Energiewende – let's look beyond Europe!
In the latest in Sitra's Energiewende blog series, policy expert Robert Brückmann urges Europe to not ignore the radical energy transitions taking place in Asia...
The current debate on the German energy transition – Energiewende – is missing an important point because it is too focused on the situation in Germany and, in some aspects, in Europe. Developments in other countries outside of Europe have been largely ignored. This is somewhat surprising as an increasing number of markets in South East Asia have picked up at an accelerating speed, partly due to the effects of the German Energiewende.
News from the region in recent months has highlighted many encouraging examples: in July 2013, for example, the Thai administration introduced policy packages for a new feed-in tariff of solar power. One month earlier, the Indonesian government put a similar regulation into effect. And the Philippine government recently published additional legislation to enforce a net-metering system.
It goes without saying that the markets of these three countries are at different stages and that it is hard to compare them with each other, let alone with the (diverse) European markets. Still, it shows an important pattern: Energiewende is taking place elsewhere and the potential of these changes is huge, with the population of these three countries amounting to more than 400 million people – only 20 per cent less than the population of the entire European Union! What is more, these are fast-growing populations in even faster-growing economies. Thus, both the economic opportunities as well as the impact on climate change can be very relevant for Europeans if these new markets decide to follow the path of renewable energies.
It should not come as a great surprise that political decision-makers in South East Asia have not taken these steps with the intention of following the agenda of the European climate and energy policies. Instead, they act because of very self-serving and utilitarian interests: they simply have to meet the soaring demand for energy that they are currently facing.
In the past 13 years, the increase in energy consumption has been extremely dynamic: in the Philippines, for example, it grew by 32 per cent, and in Indonesia the growth even amounted to 46 per cent. As a comparison, in Germany the energy consumption increased by merely 10 per cent in the same period and while this might still be a higher growth in absolute numbers, the dynamic is nevertheless shifting towards South East Asia. The growing demand calls for additional energy production capacities and, moreover, a re-evaluation of the energy supply chain. And with Indonesia and the Philippines being archipelagos, it is even more burdensome for energy suppliers.
Therefore, the economies are facing significantly higher costs for the production of electricity that have to be borne by the population, either directly through energy prices or indirectly, as taxpayers, through energy subsidies. Another important driver is concern about national energy security. According to assessments by the Asian Development Bank (ADB), unless additional measures are implemented several Asian countries would become increasingly dependent on oil imports, which could triple by 2035. Furthermore, oil imports into the Asian region stem more and more from the Middle East.
If this development continues, the Asian region will run the risk of becoming dependent on one region for its energy supply, undermining its energy security. In that regard, the growing interest in renewable energy sources is not because of some lofty ideals but rather due to very rational considerations that lead to the conclusion that the deployment of renewable energy sources would serve the countries’ goals.
If we look at these developments, it is actually quite striking that the discussion on Energiewende both at national and inter-European level is focusing so little on what is happening in other regions of the world. For one, almost all European countries are largely dependent on the import of energy fuels, be it oil, gas, uranium or to a large extent even coal. These fuels are commodities being traded on the global market and thus the growing demand for energy in another region of the world will sooner or later affect all Europeans as well.
As a result, European citizens have a strong interest in increasing their access to national renewable energy sources, too. Second, and this is the good news, the German Energiewende has done a great deal for developing and emerging markets all over the world, which are now turning to the deployment of renewable energies. The substantial investments by German electricity consumers have allowed for the exploring of new technologies, ramping up larger scales of mass production and introducing global logistics chains.
These efficiencies in production and distribution of renewable energy technologies have driven down the costs for renewable energy investments to a degree that was completely unexpected for everyone and is now enabling people all over the world to improve their national energy security. In that regard, the German Energiewende deserves to be discussed also from a global perspective, as probably one of the most effective and efficient development programmes – not only for the benefit of developing countries but also of emerging and industrialised markets.