24.05.04 . Renewable energies – General aspects
Factsheet / Berlin, 24.05.2004
Renewable energies: General aspects
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/ Factsheet24.05.04 . Renewable energies – General aspects
The global energy mix
Global primary energy consumption in 2000 amounted to approximately 410,000 PJ (1 petajoule = 278 million kWh). Among the renewable energies, only hydropower makes a significant contribution – around 6% – to meeting global energy demand. Roughly 88% is met through the use of fossil fuels (oil: 40%, coal: 24%, gas: 23%).
As a proportion of global electricity generation, the following picture of renewables use emerges:
World / Europe / Germany15,300 TWh / 2,850 TWh / 562 TWh
Coal / 35% / 27% / 51%
Oil / 9% / 7% / 1%
Natural gas / 19% / 7% / 11%
Nuclear power / 19% / 30% / 30%
Hydropower / 19% / 18% / 4%
Other renewable energy sources / 1% / 1% / 3%
Source: Hermann-von-Helmholtz-Gemeinschaft 2001
Coal, accounting for 35%, is the energy carrier which is most widely used in electricity generation worldwide. Natural gas and oil together account for a 28% share. Nuclear power and hydropower each cover 19% of electricity generation. By contrast, all the other renewables together produce just 1% of electricity worldwide (IEA, 2003).
However, where appropriate funding instruments exist, there is clear evidence of a substantial growth in renewables use. In Germany, solar, wind, hydropower and biomass met around 8% of energy needs in 2003 (VDEW 2004) – and the trend is growing.
Potential
The technical potential of renewable energy sources (i.e. the amount of energy that can be derived from the natural supply of renewables using current technologies) is far higher than total global energy consumption. Solar radiation on Earth is roughly 7,000 times greater than current global energy consumption. If calculated on a purely arithmetical basis, current global energy consumption could be met through the installation of photovoltaic cells across an area of 700 km * 700 km. However, technical potential does not correlate to the real available potential once economic and environmental factors are taken into account. Exploiting the available potential is also a process that takes time: production capacities and appropriate infrastructure must be created and know-how developed.
The link to energy efficiency
In future, the share of renewable energy sources will also depend on energy consumption trends. Will energy consumption continue to rise, or will targeted strategies to improve energy efficiency and decrease demand have an impact? Today, there is still scope to achieve major efficiency improvements. Since the costs of energy-saving technologies are often lower than energy supply costs, targeted use of the efficiency potential could also drive down economic costs. Above all, however, energy efficiency is a prerequisite if a high proportion or, in the long term, all the energy demand is to be met from renewable sources.
Impacts on jobs
Renewables offer great potential to create and safeguard jobs. The WWF's Biomass Study identifies an employment potential of 170,000-290,000 full-time jobs in the OECD countries from this renewable energy source alone. These jobs would occur mainly in rural, structurally weak regions and are therefore extremely important (WWF 2004).
The European Commission also anticipates that a renewable energy supply would have positive impacts on employment. The Commission sets out a Community Strategy and Action Plan for renewables in its White Paper "Energy for the Future: Renewable Sources of Energy". According to the Commission, doubling the share of electricity produced from renewable energy sources in the EU to 22.1% by 2010 could create an estimated 500,000 new jobs (European Commission 1997).
With the adoption of the European Directive on the promotion of electricity produced from renewable energy sources in September 2001, this target has become binding. The individual Member States have different expansion targets, depending on their various starting positions and geographical characteristics.
In Germany, renewable energy sources (RES) have already become an important economic factor. In April 2004, the Federal Environmental Agency published a study which showed that in 2002, 118,700 people were employed in the RES sector – a 78% increase compared with 1998, when there were just 66,600 jobs in renewables (UBA 2004).
Most of the jobs are concentrated in
- wind: 53,200
- biomass: 29,000
- solar energy:12,700
The largest increase was achieved in the wind power sector. In 1998, 15,600 people worked in investment and operation of wind power plants. By 2002, this had risen to 53,200.
The costs of renewables
At present, renewables cannot compete with conventional energy carriers on the open market – at least if external costs are disregarded.[1] Renewables therefore continue to require financial support.
In Germany, the financial support provided under the Renewable Energy Act [Gesetz für den Vorrang Erneuerbarer Energien - EEG] is not a state subsidy from the public budget. Instead, the additional costs are borne by every customer through the price of electricity. This approach is in line with the "polluter pays" principle.
According to VDEW, financial support for renewables cost € 1.9 billion in 2003. With 560 terawatt-hours of electricity generated (VDEW 2004), this means a price mark-up of just 0.34 cent/kWh. With annual consumption in a four-person household averaging 3,000 kWh, this is equivalent to a monthly price increase of only € 1.
Yet in the energy sector in particular, there are many examples of subsidies which are counterproductive in environmental and economic terms. A notable example is the state aid provided to the coal-mining industry in Germany. In 1998, for example, hard coal mining received around € 4.76 billion in subsidies, with a further € 2.71 billion earmarked for 2005. These subsidies safeguarded just 48,570 jobs at the end of 2002, and the figure will fall to 36,000 in 2005 (BMWA 2004). By then, every job in hard coal mining will be subsidized by more than € 75,000 a year.
The additional costs currently associated with renewables are offset by their considerable benefits. A report commissioned by the Federal Environmental Agency concludes that renewables use avoids around 14 cent/kWh (under Germany's Renewable Energy Act, the average price paid for electricity fed into the grid is 8.8 cent/kWh). Thus in 2001 alone, the electricity paid for under the Renewable Energy Act saved the economy around € 2.5 billion.
With a growing share of the market and further technological development, the costs of renewables are decreasing. Wind power is a notable example: costs in this sector have fallen by around 50% since 1990 (BWE 2003). This is reflected in the year-on-year cuts in the tariffs paid under the Renewable Energy Act.
Experts are predicting a further fall in the costs of wind-generated electricity over the next 15 years. This would mean that in 2020, the costs – depending on location and wind conditions – will amount to 4.7-9.1 ct/kWh for onshore and 3.9-5 ct/kWh for offshore wind-generated electricity (BMU 2004).
Far greater cost cuts are anticipated for photovoltaic electricity. Here, specific costs are expected to halve within 10-15 years, taking 2000 as a base year. By 2050, costs are predicted to stand at just 20% of the 2000 starting rate (BMU 2004).
At the same time, the costs of fossil energy carriers are expected to rise, with around half the power stations in Germany and Europe having to be replaced. The price differential between fossil and renewable energy sources will therefore continue to narrow. Indeed, in the long term, the costs of a renewable system are likely to be lower than the costs of a fossil energy supply system (BMU 2004).
An appropriate funding policy is required to promote the market launch of these technologies. This is because the high costs of investing in a developing technology pushes down demand, which in turn leads to a low number of units being produced – and thus to high specific investment costs.
A funding policy which safeguards the economic viability of investments in renewables technologies and, at the same time, creates downward pressure on costs through a degressive structure is thus a key success factor. Feed-in tariffs such as those provided under the Renewable Energy Act in Germany have proved successful in this context.
Export markets
Opening up the domestic market to renewables technology is a good starting point for success in the international market. In an international context, this can be illustrated by the example of wind energy in Denmark. As the construction rate in Denmark slows and demand increases abroad, exports are becoming increasingly important.
The German manufacturers of wind power installations have tended to focus on the domestic market until now. Exports by German manufacturers amounted to around 16% in 2001 (Witzel/Seifried, 2004). Given the rapid growth in the domestic market, there was little scope to focus on export activities.
In line with the EU's Renewables Directive of 2001, by 2010 the European Union is supposed to double the share of renewables to 12.5% of gross energy consumption compared with 6 percent in 1995, while the share of electricity produced from renewable sources should increase to 22.1% over the same period. With their current policies, however, most Member States are likely to miss this target (WWF 2003). In order to achieve their targets, Member States must adopt more intensive measures aimed at the expansion of renewables. They have considerable scope to develop appropriate funding instruments. For example, in 2001, France introduced an Electricity Feed Act for wind power, based on the German model. As well as adopting a statutory feed-in tariff for wind power, Spain has introduced legislation on solar thermal power plants to kick-start the building of such plants. The UK initially adopted a system of tenders for renewable energy sources, but after disappointing outcomes, it has been forced to switch to a quota system (Staiss 2003).
Wind power is promoted in countries outside Europe, such as the USA. The USA offers incentives for the generation of electricity from wind power through its tax system, and a quota system for energy supply companies is currently under discussion (BMU 2004).
These trends indicate that an increased demand for power plant technology can be anticipated in future. As German and Danish companies lead the field internationally in the construction of wind power installations, exports of wind power plant technology from these countries are likely to increase in future.
This will create and safeguard jobs and make a contribution to international climate protection. Even though many countries (e.g. India and Brazil) emphasize that their national industry must be involved in the manufacturing of plant, new jobs can still be created through joint ventures in the fields of project development, planning, production, installation and maintenance.
Overall, major new markets are likely to emerge outside Germany and the current EU for all forms of renewables technology in the medium to long term (BMU 2004). To be able to tap into these markets, the market launch of renewables technologies must be pursued vigorously.
Reducing dependence on fossil energy carriers
Germany, like the European Union, is highly dependent on fossil energy imports. The EU's dependence on energy imports is already 50% and the European Commission predicts that this will rise over the coming years if no action is taken, reaching 70% by 2020.
Progressive replacement of fossil energies by means of greater energy efficiency and a targeted strategy to expand the use of RES could cut Germany's reliance on imports from its current level of 60% (excluding nuclear fuels) to 35% in 2050 (BMU 2004).
The economic risks associated with an energy policy which is heavily dependent on conventional energy sources are illustrated by the rising oil prices, which pose a major burden on developing countries in particular.
So renewable energy sources not only offer prospects for the environmentally compatible restructuring of our energy supply. They also help to ease tensions in the world energy market, thus contributing to political and economic security.
Nature conservation
The pro-active expansion of renewables will make a substantial contribution to reducing the environmental burdens associated with conventional energy supply. In particular, it will conserve fossil fuels and reduce greenhouse gas emissions. Climate change poses a major threat to the natural environment. Besides leading to rising sea levels, greater extremes of temperature, droughts, and stronger and more frequent storms, it could also result in 15-37% of terrestrial species becoming extinct by 2050. Climate change is therefore likely to be the single most significant cause of biodiversity loss (Nature 2004).
While the expansion of renewables will reduce the burdens on the environment, it may also intrude upon local and regional ecosystems. The advantages and disadvantages must therefore be weighed up carefully on a case-by-case basis. In order to ensure that the expansion of renewables is compatible with nature and the environment, robust environmental criteria must be developed and applied. Environmental impact assessments, accompanied by ecological research, are key elements in identifying and addressing problems and weaknesses.
Sources:
BMU (2002): Volkswirtschaftlicher Nutzen des Erneuerbare-Energien-Gesetzes – Vergleich externer Kosten der Stromerzeugung – Ergebnisse einer Studie, in: Umwelt 04/02
BMU (Ed.) (2004): Ökologisch optimierter Ausbau der Nutzung erneuerbarer Energien in Deutschland, Forschungsvorhaben im Auftrag des Bundesministeriums für Umwelt, Naturschutz und Reaktorsicherheit. Auftragnehmer: Deutsches Zentrum für Luft- und Raumfahrt (DLR); Institut für Energie- und Umweltforschung (ifeu); Wuppertal Institut für Klima, Umwelt und Energie
BMWA: Coalpolitik; Stand 2004
BWE (2003) Ausbau der Windenergie: Kostenentwicklung in Deutschland (Stand: 31.12.2003)
Europäische Kommission (1997): Energie für die Zukunft: Erneuerbare Energieträger. Weißbuch für eine Gemeinschaftsstrategie und Aktionsplan
HGF (Ed. 2001): Schlüsseltechnologie Regenerative Energien. Teilbericht im Rahmen des HGF-Projektes (Hermann-von-Helmholtz-Gemeinschaft) „Global zukunftsfähige Entwicklung – Perspektiven für Deutschland“. DLR-Institut für Technische Thermodynamik, Abteilung Systemanalyse und Technikbewertung; Forschungszentrum Karlsruhe, Institut für Technikfolgenabschätzung und Systemanalyse
IEA 2003: International Energy Agency: Renewables Information 2003.
Nature (8 January 2004): Feeling the heat: Climate change and biodiversity loss
UBA 2004: Hintergrundpapier: „Umweltschutz und Beschäftigung“
VDEW (2004) Erzeugung 2003: Acht Prozent Öko-strom, Pressemeldung vom 02.02.2004
VDEW (2004) Produktion von Ökostrom verdoppelt, Pressemeldung vom 08.03.2004
Witzel/Seifried (2004): Das Solarbuch, Freiburg 2004
WWF (Ed.) (2003): Progress Report on the Implementation of the European Renewable Energy Directive
WWF (Ed.) (2004): Bioelectricity Vision: Achieving 15% of Electricity from Biomass in OECD Countries by 2020. By Imperial College London, Centre for Energy Policy and Technology and E4tech (UK) Ltd
Further information:
Claudia Kunz, WWF – Climate Protection and Energy Policy Division, Tel.: +49-30-308742-17, Fax: -50, mailto:
Regine Günther, WWF – Head of Climate Protection and Energy Policy Division, Tel.: +49-30-308742-18, Fax: -50, mailto:
This factsheet is available, together with further background information, at You can also subscribe there to our free WWF news mailing list.
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[1] External costs are the costs which do not flow into the polluter's commercial calculations, but which are borne by the public. One example is environmental damage.