Renewable energy

for biofuels at US$ 57 billion in 2009. Realigning these subsidies is the most obvious way to alter the market advantage in favour of sustainable energy production, as was recognised by the G20 in 2009 when it pledged to phase out “inefficient and wasteful” fossil-fuel subsidies (Victor 2009; GSI 2009, 2010). The IEA has calculated that a complete removal of consumption subsidies would reduce CO2

emissions by 5.8 per cent, or 2 Gt, in 2020 (IEA 2010d).

3.4 Employment potential in renewable energy

Employment in the renewable energy sector has become substantial – in 2010 more than 3.5 million people worldwide were estimated to be working either directly or indirectly in the sector. A small group of countries currently account for the majority of jobs, especially

Brazil, China, Japan, Germany and the United States (see Table 8). China accounts for the largest number, with total employment in renewable energy in 2010 estimated at more than 1.1 million workers (Institute for Labor Studies et al. 2010). In Germany, the industry employed 278,000 people in 2008, with 117,500 new jobs having been created since 2004 (UNEP, ILO, IOE and ITUC 2008). These five countries are also those with the largest investments in renewable energy assets, R&D, and production.

Among technologies, wind energy generation has undergone particularly rapid growth, jobs having more than doubled from 235,000 in 2005 to 550,000 in 2009 (WWEA 2010). The most dynamic growth took place in Asia, where employment grew by 14 per cent between 2007 and 2009, followed by North America. Among power generation options, solar PV offers the higher employment rates, though this is likely to decrease

Typical project

Coal mine methane capture Large-scale wind energy Coal-to-gas fuel-switching*

Pulverised coal CO2 capture**

natural gas prices Source: Ecosecurities Consulting (2009)

Box 1: Carbon markets

Carbon markets are an instrument for reducing carbon emissions and targeting greenhouse-gas externalities from fossil-fuel use. They are essentially a group obligation to limit the total emissions of specified sources. A limited amount of tradable emission allowances are sold or given gratis, thus creating an artificial market from which a carbon price can emerge. This price imposes extra costs on the use of fossil fuels, making non-fossil based alternatives more competitive. These alternatives can include not only renewables, but also energy-efficiency measures, nuclear power generation, carbon capture and storage (CCS) and the reduction of non-CO2

greenhouse

gases. As of 2010, the two most prominent schemes for developing markets for carbon emissions are the EU Emissions Trading Scheme (EU-ETS) and the Clean Development Mechanism (CDM). These are actually

interlinked as the ETS is the principal market in which CDM credits are traded. Owing to the low current carbon prices and uncertainty about their future levels, however, carbon pricing mechanisms have not yet led to large-scale deployment of renewables.

The return on investment for renewable energy projects, relative to fossil fuel alternatives, is sensitive to both the carbon price and market power prices, in addition to the specific support measures for renewables. The carbon price is in turn sensitive to policy decisions. Table 7 illustrates, for example, that wind energy, assuming set capital and operating costs, can go from being an expensive carbon mitigation option at low natural gas prices, to a cost- effective technology in its own right at higher natural gas prices.

Natural gas price

US$ 2.00/MMBtu US$ 5.77 US$ 47.08 US$ 15.12 US$ 279.99

* Assumes coal prices stay constant. ** Lost electricity sales are assumed due to the energy penalty associated with CO2 Table 7: Mitigation project costs per tonne of CO2

US$ 4.00/MMBtu US$ 0.79 US$ 8.50 US$ 72.44 US$ 220.86

capture. (US$ at 2007 prices), given different values for

US$ 8.00/MMBtu Negative Negative

US$ 187.07 US$ 102.59

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