Who are influencing the debate on Renewable Energy?

Here at the renewable energy blog I am quite happy to comment on the elements of the renewable energy debate that I find interesting. However, I found myself wondering, who are actually the more influential in the debate on renewable energy.

After much googling around I found many blogs and sites that were high ranked on Google, but were they really also the right ones to follow if I wanted to stay on top of the RE debate. I had the suspicion that that was not the case, as some of the sites/blogs were clearly not updated.

In order to explore this aspect in a more thorough way I asked the influence analysis authority Onalytica for assistance. Onalytica is a young company that has achieved great results based on their unique algorithm driven analyses of the internet buzz. Recently they published a top 100 list of economic blogs.

Using Onalytica's Influencemonitor I identified the Top 10 influencers on the Renewable energy debate.

The list is clearly a list  of heavyweights. Five on the list are Newspapers (New York Times, the Guardian, Wall Street Journal) or syndicated news agencies (Bloomberg, Reuters). The other five are either connected to the US government (Whitehouse and Department of Energy) or the EU (the European Union, the European Commission or the European Investment Bank).

I invite you to explore these sites in more detail. They contain a wealth of information and most have special sections dedicated to renewable energy.

Why is Biofuels the only industry to struggle with ILUC?

OK, so maybe it wasn't such a good idea to grow agricultural crops in order to be able to fuel my car. I realise that using agricultural land to grow biofuel does compete with other crops that feed man and beast. Let's call it ILUC (indirect land use change) - and make it very complicated.

What I don't understand is why biofuel crops (oilseed, oil palm, sugarcane and corn/wheat) are the only crops that are unwanted. Cotton you say is OK, because of course we need clothes, but hey we can wear clothes made from woodfibres/viscose or made from crude oil we pump out of the ground aka nylon. No need to wear these agriculturally grown fibres? When we wash our hands or hair in the bath, did anyone ever cry ILUC? As well as for biodiesel the oil crops are also the only feedstock for production of a whole range of soaps, shampoos and technical products that we like to use. We could also use products derived from mineral oil, but we prefer the natural products.

I think it is amazing how the green troops have managed to set the agenda selectively. The reality is that no matter what we do when we try to manage nature, we will get negative side effects.

Let's take a look at the next big thing. Everybody agrees that it would be just wonderful if we could "just" make biofuel from cellulosis and agricultural waste. Has anybody tried to calculate how much wood waste would be necessary to "feed the beast"? Wikipedia suggests that close to 20% of US land (similar to the area used to grow crops) would be needed to cover US transportation fuels from ethanol from switchgrass - quite significant numbers - that will definitely have a significant ILUC effect.
What will happen to the ecosystem and the nutrient content of the soil if much more of the biomass is removed from the land in order to be processed/turned into biofuel? Well - the soil is going to be deprived of  organic material, which constitutes an important part of the slow release system for nutrients and water of the  soil - also known as humus. Depriving the soil of the organic material will be slowly spoiling the carrying capacity of the soil.
Using wood and forest by-products has similar problems. Enormous quantities are needed, there will be competition with other uses of forest products, from firewood, over cellulosis to fibreboards and construction wood. And the forest is potential agricultural land and vise versa - so also an ILUC effect here. I guess our politicians are in for a tough job to find the "good" solution to our energy and transport fuel problems. Unfortunately they are not going to get any help from the green NGOs.

Update: A German view on the same issue comes to largely the same conclusion.

The Investor's View of Renewable Energy

Solar and Wind are the investors' favorite renewable energy types. The United Nations UNEP publish an insightful yearly publication on investments in renewable energy. This is interesting because this cuts through the nice talk and zooms in on where the money flows.

Global investments in 2011 in billion USD in different types of renewable energy. Right hand figures show 2011 growth on 2010.

It is interesting to see that Solar and Wind run with the majority of the investments. Of total investments in 2011 of 257 BUSD, solar and wind represent 90%. Solar has seen an extraordinary growth in 2011, contrary to all other types of renewable energy except small hydro. The investments are a result of national energy policies and subsidies as well as developments in technology and costs.

Global investments in billion USD in 2011 by region.

Europe emerges as the region with the largest investments in RE, whereas China is the country with the largest investment. China invests mainly in wind, whereas in Europe solar PV especially in Germany and Italy is the favorite technology.

Levelised costs of different renewable energy technologies, costs in USD/MWH, Q1 2012 vs Q1 2011

Compared to my previous post this report has much more up to date data. It is interesting to note that solar PV is currently getting more competitive as we speak with more than 30% reduction in cost in only one year. This is quite extraordinary, and is due to the overcapacity and shake out that is currently happening in the solar industry.We can see that several RE technologies (wind, hydro and landfill gas) are now competitive towards conventional energy, which is also the reason why these are prefered by China and other developing countries that cannot afford the luxury of choosing RE over conventional just because it is "cleaner". This is encouraging reading that confirms that RE is competitive in many cases and costs continue to fall in many cases. Actually RE investments are only trailing slightly behind investments in conventional energy.

There are other problems associated with renewable energy such as the fact that the most popular solar and wind are variable in nature and are therefore challenging to manage. This is an issue we will have to look at in a later post.

Biofuels in Troubles

Food versus Fuel
The European biofuel market is setting the agenda for the world of biofuels. Biofuels has come under severe attack from many sides again lately. This is nothing new, as we have previously discussed here on this blog. Last time around was back in 2008 when oil prices as well as most agricultural commodities rallied until they collapsed in the summer of 2008. This time around it was the drought in the US and the consequently high prices of corn/maize that started the debate. The debate was started by authoritative UN food agency that called for a suspension of US bioethanol scheme. As roughly 40% of the US corn production is used for ethanol biofuel production, the usual players started the fuel versus food debate. Nestle, Swiss multinational food company issued a statement already back in 2011, but were happy to repeat the message in 2012. European politicians already under financial pressure have already scaled back their support for biofuel. With the introduction of the Renewable Energy Directive in 2009 and introduction of the double counting for waste based biofuels (a programme which makes it easier to meet blend in targets) are now again under pressure to repair the biofuel policy. So it was really no big surprise when on September 10 Reuters could rumour a EU document that spoke about limiting crop based biofuels to 5% of transport fuels by 2020.

Biofuel already under pressure to improve
This EU initiative really should not come as a surprise. It is clear that current 1st generation biofuel will not solve the fuel issue, and biofuel that is either unsustainable or comes at the cost of human starvation is not a long time option. Already the Renewable Energy Directive has some quite ambitious targets, as the green house gas savings requirements rise from 35% over 50% in 2017 to 60% in 2018. Ongoing discussions over the so-called ILUC (Indirect land use changes) have been ongoing for years, and it boils down to the fact that no matter how you look at it, if you grow crops for use as biofuel they will inevitably end up having replaced a food crop and thus potentially contributing to reduction in food supply.

Silence from the industry?
So who is actually standing up for the biofuel industry. Well nobody really. The European Biodiesel Board, the European biodiesel manufacturer's association seeems to so be busy fighting their colleagues in the US, Argentina and Indonesia that they have not had the time to go in and defend the industry.

The future for the biofuel industry
So clearly production of biodiesel from virgin oils and bioethanol from corn and other food crops is not the final solution. However it is an important stepping stone in the search for better and more sustainable technologies. Already in Europe the biodiesel industry is under so much economic pressure that the majority of biodiesel plants are idle, and a large part of the remaining plants are running on used cooking oil, waste animal fats and other low quality non-edible by-product oils. A number of new technologies are under development, where the greatest hopes are tied to the cellulosic ethanol, which as a 2nd generation biofuel with no food versus fuel dilemmas is seen as very green. The hope is that you can really turn low value wood and agricultural by-products into valuable biofuel with clever technology. We are still waiting for the technology improvements that will allow profitable commercial scale production. In the meantime it is important that politicians do not rock the boat so much that all the commercial players will drown. Who is going to invest - next time the politicians want us to be more green?

EU opens anti dumping investigation against biodiesel from Argentina and Indonesia

After pressure from European biodiesel producers the EU published on 29 August 2012 an investigation into whether biodiesel from Argentina and Indonesia is being dumped in the EU. Both countries have for years been operating a differential export tax, with higher tax on vegetable oil than on biodiesel. Now the EU has decided to strike, which comes at a time where the EU and Argentina is already in a struggle in WTO. Hardly a coincidence.

The mere existence of the investigation will put a dampener on the appetite to import biodiesel from these countries into the EU, as soon the EU can implement a preliminary anti-dumping duty with short notice - should they wish to.

What is the Cost of Renewable Energy?

What is the cost of renewable energy? This is the question that politicians should be asking themselves before they compose their energy policy. Obviously there are a lot of variables that influence the answer here. Technologies are developing all the time so efficiency is likely to improve over time - and thus the cost will fall. In wind energy the costs are being driven down by size, the latest and largest wind mill to date was erected in August 2012 in Denmark, a Siemens giant at 6 MW and 196 meters height.

World's largest Windmill 2012. Credit: Ingeniøren

Subsidies, tax exemptions as well as unit compensation is likely to change over time, as politicians change policies. Unit costs are influenced by the size of the investment, but also by the life time of the investment as well as the operation and maintenance costs. In some cases there are fuel costs that can change over time as demand and supply can change over the life time of the investment, in other cases (wind, solar, hydro and wave) the "fuel" generally is free, but can vary in quality and quantity.
With this list of variables it is clear that it can be difficult to compare different technologies. But we would still like the answer, thank you very much. So how about this chart from Alt Energy Stocks:

Cost comparison of different renewable energy technologies. status 2009. Credit: altenergystocks.com

The chart dates back from 2009 and is based on a California context. Interesting to see that solar comes out as a very expensive type of energy. Surely the Solar PV industry shakeout has changed this picture a bit. But is it enough to defend the big move Germany has made into solar? Resulting in a record 40% supply of national energy production on one sunny day in May 2012.

Installation price of solar PV plants in Germany have fallen 50% since 2009 after the industry shakeout. Credit: Bundesverband Solarwirtchaft.

This is surely an interesting subject that I hope to revisit soon, so we can get more facts on the table.

What is Renewable Energy?

A lot of people get a bit confused, when they hear about renewable energy. The energy part most people understand, but what is really renewable? The term renewable energy comes as an alternative to finite energy sources also known as petroleum or mineral oil in its wider sense. In the time perspective of the human being the energy that we pump up or extract from the interior of our planet are finite and exhaustible and NOT considered renewable.

So what is renewable energy? If we turn to people already in the market as authorities on this subject in this case Kachan & Co, the inventor of the cleantech term they have recently published their revised definition of renewable energy. They consider renewable energy to consist of the following 11 technologies: 

- Wind

- Solar

- Renewable fuels (biofuels)

- Marine

- Biomass

- Geothermal

- Fuel Cells

- Waste-to-Energy

- Nuclear

- Emerging (osmotic power and kinetic power)

- Measurement and Analytics

In fact Kachan & Co seem to get a bit carried away, maybe because they come with a cleantech perspective. In my objective nuclear cannot be included as a renewable energy source. Nuclear can be argued to be relatively clean, but the source of energy is mined and finite and thus does not fit the definition. Fuel cells also seems a bit out of place. Kachan argues that fuel cells today are not just storage of energy, but also generation of heat and power. However, it seems that Fuel Cells is more a technology that is a special case of one or more of the previous categories. Measurement and Analytics, is also a category that we can safely take away. For some reason Kachan is not mentioning Hydro. I have marked with red the Kachan technologies that I cannot accept in my understanding of renewable energy.

If we cross check with Wikipedia they are a bit more conservative, as they are only listing six different sources of renewable energy: wind, solar, biofuels, biomass, geothermal and hydro. Our last authoritative source of definition is the International Energy Agency that use the same categories as Wikipedia but add a seventh the Marine.

I agree with all of the categories used by the International Energy Association. For the purpose of this blog I shall be using also the emerging as well as the waste-to-energy technologies in my definition. The emerging technologies seem still to be quite exotic, whereas the Waste-to-energy in my opinion is an important source of energy, which it would be wrong not to take into the energy mix.

So my list looks like this, and these will be the subjects that will be considered in more detail in this blog going forward:

- Wind

- Solar

- Renewable fuels (biofuels, liquid and gaseous)

- Marine

- Biomass

- Geothermal

- Hydro

- Waste-to-Energy

- Emerging (osmotic power and kinetic power)