Rhein on Energy and Climate

The southern Mediterranean countries have a vital interest in engaging in the fight against climate change. Their share in global green house gas emissions may still be small, but bound to rise due to population growth and increasing energy demand; and sooner or later the international community will ask them to contribute their fair share to the climate battle.

The MED is extremely vulnerable to climate change. It will suffer from rising temperatures and more frequent drought spells, which will make rain-fed agriculture progressively impossible. Water scarcity will become a major constraining factor for future economic and social development. Desalination will become inevitable though expensive. To make it sustainable it has to run on renewable energy.

Fortunately, the MED can rely on almost unlimited solar and wind resources to progressively replace oil and gas as the future sources of energy.

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Long before their oil and gas resources will reach depletion in the course of the century MED countries should develop strategies for their progressive replacement and an energy supply essentially based on alternative energies.

Such strategies are urgent for countries whose fossil energy resources are already depleted or approaching that point in the near and medium-term future: Morocco, Tunisia, Jordan, and Turkey and, to a lesser extent, Algeria and Egypt.

Any rational energy strategy should follow a dual track:

Reduce the demand by raising energy efficiency,

Increase the supply of alternative non-fossil resources.

Key to a successful transformation of the energy sector is the price of fossil energy. At prevailing prices in most Med countries energy policies are bound to fail, whatever the technological efforts. Fossil energy being too cheap there is no incentive to save and replace it by alternatives.

The first priority is to phase out all direct and indirect subsidies on fossil energy, as the G20 has asked for at the Pittsburgh Leaders meeting.

The second priority is to introduce progressively rising excise taxes on gasoline, fuel and natural gas. This is indispensable for making renewable energies more competitive and also for helping finance subsidies that may be needed for encouraging the use of renewable energies.

In addition to reviewing their taxation policy, MED governments should establish energy efficiency standards. The easiest effective way would be to ban incandescent lamps and set energy efficiency standards for buildings, household utilities automobiles.

Raising energy efficiency might reduce C02 emissions by 20-30 percent; it is therefore profitable for investors and will produce results within a short time. Governments should therefore attribute priority to energy efficiency.

Introducing alternative energies will be a much longer process that needs to be carefully planned. The MED countries have the advantage of being able to learn from European, American and, more recently, Chinese and Indian experience in this field.

Each government should assess the most appropriate technologies on which to base its strategy.

Nuclear energy does not appear the right technology for any MED country. It is too complex a technology, fraught with incalculable risks, from cost overruns to cooling problems and the disposal of nuclear waste. Last not least, nuclear electricity is anything but cheap if all the costs- depreciation, interest, maintenance, safety, exchange of nuclear rods, and final storage- are correctly calculated. MED countries should reflect very carefully before embarking on this risky road.

Wind energy offers a big potential for large-scale deployment in Morocco and Egypt. For them it should become the first avenue for green power generation. The technology is mature and the production costs not much higher than those of fossil-power.

Solar energy is, of course, what MED countries have most. Any long-term strategy should therefore focus on exploiting this technology in the fastest and most cost-effective way.

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Both types of solar power generation (PV and CST) are proven technologies, but their production costs still exceed those of conventional of gas-fuelled power plants. And for both it will be necessary to provide for backup over-night capacities.

Governments will therefore need to introduce attractive feed-in tariffs that will induce private investors to build solar power plants, as Spain, France, or Germany are doing, or to deploy them on their roofs. They should also consider making solar installations mandatory for all residential buildings

To go ahead governments need to define medium-term strategies with 2020 targets for the share of renewable energy in total energy supply and for raising energy efficiency.

More important, they need to set out where the new sources of energies will be optimally located to supply cities with electricity and desalinated water. Solar energy is ideally suited for decentralised generation of electricity, from individual buildings to villages and cities¸ and it is a clean energy without smoke or dust being emitted. So it can co-exist perfectly alongside residential areas.

In addition, it may be possible technically to export electricity to Europe from big power plants applying solar thermal technology. But this grand design still requires further technological clarification, especially concerning the overnight storage, long-distance transmission and coping with sand storms, before large-scale deployment after 2020 might be envisaged.

In addition each country would have to introduce the basic legal framework in which private foreign utilities might be authorised to generate and transmit electricity on their territory. Russia’s recent power cooperation with European utilities may serve as an example.

On the supply side, it is essential to redesign buildings and cities in view of making them increasingly independent of fossil energies. This is a long haul; but the efforts should start as of today in universities and specialised research centres. MED countries would be well advised to learn from the experience in Abu Dhabi and other cities across the planet.

The financing of the necessary investments in buildings, public transport, wind turbines or solar heating should not pose more problems than of conventional technologies. Private or state investors will have to comply with whatever new regulations imposed, most of which will turn out to be profitable in the short or medium-term.

Governments should focus on setting the rules and finance research and training centres and pilot schemes and refrain from investing tax payers’ money.

Europe with its intensive investment and experience in alternative energies should stand ready to assist those MED countries that are committed to green energy.

Brussels , 25.09.09 Eberhard Rhein

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