Sustainable management solutions CLIMATE CHANGE AND RENEWABLE ENERGY CHALLENGES AND OPPORTUNITIES IN DEVELOPING NATIONSOctober 5,2011 Webinar, PMI Global RUTH P. BRIONES, MPA, LlBSustainability Community of Practice
Abstract The intention of this presentation is to focus on the challenges that developing nations in order to reduce emissions in view of the refusal of developed nations to sign an extension of the Kyoto Agreement. This is in view of the a great divide between developed nations and developing nations as to how these countries cut their emissions. It could be noted that the Kyoto Protocol set emissions targets only to developed nations and that the said agreement is ending, the challenge is on the developing nations to implement measures to cut emissions by speeding up development of sustainable green technological change and the transition towards renewable energy. It will be emphasized that the real challenge for the future is to introduce policy measures that can really enhance inclusive and sustainable growth on renewable energy, which is an opportunity to developing nations.
Parts of the presentation Background on Climate Change, impacts and effects Challenges, Cause of action Management and Development The Opportunities
Climate change… Climate change is a significant and lasting change in the statistical distribution of weather patterns over periods ranging from decades to millions of years. It may be a change in average weather conditions or the distribution of events around that average (e.g., more or fewer extreme weather events). Climate change may be limited to a specific region or may occur across the whole earth.
COAL, OIL, NATURAL GAS- when LANDFILLS, burned release carbon GAS PIPELINES dioxide (greenhouse gas RICE PADDIES. emissions),transportation, CAUSES COAL MINERS power generations OF CLIMATE DEFORESTATION: CHANGE FERTILIZERS when wood is burned; AND OTHER wood rots in swamp CHEMICALS. methane is producedHOW MUCH WARMING ?SCIENTISTS SAY---- ABOUT 2.5 DEGREE FAHRENHEIT 1.4 DEGREE CENTIGRADE BY THE YEAR 2050
Climate Change? Causes…a blanket around the earth… A layer of greenhouse gases – primarily water vapor, and including much smaller amounts of carbon dioxide, methane and nitrous oxide – act as a thermal blanket for the Earth, absorbing heat and warming the surface to a life-supporting average of 59 degrees Fahrenheit (15 degrees Celsius). Water Vapor Human Carbon DioxidesMain causes of expansion of Methaneglobal warming Greenhouse Nitrous Oxide Effects Chroloflourocarbon Source: NASA
Effects of Climate Change in developing nations • Food Security Scarcity• Untold Sufferings to • Hunger developing nations • Worsening economy • Famine• Little mitigation or no • Poor development capacity to mitigate • Widespread infrastructure the impacts Diseases • Political instability• Worst affected • Desertification of • Mushrooming some arable lands population in urban areas
The United Nations Framework Convention on ClimateChange (UNFCCC) recognizes that the industrialized countriesare responsible for a major part of historical and current globalemissions of greenhouse gases, and they must therefore takethe lead in making commitments to reduce their emissions.
Costof Climate HIGHChange CUTTING OF EMISSIONS OF GREENHOUSE GASES GREENING OF ECONOMIES THAT WILL PROVIDE GLOBAL LEAD OUR RESPONSIBILITY USE OF ADVANCED IN TWO WAYS TECHNOLOGIES BUILDING LOW OR CARBON ENERGY STRUCTURES SHARING SCIENTIFIC UNDERSTANDING AND TECHNOLOGICAL EXPERTISE• This will cost money -------• but, will save humanity and long term health of economy
CHANGINGCOURSE… • REDUCE DEPENDENCE ANDWORLD AGENDA DEMAND ON FOSSIL FUELS ALTERNATIVE COURSE OF ACTION GROWING POPULATION BURGEONING ECONOMIC DEVELOP FOSSIL FUEL DEVELOPMENT ENERGY ALTERNATIVES ENERGY SECURITY INCREASE ENERGY EFFICIENCY ENVIRONMENTAL DEGRADATION REDUCE ENERGY CONSUMPTIONACHIEVING SOLUTIONS WILL NOT BE EASY, BUT ENHANCINGENERGY SECURITY AND AVERTING FUTURE HARMS TO THEENVIRONMENT IS POSSIBLE AND CAN ALSO BE PROFITABLE.
WE MUST CUT OUREMISSIONS OFGREENHOUSE GASES Global renewable energy investment growth (1995-2007)
International Climate Change Negotiations Kyoto Protocol’s target : reduce by 5.2% compared to the year 1990 (but note that, compared to the emissions levels that would be expected by 2010 without the Protocol. The goal is to lower overall emissions from six greenhouse gases - carbonI. Earth Summit, 1992 dioxide, methane, nitrous oxide, sulfurII. United Nations’ Framework hexafluoride, HFCs, and PFCs - calculated Convention on Climate as an average over the five-year period of Change,1992 2008-12;III. Kyoto Protocol,1997 National targets range from 8% reductions for the European Union andIV. Copenhagen Accord, 2010 some others to 7% for the US, 6% forV. Bonn Climate Change Japan, 0% for Russia, and permitted Negotiation,2011 increases of 8% for Australia and 10% for Iceland.“–
The Challenge to Developing NationsThe low commitment from rich nationsto reduce emissions is unsurprising.The major emitters (USA, theEuropean Union will continue to retain Developed nations imposed that a newthe highest share of emissions over time. legally-binding framework should include all major emitters including theCountries such as USA, Australia and developing nations.Japan had signified that they do not favorsigning a post Kyoto 2012 emissions Developing nations are for theconstraints agreements. extension of Kyoto, obliging all industrialized nations to cut greenhouseIn 2010, investments in clean energy gas emissions by 5.2% below 1990rose up to US$ 243 Billion and a 30% levels during 2008-2012.increase of 2009 levels. Developed nations refuse any legallyAn IPCC report stated that the world binding agreement to reduce emissionscould meet as much 43% of global after 2012.energy demand with renewable energysources by 2030 and 77% by 2050. This30% renewable energy penetration isrealistic.
Pledge amount to more mitigation and move towardThe post 2012 stop growth of energychallenges for related emissionsdevelopingnations Speed up green technological change and transition towards renewable energy.
1. Viable alternative 2. Environmental concernsWhy 3. Fossil fuel are more expensiveRenewable 4. Limitless fuel to turn a RenewableEnergy? Energy Infrastructure like wind, solar, and wastes 5. Increase range of technologies 6. Renewable energy gets cheaper Project Design and Management A successful renewable energy project is one that 1. Links energy with social aspects 2. Meets needs 3. Use appropriate and proven technology that will effectively use as alternative energy source at the same time reduces and eliminate carbon dioxides and greenhouse gases 4. Is reliable and sustainable 5. Is economically viable
Issues in the management and development ofRenewable Energy Projects THE POLICY ISSUES FEED-IN-TARIFF REQUIREMENT BIAS TOWARDS FOSSIL FUELS LACK OF REGULATORY FRAMEWORKPOLICY DEREGULATION OF ENERGY SECTORTECHNOLOGY THE TECHNOLOGY ISSUESINSTITUTIONAL LACK OF ENOUGH INVENTIONS REQUIREMENT OF PROVEN TECHNOLOGIESFINANCIAL COMPLIANCE UNDER INTERNATIONAL ENVIRONMENTAL STANDARDS PERMITTING PROCESS ARE TEDIOUS LACK OF WORKING TECHNOLOGY REFERENCES
Issues in the developmentof Renewable Energy Projects THE FINANCIAL ISSUES INSTITUTIONAL/REGULATORY ISSUES i. SOURCES OF FINANCING i. LACK OF CAPACITY TO ii. NEED FOR PRE-DEVELOPMENT DEVELOP, IMPLEMENT, FUNDING OPERATE RE PROJECTS; iii. LIMITED ACCESS TO EQUITY ii. LACK OF SOUND RENEWABLE ENERGY POLICY; iv. HIGHER PROJECT PREPARATION/TRANSACTION iii. WEAK IMPLEMENTATION OF COST THE UNFCCC CLEAN DEVELOPMENT MECHANISM v. REQUIREMENTS FOR LOCAL GUARANTEE FUND iv. NEED OF FLEXIBLE AND SELF- SUSTAINABLE SUPPORT vi. GRANT MENTALITY OF MECHANISM FOR RENEWABLE DONORS/COUNTRIES ENERGY DEVELOPMENT
In order to achieve self reliance in the development of Renewable Energy project s Policy Framework should have the following directions: Encourage the Adoption of development andsustainable energy Increase the utilization of development utilization of renewable energy strategies to renewable energy resources as tools reduce the Establish the by institutionalizing to effectively dependence on necessary prevent or reduce fossil fuels and the development of infrastructure and harmful emissions thereby minimize capabilities in the mechanisms. and thereby exposure to price use of renewable balance the goals fluctuations in the energy systems; of economicinternational fossil growth and fuel markets. development;
PROJECT MANAGEMENT FOR RENEWABLE ENERGY RESEARCH AND DEVELOPMENT PROJECTS ECONOMIC VIABILITY TECHNOLOGY SELECTION PRELIMINARY STUDIESFactors to be PROJECT SIZINGconsidered at theplanning stage INSTITUTIONAL, POLICY, AND REGULATIONS STAKEHOLDER AND OFFTAKER REQUIREMENTS FINANCING OPTIONS, ECONOMIC VIABILITY AND COST TIMETABLE
THE PROJECT DEVELOPMENT AND MANAGEMENT SYSTEMSINTEGRATION REQUIREMENTS FOR RENEWABLE ENERGYPROJECTS DETAILED INVESTIGATION AND PREPARATION OF ANALYIS OF THE TECHNICAL, LONG TERM CONDUCT OF FRONT ECONOMIC, INSTITUTIONAL, END ENGINEERING LEGAL,REGULATORY COMPREHENSIVE DESIGN ELEMENTS OF THE PROPOSED DEVELOPMENT PLAN PROJECT TO SUBSTANTIATE THE PROJECT’S ECONOMICS THE TOTAL PROJECT PROCESS FLOW CIVIL WORKS COST ESTIMATE DIAGRAM DETERMINATION OF THE DELIVERY PRELIMINARY HEAT THE FIRM PRICE SCHEDULE FOR THE AND BALANCE QOUTE AND PROJECT EQUIPMENT
Factors to be considered in the preparation of a long termproject management plan for Renewable Energy Projects Market oriented Human capacity Infrastructure reform building Technology Capacity Local workforce transfer and expansion training productivity requirements enhancement Regulatory, legal Project Project and policy management and sustainability and requirements maintenance risks
The Business Plan Business Model and Executive Summary Investment Strategy• Scope of the project • Investment structure • Detailed business plan• commercial rationale for • Operations/Planning implementing the project, • Equity cash flow • Expansion/Growth• where located, Strategy• who are involved, • Marketing Strategy • Exit Strategy• who is doing, what, where, when, how and why • Management and manpower• Total investment involved; • Management expertise• investment/financing required, and credentials partnerships• market opportunity;• business objectives; • Technologies and Suppliers• projected headline returns • Industry analysis, external analysis • Competitive advantage analysis
FOUR STAGES OF PROJECT MANAGEMENT FORRENEWABLE ENERGY PROJECTS
On Managing Renewable Energy Projects indeveloping nations…The challenge and objective that project managersshould participate is to involve in undertakingconcerning the technological change that will stabilizegreenhouse gas concentrations in the atmosphere at alevel that will prevent dangerous human interferencewith the climate.As managers, Renewable Energy project managementdeals with climate change in a way that balance abroad array of relevant policy imperatives, whichinclude energy security, sustainable economic growth,economic competitiveness and the other non-environment issues and directions.Renewable Energy is broad project managementagenda—a flexible market based approachtowards a low carbon, zero emission based actiontowards an effective climate change mitigation.
FINANCING RENEWABLE ENERGY PROJECTS INDEVELOPING NATIONS Twenty (20) United Nations agencies support renewable energy projects in developing and underdeveloped countries. Technical assistance and training Institutional developmentUN Activitiesin Renewable Capacity building Energy Policy development Power sector reform Energy access and poverty reduction
FINANCING RENEWABLE ENERGY PROJECTS IN DEVELOPING NATIONSBilateral Development Agencies Global Environmental Facility International & Local Financial Institutions Asian Development Bank Carbon Finance, World Bank
Opportunities as per New Energy Finance Report – CANREA Total amount of RE investment – over US $ 42 Billion in 2005 and five fold increase thereafter CANREA sees the rapid growing investment interest in renewable energy globally involving developing nations. Wind energy dominates RE investments at $ 12 Billion in 2005; Solar photovoltaic climbs over 5 GWp per year by 2011. Top 20 utilities in Europe targets to double RE capacity in the next five years.
Renewable energy development in developingnations during the last ten yearsBrazil- 90% of electricity comes from Hydro electric plants and 15 % of total energy comes from Renewable Energy projects; 2,000 MW of Biomass cogeneration power plant , 5 GW of wind power and 14 GW of hydro power.India—Non-commercial biomass energy comprise 1/3 of total India energy use ; the transition to RE is visible of energy capacity initiatives to mitigate climate change, has instituted a sizeable RE program over the past 20 years- 3.3 million of household uses biomass gasification plants. High penetration of small hydro, wind, biomass and industrial waste –to-energy technologies sustains RE markets.Other countries such as Mexico, Thailand, Malaysia, Philippines, Morocco, Croatia, Jordan, South Africa, Tunicia have programs in sustainable development of renewable energy projects.
The Feed-In-Tariff for Renewable Energy Projects The Feed-in-Tariff is the besti. Guaranteed connection to the grid renewable energy policy andii. Long term contract to sell political mechanism to Renewable energy provide investment securityiii. Fixed price sufficient to recover and spread the decentralized their costs plus a reasonable production of renewable profit. energy.iv. Democratizing energyv. Encouraging decentralized As a renewable energy production from many producers policy, feed-in-tariff would and many renewable sources provide flexible, self-vi. Spreading the power and sustainable support economic benefits as widely as mechanism for renewable possible. energy development in developing countries.
The Clean Development Mechanism (CDM) and the development of Renewable Energy projects in developing countriesThe CDM allows industrialized nations to fulfill some of theirlegally binding greenhouse gas emissions reduction targetsby financing projects in developing nations .Each tonne of reduced and verifiedCO2 equivalents resulting from the Can CDM and Feed-in-Tariffproject can be traded- and profits be combined to sustain themade - - on the international carbon commercial viability of amarket in the form of Certified Renewable Energy Project?Emission Reduction Units (CERs)
Is there a need for a renewable energy policy fund?According to World Future Council - a national renewable energy policyfund can cover the feed-in-tariff rate and the concrete shares ofdeveloping country could be determined on the criteria reflecting thedevelopment status of the respective country, GDP /capita PPP/capita.Is there a need to impose tax CDM in developing nations? This is ideal inthe sense that the imposition of tax on CDM generated within its borders,this is an additional revenue.
Financial incentives Users’ Tax Income Tax Holidays Market support Green Option Feed-in-Tariff RulesPolicies forleveraging Low interest loansrenewable Building domestic capacity for REenergy developmentinvestments Leveled playing field Access to funds for R & D for RE technologies Domestic supports for RE technology standards and energy efficiency standards leveling Introduction of revenue neutral environmental taxes
Opportunities in renewable energy projects indeveloping nations Energy Efficiency Improvement: In the near future, the amount of primary energy required for a given energy service could be cost-effectively reduced by 25 to 35 percent in industrialized countries (the higher figure being achievable by more effective policies). In transitional economies, reductions of more than 40 percent will be cost-effectively achievable. And in most developing countries – which tend to have high economic growth and old capital and vehicle stocks – the cost-effective improvement potential ranges from 30 to more than 45 percent, relative to energy efficiencies achieved with existing capital stock. However, when this potential is made use of there will still remain 20 to 40 percent in 20 years time due to technological progress. (Johansson et al, 2004)
The European Union supports for REdevelopment in developing countries About $115 M annually has been assisted over period 1997-2001 A 250 million euro facility created to finance RE/EE Setting up Global RE funds (GREFF) to support several investor- financed funds Target capitalization of 75 million euros EU had set up development assistance in renewable energy in developing countries. EC-ASEAN Energy Facility (EAEF) aims to promote climate- friendly and clean energy sources as its primary focus in the ASEAN which ran between 2002-2007 with EU funding of 215 M Euro. Renewable Energy and energy efficiency components compose about 77 projects.
Conclusions Efforts among developing nations to speed up development of Renewable Energy can be crucial during the post-Kyoto scenario, however, these challenges provides opportunities with developing nations in the forefront of climate change mitigation and reduction of GHGs emissions. The global initiatives and supports towards the maximizing energy efficiency investments, continuing market and policy reforms could move to the direction towards clean technologies and the transition towards renewable energy.
For more information, please contact: RUTH P.BRIONES, MPA, LlB. Chairman/Chief Executive Officer Greenergy Solutions Inc. Rm.401/411,Verde Oro Bldg., 535 Commonwealth Ave. Diliman Quezon City, Philippines Phone Nos: +632-490-5776 / + 63 917 5556948 E-mail Address: email@example.com Website: www.greenergy-solutions.com