are still in their experimental phase.
The estimated energy potential from renewable sources is approximately 87,000 GWh, which
represents nearly 49% of the electricity consumed in 2001.
Source Estimated Potential
Wind (not including offshore)............................ 198,000 GWh

Bio-mass (Wood and agro-fuels) ...................... 20,000 GWh/year
Small hydroelectric (up to 10MW) .................... 9,900 GWh/year
Solar (photovoltaic) .......................................... -
Household and industrial waste ........................ 132 MWh/year
Waves, tides and marine currents ...................... 60,000 MW (experimental phase)
Source: DME, Eskom, CSIR. 2001.
109
SOUTH AFRICA
5. Challenges and Strategic lines of action
The strategy combines investment and promotion of technologies with a relatively low cost
(such as those based on bio-mass), the development of large scale technologies (such as wind
parks and hydroelectric works) and the adaptation of institutions as necessary.
The Government must introduce fiscal and financial mechanisms, as part of an appropriate
legal and regulatory framework, to help renewable energies be competitive against technolo-
gies based on oil.
Institutional changes also need to take place, such as restructuring the generation and dis-
tribution networks (in 2003 ESKOM dominated practically the entire market).
The program establishes four strategic areas:
• Financial instruments. Appropriate mechanisms of incentives and financing that en-

sure that an adequate amount of resources is allocated in an effort to strengthen renew-
able energies at a national level and that they create a favourable and attractive invest-
ment climate for local and foreign investors.
• Legal instruments. Develop and implement an effective legal system that allows the
market to integrate renewable energies and incorporate independent energy producers
into the existing electricity grid.
• Technology development. Promote research and development of technologies for the

sustainable implementation of renewable energies and local manufacturing thus lower-
ing the need for foreign imports, creating economies of scale and encouraging the cre-
ation of jobs locally.
• Education and information. Raising awareness, informing and empowering public

opinion, local and regional governments and specific group on the benefits and oppor-
tunities offered by renewable energy sources.
110
SOUTH AFRICA
6. Legal and regulatory framework. Perspectives.
• DME. Strategic Plan for 2006/2007 – 2010/2011
In order to support the development of renewable energies, the Strategic Plan envisages the
creation of specific legislation to promote the use of safe, efficient and environmentally
friendly energy. This legislation will create various entities to support the promotion of en-
ergy efficiency, renewable energies and environmental protection.
• Hydro-fuels, Energy Planning and Clean Energy Program
This program is part of the DME’s Strategic plan for 2006/2007 to 2010/2011. Its key ob-
jective is to promote the sustainable use of energy resources by means of an integrated en-
ergy plan, including the development of new policies and regulatory frameworks for differ-
ent energy efficiencies and sources. The program establishes five key areas: 1) integrated
energy planning, taking into account resources, demand and security, health and environ-
mental concerns; 2) improve low-income household access to modern energy; 3) implement
appropriate economic and legislative policies; 4) Security of supply; and 5) increase the con-
tribution of renewable energies to the energy matrix.
• Energy Development Corporation (EDC)
This is a new division created inside the Central Energy Fund (CEF) with the objective of look-
ing for commercially viable investments and other technologies (excluding bio-fuels and other
technologies already developed and commercialized in the region). The EDC centres its at-
tention on certain “niche” areas, commercial projects and the development of renewable en-
ergies sectors which primarily benefit less-favoured communities.
7. Financial instruments
The financial resources expected for the implementation of the Program come from national
and international sources, such as GEF and MDL. Other international sources of funding are
also being contemplated, such as the Prototype Carbon Fund (PCF), as well as investments
by the private sector and budgetary resources.
111
SOUTH AFRICA
The following instruments have been created:
• Renewable Energy Financing and Subsidy Office (REFSO)
Created in 2005, its mission is to manage the granting of subsidies and provide advice to
sectors that are interested in accessing financing and subsidies. Companies interested in de-
veloping renewable energy projects can access this information and present their applica-
tion via the internet. The first subsidy was granted in 2006. Currently, 29 applicants have been
accepted as viable projects to received subsidies. The Strategic Plan for 2006/2007 –
2010/2011 has the target of subsidizing 23 projects (three projects in 2007/2008, 10 proj-
ects in 2008/2009, and 10 projects in 2009/2010.
• Project for the Transformation of the Renewable Energy Market
This project has the objective of removing the barriers and reducing the implementation costs
of renewable energy technologies. The project has a total cost of 17.3 million USD, which
is partly covered by private sector funds (9 million USD), the GEF (6 million USD) and the South
African Government (2.3 million USD).
• DME. Strategic Plan for 2006/2007 for 2010/2011
Among its strategic objectives, the plan presents the need to “actively contribute to sustain-
able development”. To this end the plan envisages the implementation of instruments such
as feed-in tariffs (the distributor is obliged to buy, at a minimum determined value, electric-
ity from renewable energy generators connected to the grid) and Tradable Renewable En-
ergy Certificates (TRC). Renewable energy generators have the possibility of obtaining a TRC,
which they can commercialize nationally or internationally and use to access financing op-
portunities.
8. Examples of project in development
Hybrid Systems. There are two pilot plants combining solar and wind systems: 1) Hluleka,
which has been operating since June 2002, consisting of two wind generators (2.5 KW) and
three photovoltaic modules (10.6 KW); and 2) Lucingweni, with solar panels (50 KW) and
wind generators (36 KW)
112
SOUTH AFRICA
Solar Energy. The current capacity of the the photovoltaic panels installed is 5 MW/year.
Two cases can be noted: 1) Filovhodwe Solar Village Project: where the DME has provided
electricity to the city of Folovhodwe, in the province of Lipopo, by installing 580 solar units
(1997/1998); and 2) Maphephetheni Solar Village Project: a small project started by the So-
lar Electric Light Fund and Solar Engineering Services between 1996-2001. It covered a to-
tal of 52 house and a school, which were equipped with photovoltaic units.
Eskom, the state-owned energy company, was studying the viability of a 100 MW solar en-
ergy plant in the North Cape, with technology that will allow energy to be stored for mo-
ments of peak demand.
Wind Energy. There are currently two wind farms in operation: 1) Klipheuwel Wind Farm,
with about 3.2 MW in capacity; and 2) Darline Wind Farm, the first commercial wind farm
of the country, which started to operate at the end of 2005 with a 5.2 MW capacity. A sec-
ond phase envisages the addition of 5MW.
Marine currents and waves. A Project for the generation of 20 MW in Cape Agulhas is
currently under development. Eskom, together with the Marine and Costal Management de-
partment and Bayworld Centre for Research and Education, is studying the technical feasi-
bility of this resource and so far the results obtained suggest this could be a significantly large
scale energy source.
9. Bibliography
• DME. Strategic Plan 2006/2007-2010/2011. Minerals and Energy for Development and
Prosperity.
• DME, Digest of South African Energy Statistics. 2006.

http://www.dme.gov.za/pdfs/energy/planning/2006%20Digest.pdf
• DME. Energy Outlook for South Africa: 2002.

http://www.dme.gov.za/pdfs/energy/planning/energy_outlook_may02.pdf
• DME. White Paper on Renewable Energy. Noviembre de 2003.

http://www.dme.gov.za/pdfs/energy/renewable/white_paper_renewable_energy.pdf
113
SOUTH AFRICA
• South African Council of Science and Industry Research.

http://www.csir.co.za
• Grupo Banco Mundial –Noticias–, 28/06/2007.

http://web.worldbank.org/WBSITE/EXTERNAL/BANCOMUNDIAL/NEWSSPANISH/0,,
contentMDK:21392555~menuPK:3327626~pagePK:34370~piPK:34424~theSitePK:1
074568,00.html
• W. Matekenya y M. Mehlwana, Energy Technologies For Climate Change Mitigation.

What Is Appropriate For Sa? CSIR, Pretoria, 2006.
• (Documento presentado en la Industrial and Commercial Use of Energy Conference

2006).
http://researchspace.csir.co.za/dspace/bitstream/10204/1048/1/Matekenya_2006_D.pdf
• National Energy Regulator of South Africa.

http://www.nersa.org.za/
114

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1. A QUESTION OF NEED - The international energy debate: securing supply

2. Developed countries and the sustained growth of renewable energies ... 15

3. Economics today: towards a true estimation of costs .............................. 23

4. Energy transitions in the world: different roads leading to a common fu-

1. The relationship between economic development and energy ................ 39

2. Poverty and access to energy ................................................................. 43

3. Supporting a qualitative jump in development: sustainability and renewable

1. Renewables and participation: correlative or independent dynamics ....... 59

2. New institutions for new energies ......................................................... 67

1. A QUESTION OF NEED - THE INTERNATIONAL ENERGY DEBATE: SECURING

Developing renewables. Renewing development

Security of supplies and energy dependency

Renewable energies: present energies | Part one

The Greenhouse effect and climate change

Developing renewables. Renewing development

EU-15*, Bulgaria, Czech Republic, Estonia, Latvia, Liechtenstein,

Renewable energies: present energies | Part one

Developing renewables. Renewing development

A task for this century: extending access to energy

Renewable energies: present energies | Part one

2. DEVELOPED COUNTRIES AND THE SUSTAINED GROWTH OF RENEWABLE

c) Of their aspirations and goals;

Reasons for developing renewable energies

Developing renewables. Renewing development

What has been needed: investment tendencies of developed countries

Renewable energies: present energies | Part one

Solar photovoltaic.......................................................................................... 2.7%

Developing renewables. Renewing development

Other Power & Storage Tech. Nuclear Fusion Nuclear

Renewable energies: present energies | Part one

Small Hydro Large Hydro Geoth Bio Oce

Wind Solar Solar Solar Heating

Developing renewables. Renewing development

What implications DO renewable energies have for job creation?

Renewable energies: present energies | Part one

Developing renewables. Renewing development

TABLE 3. AVERAGE EMPLOYMENT OVER LIFE

Manufacturing, construction, Operation and Total

What kind of jobs are created?

Renewable energies: present energies | Part one

3. ECONOMICS TODAY: TOWARDS A TRUE ESTIMATION OF COSTS

Developing renewables. Renewing development

• Pre-production - research and development, and prospecting.

• Production - extraction, conversion/generation, and distribution to consumers.

Renewable energies: present energies | Part one

Environmental and sanitary costs

ENVIRONMENTAL AND HEALTH COSTS

Developing renewables. Renewing development

FIGURE 3 Mortality due to urban air polution, 2000

CLIMATE CHANGE COSTS

Renewable energies: present energies | Part one

Political and Institutional costs

Developing renewables. Renewing development

4. ENERGY TRANSITIONS IN THE WORLD: DIFFERENT ROADS LEADING TO A