Renewable energy has been a harbinger of hope for the entire world, when it felt that the perils of Earth due to upcoming climate change have become inevitable and beyond repair by Humans.
This empowerment by cleaner energy forms has led to a significant increase in percentage of renewable fuels in our total fuel usage, i.e., to 29% increase in 2020.
Why does this happen?
Renewables offer bigger development and environmental benefits, apart from embracing the potential towards greater security as well as economic stability.
The renewable energy sources when increased for consumption, will dare to reduce dependence of public on expensive and unclean fossil fuel imports.
This may help many countries improve their balance of payments, especially the developing ones.
Who deserves renewable energy more: developed countries or the developing world?
How can one depict a country in the terms of its energy consumption?
From 1800s when the world hosted one billion of population to the current scenario, when the number has swelled to seven billion people who are walking on the face of the Earth.
Now that is a good number. While it has been projected that the population is bound to face decline in the later half of this century, we still continue to grow in numbers.
Though it may not appear so, but what makes a real difference in the world’s energy statistics, is how and how much energy content each person consumes.
Well, generally, it has been observed that population striving in a developed country, tends to consume more energy in comparison to people living in a developing country or an economy that remains non-industrialized and poor.
Simply, if the economy of a specific developing country improves, the energy needs of that prospering nation are bound to rise.
And this difference is huge, the way a developing and a developed country consumes energy sources. For instance, the developed countries enjoy a fair share of energy usage and been at the center of criticism because of their reluctance to go on an ‘energy diet’.
While the developing nations barely compose of only 30 per cent of the planet’s energy share.
We have talked enough of ‘energy consumption’, what does it mean?
It depicts the consumption of energy sources in such a manner that they are used to generate power, including majorly the fossil fuels as well as renewable energy.
While the prominent fossil fuels include oil, coal, shale and natural gas, the main renewables are wind, solar, small hydro and biofuels.
Difference in Developing -Developed energy trend and its aftermath:
The above difference is worrisome because this is a vicious cycle, revolving around poverty, energy usage, economic growth and climate change.
If we are to believe the statistics, nearly 1.4 billion people in the world have survived without electricity.
Consequently, approximately 2.7 billion had to rely on wood, charcoal and even dung to meet their home energy requirements.
It is this particular lack of access and feasibility to modern technology that limits income generation in developing countries. This further blunts almost every effort to escape poverty and severely impacts people’s health.
Besides negating the social upliftment efforts in India, it lures the vulnerable in to contribute towards global deforestation and climate change.
Recognizing the needs of developing countries to move swiftly and rapidly towards Renewable energy forms, it lies an imperative on respective governments to provide assistance and policies conducive to growth of renewable energy production and consumption.
For this, we need a healthy investment for adoption of Renewable energy.
Best practices to do the same are:
1. Transparency in Power transactions and arrangements:
Transparent and well-regulated policies can help build a reliable and stable market which may be able to garner confidence much needed for investors, especially after the coal and energy crisis in the country and the world.
Examples may include promoting the independent power producers (IPPs) to resuscitate the ailing power sector, permitting standardized power purchase agreements (PPA), conducting transparent auctions etc.
A transparent tariff revision can even help investors to decide in times of inflation.
This got showcased very well in recent transmission line auction in Brazil that failed to attract investments.
2. Clean energy incentives and subsidies:
This proves why India, though relentlessly, decided to deliver a net-zero goal i.e., by 2070s.
Displaying a long term energy strategy in deep integration with short-term targets to progressively phase out the fossil fuel based power plants, helps gain attention and hope.
However, one needs to be careful while bringing alive this debilitating change for the Clean energy market shall be able to fill in the vacancy left by the dirty forms of fuel.
Lauding the efforts while discouraging the biggest emitters shall be our concerned approach. This can be done extensively through carbon markets or any other carbon-pricing mechanism.
This was offered well by Chile as it put forward a decommissioning plan for coal-fired power plants in the country with a strict mandate.
This got implemented after concerned engagements with power producers using coal and further devised a tax on carbon for larger power plants operating in the country.
3. Inculcating Business-friendly measures:
Renewable energy too cannot prosper without healthy businesses in any region of the world. General policies in regards with business need to ameliorate with the initiatives to boost renewable usage.
Most important of this is the tax policy of a country, that ought to reflect a balance between sizeable levy on profits or wealth as well as incentives on the clean energy sources.
Investment shall have no bars for clean energy, allowing every bit of foreign currency ready to make a change in a developing country.
Red-tapism, corruption, delays and deferment is to be discouraged at all levels.
Improved permitting processes through single window clearances, easy but efficient environmental analysis will be the need of the hour.
4. Diverse and innovative financial mechanism:
Different types of financing mechanisms can be used to mitigate investment risks. If one is able to diversify the risk, it helps manage them easily.
For example, Indian currency denominated Masala bonds, which are issued in foreign countries for risk mitigation and hedging.
In this respect, the cost of financing the project and its targeted returns, can all be based on achieving their respective decarbonization targets.
There are other potential ways to promote investment in renewables be it the synthetic corporate power purchase agreements (CPPAs), those can offer protection to buyers against fluctuations in power cost.
Another instrument called an energy transition mechanism (ETM), offers an opportunity to investors for buying high carbon-emitting assets, manage them and further replace them with renewable energy in the world in controlled acceleration.
The last of all these key principles is the heart and soul of all others because if this is not undertaken seriously, the aforementioned practices may fail.
5. Early risk Hypothesis:
Ascertaining certain risks related to even a renewable project is a good strategy so that an early sponsor can assume future by deciding whether to attract additional or go with lesser capital.
International development organizations can help the middle-income countries or the LDCs (least developing) to garner funds and provide debt management.
Most of the above parameters are to be fulfilled by the Government of the day.
Their unconditional support for the renewables can help change the game, in tandem with the assistance from multilateral development banks and respective Central Banks.
Other renowned financial institutions, private as well as public, domestic as well as international, which have the ability and technology to limit the market risks, can extend their help.
Through these measures, the world can sustainably increase the flow of needed capital for clean energy projects.
Although the demand by developing countries for compensatory as well as climate assistance fund that was promised to them by the developed world remains in lurch, it remains important that we save every possible investment for clean energy.
Why? Because both the developed as well as developing world has begun to witness the impacts of climate change. Its an evil that engulfs us all, it will not spare an individual because he/she may be affluent, it is not biased.
Therefore, it becomes crucial that without further bending time, we begin bending the world we live in so that better and efficient utilization of earthly resources can help save the planet from an impending chaos.
However, this presses for a need to invest in the near term, to make these clean energy sources accessible to all across the globe.
That is where our governments will have to fight hard because renewables are lesser accessible than their dirty counterparts in satiating people’s energy needs.
But these actions cannot be adjourned for another decade or for the future generations. Now is the time to set the stage for achieving the world’s sustainable development goals.