Energy Governance and Sustainability as a Vector of Change

DOMINGO JIMENEZ BELTRÁN

 

Download Paths to sustainability S.M.A.R.T. (PDF)

 

In its periodic reports on the situation of our natural resources (water, soil, energy, biodiversity, etc.), the United Nations has been arguing for some years that “the crisis is not one of resources but of the management of resources.” In other words, the richest or best countries, those with the highest levels of well-being and the greatest chances of achieving sustainability are not the countries with the largest amount of resources but those which best manage the resources they have, as is clearly shown by countries that exemplify the two extremes of this thesis, such as Venezuela and Denmark.

The crisis is not one of sustainability but of governance, governability or simply good government. There is no sustainability without governance, and this is particularly evident where energy resources are concerned, with climate change as the result of their mismanagement on a national and global level. There are enough resources, and ones that are moreover renewable, to satisfy global energy requirements in a sustainable way now and in the future, but what is needed is a radical change in our energy policies.

Such a change clashes head-on with the interests of many countries with fossil resources, and of energy and electric companies whose source of income lies in the economy of coal and fossil fuels (not forgetting nuclear energy). These interests, generally speculative and short-term in outlook, are strengthened by cartels such as OPEC or simply by oligopolies, as in the Spanish case. Interests of this kind make for positions of extreme resistance, as that of the United States was until recently, a resistance tempered only thanks to the mandate of Barack Obama.

 

The Challenge

The challenge is not a technical one, as we have mature and accessible technology for renewables, nor is it economic, since most technologies have surpassed not only what is known as “grid parity,” by equaling costs at the point of supply, but also “generation parity.” This is shown by the fact that in 2015 investments in renewables for generation of electricity have been much greater, and with much more installed power, than in fossil and nuclear technologies. This is the situation even despite the fact that not only do the latter not internalize their environmental costs but also, appearances to the contrary, they received nearly four times as much aid and subsidies in general as renewables, according to the International Energy Agency (IEA) itself. The challenge is simply political, it is one of “good government” or governance.

What is all this about governance? And what chances do we have of using it to propitiate energy sustainability, thereby responding to an otherwise necessary and opportune change in the energy system (and with it the model of production and consumption in general), which would result in a true mitigation of climate change?

 

Acting Is the Key

The key is to move from reactive to proactive positions. Although it has not been sufficiently explained or, above all, emphasized, that is what is provided for (thanks to the negotiating capacity and diplomacy of the French team headed by Laurent Fabius and Ségolène Royal) by the Paris Agreement, now coming into force. Indeed, the preparations for the Marrakech Summit (COP 22) in November 2016 confirm that the goal of establishing the rules for the implementation of the Paris Agreement implicitly calls for a reliance on renewable energies in making the transition toward more sustainable energy and progress.

It is crucial that we have gone from talking simply of the intention of reducing greenhouse gas (GHG) emissions to considering them an objective, as a result of a promising and opportune change in the energy model and system at every level. Even if there were no climate change, this transformation would in any case be necessary. Climate change, however, obliges us to act more quickly.

Above all, climate change has equipped us with something fundamental for the “governance” of this change in the energy model. In the measurement of GHG emissions and their corollary, the increase in global temperature, it has provided us with an indicator to establish the inexorable route from here to 2050–2100, which is in no case to exceed a 2ºC increase in global temperature and if possible to keep the rise below 1.5ºC.

Let us hope that this will lead to a definition on the route map drawn up in subsequent summits, beginning with Marrakech, of the intermediate goals to be attained regarding GHG emissions. Said intermediate goals will result from the sum of the commitments accepted by the signatory states of the Paris Agreement, and could include:

  • Reaching the peak of the greenhouse effect before emissions in 2014 and 2015, this might already have been achieved thanks to the decrease in coal burning in China and the USA, and should therefore be maintained.
  • A 60 percent reduction of GHG emissions by 2050 with respect to 1990, as the European Commission proposed before Paris (surprisingly defended by the Commissioner Arias Cañete), in order to reach a practically “decarbonized” energy and economy by 2100.

This proactive approach is legitimized simply by the consideration that this reduction in GHG emissions, or decarbonization of energy and the economy, will not only do away once and for all with the atmospheric pollution of our cities (“Spanish cities are being asphyxiated,” we read in the press) and its huge impact on our health—something that is not sufficiently stressed—but will also involve:

  • A “de-energization” or reduction in energy demand through more effective and efficient consumption, healthy also in economic terms.
  • The “dematerialization” of the economy in order to reduce inputs not only of energy but also of non-renewable resources, raw material and so on, which in turn is mirrored by an equivalent reduction in the generation of waste (there is symmetry between “zero emissions” and “zero waste”), a step that is also necessary for environmental and economic reasons.
  • The substitution of non-renewable energy sources and their related technologies, which are environmentally and socioeconomically unsustainable, with renewable energy sources and technologies, the best alternative from every point of view, and inexorably a part of the future.

The Role of Renewables

Renewables provide a key strategic element for the sustainability and progress of countries and regions. Energy sovereignty, achieved with autochthonous and renewable resources, is instrumented, I prefer the term, by “connected energy self-sufficiency.”

Unfortunately for the energy and electric companies, such self-sufficiency is already possible where electricity is concerned. There is a growing number of electrified systems at domestic level in self-consumption dwellings and buildings, and the same is true of whole neighborhoods, farms, industrial compounds, and municipalities with distributed generation and integrated energy management, which could even lead to the municipalization of the energy grid, as occurs in Germany.

As a Nobel Prize laureate has pointed out, “the Stone Age did not end because there were no stones left, but because there were better alternatives: metals. The same is true of fossil fuels.” The fossil fuel age is not coming to an end because fossil fuels are running out, or even because they cause climate change (as they do), but because there is moreover a much better alternative: renewables.

The fossil fuel age is not coming to an end because fossil fuels are running out, or even because they cause climate change (as they do), but because there is moreover a much better alternative: renewables

The first industrial revolution was based on coal, and the second on petroleum. The third is already being based on the abandonment of both as fuels and a decisive switch to renewables. As in those cases, this shift towards energy sustainability could be the vector of change (or in any case a decisive vector) toward more sustainable progress, more effective and more efficient in the use of resources in general (Fundación Renovables 2015).

The important thing is that this change in the model of production and consumption, which, like any paradigm shift, would otherwise have taken decades or even generations to take place, is now linked to a time schedule. The years 2050 and 2100 are the unpostponable deadlines for mitigating climate change and adopting a clear alternative: renewables.

We know what is happening and will keep happening if we continue using fossil fuels. We even know what has to be done to escape this growing cycle of unsustainability and enter the path of sustainability, not only of energy but of the economy in general. If energy changes, everything changes.

 

Organization for Governance

If all this is so obvious, then why is this necessary and opportune change not already effectively under way?Why is it that since 1992, when the Convention on Climate Change was agreed at the Rio Summit, emissions have continued to rise, and with them the levels of GHGs in the atmosphere, the average global temperature, and in consequence, the impact on the world’s climate in general? Why have we had to wait until December 2015 to achieve an agreement subscribed by most countries that is still, as the United Nations points out, clearly insufficient for the achievement of the goals deemed essential for 2050 and 2100?

The answer is quite simple: because we have been incapable of organizing ourselves properly to manage the change. This is because these inexorable scenarios of sustainable energy and socioeconomic sustainability are not yet accompanied by the mechanisms of governance necessary at a global level to manage route maps for overcoming the short-term interests of the various countries and economic sectors linked primarily to the fossil fuel economy.

The challenge for the Marrakech Summit and subsequent climate summits up to 2020, when the cutbacks in emissions undertaken by the different countries in the Paris Agreement will start to be applied, will be to establish not only the regulations for homologating each country’s efforts to reduce emissions (reference dates, sectors involved, etc.) but above all to agree how to make these commitments much more ambitious. According to the United Nations, we need a general reduction of up to 25 percent more by 2030 if the agreed global objective, a temperature rise of no more than 2ºC and preferably less than 1.5ºC, is to be respected.

The challenge lies in the governance of the Paris Agreement, as can be surmised from the fact that what major countries such as the United States and China were resisting was not so much, or not only, committing to the reductions but rather abiding by rigorous monitoring mechanisms for such commitments, with checks (always under voluntary schemes, since the possibility of binding commitments such as the ones that apply to EU states was out of the question) taking place every five years.

 

Finance

Among the difficulties of governance we must include what is always the thorniest issue: the predictable provision of funds for financing the agreements. The most important such agreement is the one reached in Copenhagen in 2009, which is supposed to raise 100,000 million dollars by 2020. This figure constitutes the condition for the countries most affected and least responsible for climate change—generally developing countries—to join the agreement as receivers of economic resources to adapt and contribute to climate change mitigation. Some of the receiving countries, such as Cape Verde, Samoa and Papua New Guinea, are spearheading the proactive position outlined above by committing to self-sufficiency with 100 percent renewable electric systems and consequently “zero emissions” by 2030. This is a shining example for countries such as Spain, with more reasons and potential to adopt such an approach.

The challenge is not a trifling one. It requires radical changes in global governance if adequate management is to be provided for the objectives of emission reduction and the changes in energy and general economic models necessary for sustainability to be achieved.

In December 2004, at the end of his term as Secretary General of the United Nations, Kofi Annan seconded the conclusions of a report by a team led by Jeffrey D. Sachs. This defined the keys to global governability with the aim of progressing towards the Millennium Development Goals and global sustainability.

The first key was to have global strategies which now, in the case that concerns us, have clear substance in the so-called Global Sustainability Goals, and in particular in the climate change strategies established within the development mechanisms of the 1992 Convention on Climate Change and the 2006 Kyoto Protocol, now strengthened by the Paris Agreement of 2015. This is not the main shortcoming where strategies are concerned.

The second key was to develop global capabilities, necessarily within the United Nations, and embodied in this case in the United Nations Secretariat for Climate Change, the different working groups and commissions set up to implement the Paris Agreement, and other similar organizations within the United Nations Environment Programme (UNEP) or the Global Sustainability Goals, among others. In this respect, however, there are shortcomings. These bodies have very limited powers, since none of the goals are binding, nor can they impose economic sanctions for deviations from the relevant commitments acquired (as the World Trade Organization can). Most importantly, however, (and this shortcoming is connected to the third condition), they do not have the resources or a sufficient foreseeable budget to economically incentivize compliance and finance existing commitments, above all in developing countries.

The third condition was the need for shared global responsibilities that would acquire substance, as occurs at state level, in the existence of predictably available resources. These resources would be obtained by consolidating annual budgets with taxes or tariffs (can we imagine states financed with the voluntary contributions of their citizens, as occurs with the United Nations?), which in this case would be global. These responsibilities would contribute to global cohesion and cooperation, and to the proper distribution of charges and redistribution of the resources generated. They would also be the guarantors of a global budget, an instrument that would strengthen global capabilities and provide them with resources to incentivize compliance with the goals, and to finance programs for adaptation and mitigation in less developed countries. This is perhaps the most serious shortcoming for global governance, and for our ability to embark on proactive and operative processes to mitigate climate change, understood simply as management of a worldwide energy transition, necessary in any case, that will result in climate change mitigation and act as a vector of change toward global sustainability.

The challenge lies in the governance of the Paris Agreement. Major countries such as the United States and China resist not so much committing to the reductions but rather abiding by rigorous monitoring mechanisms for such commitments

 

A Tax

Once again, climate change, thanks to the existence of an indicator as evident, measurable and controllable as emissions expressed in CO2, has provided us with a powerful potential instrument, a global tax on CO2 (preferable to the so-called “carbon pricing”) in order to finance the Paris Agreement. Such a tax was in fact already suggested at the Rio Summit in 1992, and was unfairly whisked off the agenda during the negotiations for the Kyoto Protocol at the insistence of the United States (which in the end failed to ratify the protocol) to provide for another not-so-efficient economic instrument, tradable emissions permits, in what proved to be a lost opportunity.

A tax equivalent to 3–4 dollars per ton of CO2 would be sufficient (its repercussion would be just over one cent per liter of fuel, or one third of one cent per kWh produced with fossil fuels, for example) to secure the 100,000 million dollars per annum that have been committed, but not so far advanced, to implement the Paris Agreement.

Owing to its fiscal repercussion, this fund could no doubt be multiplied four or five times simply to catch up with the subsidies received today by fossil fuels according to the IAE, or to double the investments in the generation of electricity with renewables in 2015, a year in which, as stated above, they surpassed investments in generation with fossil fuels.

This would satisfy the second and third conditions for global governance in climate change (capabilities and global economic resources) and sustainable energy.

Additionally, it would almost certainly make the goal of zero emissions a desirable and advantageous reality, together with that of efficient (up to 50 percent less final energy consumption) and 100 percent renewable energy systems by 2100. The process would be punctuated by a reduction in emissions by 2030 that would be 25 percent greater than the number stipulated in the Paris Agreement, and a reduction of 60 percent by 2050 of the emissions recorded in 1990.

All this might put us on the path to remaining below a 1.5ºC global increase in temperature, besides achieving more sustainable energy systems and progress in general. Not forgetting an added dividend, the drastic reduction in atmospheric pollution in our cities.

So why wait to demand global fiscality on CO2 (we might start with kerosene for aviation, which currently pays no taxes) in order to ensure governance of the Paris Agreement? This fiscality would ensure we have the funds necessary to achieve sustainability with our energy system and the resulting mitigation of climate change. It would also finally introduce the vector of the necessary change in the model of production and consumption, as we advocate at the Fundación Renovables.

Let us imagine for a moment what it would mean to add a proactive approach to climate change as the climax for change already propitiated by the Paris Agreement, and due to be reinforced in Marrakech, in the form of a global CO2 tax that would supply predictable resources proportionate to the effort to be made, and which would gradually disappear with the “decarbonization” of the economy. It would put the Paris Agreement in “turbodrive,” but this time with renewables.

 

BIOGRAPHY

DOMINGO JIMENEZ BELTRÁN

The former Environment and Public Works counselor on the Spanish Permanent Representation to the European Union, he then took over as head of the Division of Health, Safety and Quality of the European Commission. Until 2002 he was the first executive director of the European Environment Agency based in Copenhagen, and he has held many important positions in both the European Commission and the Spanish government. An industrial engineer by training, he acted in an advisory role for the president’s Economic Office and as director of the Sustainability Observatory in Spain before throwing in his lot with clean energies as the head of the Fundación Renovables, an organization devoted to accelerating change in the energy model. He is currently the chairman of the Fundación Desarrollo Sostenible and the Institute for European Environmental Policy in London. He has been the recipient of many awards, among them the 2007 National Environment Prize.

Download Paths to sustainability S.M.A.R.T. (PDF)

References
Fundación Renovables. 2015. La energía como vector de cambio para una nueva sociedad y una nueva economía [Energy as change vector for a new society and a new economy]. Madrid: Fundación Renovables.

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