Discussions
Renewable energy capacity and trade in renewable energy products – a review of developments in 2013
Willemien Viljoen, tralac Researcher, discusses the recently-released Renewables 2014 Global Status Report by the Renewable Energy Policy Network for the 21st Century (REN21)
Over the past decade the installed capacity and production of renewable energy sources worldwide have increased substantially. The foundation for this rapid growth comes from pioneering countries, like Germany and the US which drove technological advances and economies of scale after identifying energy as a priority for national and economic security. However, renewable energy technologies are becoming increasingly important for the mitigation of and adaptation to the effects of climate change and as direct and indirect investment opportunities with socio-economic advantages. These advantages include foreign direct investment in energy infrastructure, job creation, energy efficiency and sustainable development which are not just associated with countries increasing their renewable energy capacity and consumption, but also with the increased diffusion of renewable energy products through international, regional and bilateral trade.
The 2014 Global Status Report for Renewable Energy was released on 6 June 2014. It provides an overview of the renewable energy market, industry, investment and policy developments worldwide, for the past year (the full report is available here). The report focuses on renewable power capacity (geothermal power, hydro-power, solar photovoltaics (PV), wind power, bio-power and concentrating solar thermal power), solar hot water capacity, biodiesel and ethanol production and support policies to build capacity.
The renewable energy indicators show significant growth in renewable energy investment and capacity generation between 2004 and 2012. However, between 2012 and 2013 additional renewable energy capacity generation was minimal with new investment actually declining by 14 percent. In 2012 renewable energy provided an estimated 19 percent of global final energy consumption which continued to grow in 2013, while the modern (energy generated from algae, organic waste, wind power, hydro-power and biofuels) and traditional renewable energy (energy generated by traditional biomass which includes fuel wood, crop residues and animal dung) shares remained at about the same level as 2011. This is mainly because the growth in modern renewable energy is constrained by slow migration from traditional biomass and the continued increase in total global energy demand.
In 2013 renewable energy markets and industries faced various challenges, including declining policy support in some countries, electric grid-related constraints, opposition from electric utilities concerned with increased competition and continued high subsidies for fossil fuels. Adoption of policy support, including feed-in tariffs and quota policies mainly slowed in 2013, since most countries now have policies in existence. This meant that the focus shifted to the revision and adjustment of existing policies. Although some revisions were aimed at improving the effectiveness and efficiency of prevailing policies; others, mainly in Europe, were aimed at restricting the growth of renewables. The reduction in policy support measures in European countries, including Germany, Italy and the Netherlands has been attributed to electricity over-capacity, increased competition from fossil fuels, tight national budgets and public opinion that renewables have contributed to rising energy prices. The stagnation and even decline of support for and investment in new capacity generation in many countries that have been the pioneers of the renewable energy era has led to developments in developing and emerging economies surpassing expanding renewable energy markets, manufacturing and investment in many European countries and the US. Currently, China and Brazil are among the countries with the most installed renewable power capacity, while Uruguay, Mauritius, Costa Rica and South Africa have the highest level of investment in new renewable power and fuels as a percentage of Gross Domestic Product. The shift of renewable energy generation and investment away from mature markets in developed countries can mainly be attributed to the recognition of the increasingly important role renewable energy plays in providing access to modern energy services in developing and emerging economies. This has led to a significant increase in domestic support policies, greater access to financing, transfer of advanced technologies and the identification of rural energy markets in developing countries as significant business opportunities.
Evaluating the trade data for specific single-use renewable energy products shows that the long-term increase in renewable energy generation and consumption has coincided with an overall increase in the total trade of various renewable energy products, but also reflects recent challenges experienced in renewable energy markets and industries. These single-use renewable energy products include, biofuels (HS 220710 and HS 220720), hydraulic turbines (HS 841011 and HS 841012), geothermal heat pumps (HS 841861), solar water heaters (HS 841919), wind turbines (HS 850231), compact fluorescent lamps (CFLs) (HS 853931) and solar PV devices (HS 854140). Between 2001 and 2011 there was a steady annual increase in total trade of the specific renewable energy products, but over the last two years total trade has been declining (21 % in 2012 and 7 % in 2013).
In 2013 the major importers of renewable energy products were China (11%), US (11%), Japan (10%) and Germany (7%), while the main exporting countries were China (27%), Germany (9%), Chinese Taipei (8%) and Japan (7%). China’s imports of renewable energy products are highly concentrated in solar PV devices. The US was the main importer of biofuels, solar water heaters and CFLs, while the main exporting countries were Brazil, Mexico and China, respectively. China was also the main exporter of hydraulic pumps, which were mainly exported to Turkey, Romania and Panama. The main importer of wind turbines was Russia, and these turbines were mainly sourced from Denmark and Germany, while geothermal heat pumps were mainly exported by France and Ireland to Germany and the UK.
Although numerous developed countries (including US, Denmark and France) still features are key economies trading in renewable energy products, their share in global trade has decreased significantly compared to the share of developing and emerging countries (including China, Taipei, Korea and Brazil) in global imports and exports. In 2013 the majority of countries experienced a decline in total trade; however, the decrease in exports from developing countries were on average only 5 percent, while developed country exports decreased by an average of 17 percent. On the import side, developing countries’ global imports increased with an average of 17 percent, while imports into developed countries decreased on average by 41 percent.
The data on renewable energy capacity, consumption, investment, support and trade all show that developing and emerging economies catching up with, or have moved ahead of their developed counterparts in transformation of their economies from dependence on traditional energy sources like fossil fuels to reliance on renewable energy. Although the maturity and saturation of the renewable energy industry in developed economies play an important role in the shift of renewable energy capacity, consumption and investment from industrialized economies, the main driver behind developments in the developing world seems to be the recognition that renewable energy offers an unprecedented opportunity for the transition to modern energy services in rural areas which are indispensable for attaining sustainable development objectives.
Sources:
Ren21 (www.ren21.net); TradeMap (www.trademap.org)