Trade barriers block clean energy efforts

10 September 2015

BUSINESS DAY LIVE

By Charlotte Matthews

Trade barriers, such as local content requirements and anti-dumping measures, are raising the costs of renewable energy and making it harder for governments to meet their commitments to reduce carbon emissions, a trade expert said on Wednesday.

Local content requirements are a pillar of SA’s industrial policy, particularly in its renewable energy independent power producer programme. The government wants to grow local jobs and skills, as well as diversify the country’s energy mix away from fossil fuels to meet its climate change commitments.

Ricardo Melendez-Ortiz, CEO of the Swiss-based International Centre for Trade and Sustainable Development, told the Global Cleantech Conference on Wednesday that international agreements were critical in driving development of clean technologies.

Clean technologies embrace energy, water management, waste disposal and other systems used for pollution control.

The Finnish ministry of employment and the economy has organised the conference.

Global carbon emissions were stable last year despite growth in the world economy, reflecting increased penetration of renewable energy technologies. However, renewable energy usage was still rising too slowly to achieve the International Energy Agency’s targets to keep the rise in global temperatures to below two degrees by the end of this century, Mr Melendez-Ortiz said.

The main obstacles to renewable energy growth were subsidies for fossil fuels in many countries, anti-dumping measures — although falling prices of imported goods might also reflect the learning curve rather than dumping — and local content requirements.

Local content requirements were against World Trade Organisation agreements but were in place in many countries, Mr Melendez-Ortiz said, and could be challenged by affected industries.

"They contribute to making technologies less accessible and less advanced," he said. In India, local content requirements had increased the cost of solar power, which was the opposite of what government was trying to achieve.

Ross Bruton, a senior industry analyst at Frost & Sullivan Europe, said by 2050 the global market for clean technology was expected to be worth $8.7-trillion, equivalent to 3.1% of global gross domestic product.

By then, it would be so integrated into society that it would no longer be a separate industry but simply best practice for financial and environmental reasons.

In the past decade clean technology had become highly diversified as it has moved into new areas including utility management and city development. Digitisation and analytics have also advanced.

In 2004 the clean technology market was worth $94bn, which had grown to $601bn by last year, Mr Bruton said.

Further dramatic growth was projected: in wind generation to 814GW by 2025 from 279GW in 2012; in solar photovoltaic to 638GW by 2025 from 198GW in 2012; in concentrated solar power to 30.4GW by 2025 from 2.6GW in 2012; and in bio energy and waste to 188GW from 97GW.

Most of this growth would be driven by China. According to management expert Anil Gupta, of the Smith School of Business at the University of Maryland in the US, China’s attitude has changed since 2009, when it took the view that environmental pollution was a US and European problem.

Now, under public pressure to address air and water quality, China has set ambitious goals to reduce emissions and clean up rivers. It is also becoming the world’s biggest market for hybrid electric vehicles.

Mr Bruton said smart water technologies, including systems to reduce non-revenue water in cities, were expected to be worth $22bn by 2020.

There were also exciting opportunities in energy efficiency management, including sustainable building practices and the use of green materials and monitoring systems to improve efficiencies.

Beyond 2020, Frost & Sullivan anticipated innovations such as growing power generation by households, which would challenge the traditional dominance by centralised utilities; automated transport and a reduction in car ownership; and significant growth in green buildings, possibly even with the development of systems to harvest heat from the people inside them.

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