IEA Says U.S. Lacks Long-Term Vision
For Deploying Needed Renewable Energies
By Rick Mitchell
PARIS--The United States lacks a long-term federal policy for deploying the renewable energy technologies needed to reduce reliance on fossil fuels and fight climate change, an International Energy Agency official said Nov. 23 in conjunction with the release of an updated global analysis.
Paolo Frankl, head of IEA's renewable energy division, told reporters in a conference call that although a handful of U.S. states have effective renewable energy policies, the main U.S. federal policy consists of a production tax credit that, because of the way it is renewed, contributes to investor uncertainty.
Frankl and other agency officials were presenting IEA's new publication Deploying Renewables 2011. The document, which updated a 2008 version, analyzes the cost-effectiveness and impact of 56 countries' renewable energy policies and market trends in three sectors: electricity, heat, and transportation.
The new report said renewables are rapidly becoming more viable; for example, the global renewable energy electricity sector grew 17.8 percent in the five years through 2009 and currently provides 19.3 percent of total power generation worldwide, with hydropower contributing the largest share.
However, the Paris-based IEA, which advises 28 wealthy countries, said strong policy support is needed to make the price of renewable technologies competitive with fossil fuels—in particular an increase in economic incentives and a reduction in noneconomic barriers to deployment.
U.S. ‘Boom-Bust Cycle.’
Frankl said the main U.S. federal renewable energy policy tool, a production tax credit renewed every two years, contributes to uncertainty for deployment of renewable technologies because it is usually renewed in the last month of the second year.
“If you compare that [policy] with deployment of wind, you will see perfectly a boom-and-bust cycle which corresponds to the uncertainty which is caused by this kind of policy approach,” he said.
“I have to say that the systematic problem with the policies on renewables at the federal level is a lack of long-term orientation. I think that is the most important single criticism that we have of the U.S. federal policy approach right now,” Frankl said.
However, he said some U.S. states are doing well at promoting renewables, particularly California, with solar policies, and Texas, with policies to boost wind-energy deployment.
Carbon Price Needed
Noting that many of its member countries face budgetary problems, IEA urged policymakers to opt for measures that have the highest impact at the lowest cost.
The 186-page report argued in particular for a global carbon price to raise the cost of high-emitting fossil fuels, along with $46 trillion in infrastructure investments by 2050 in low-carbon-emitting energy sources and carbon capture and storage.
IEA Executive Director Maria van der Hoeven said countries need measures that increase the price of cheap electricity, in particular a carbon price—primarily achieved through taxes on emissions—and an emissions trading system. The United States has neither.
“Something that costs nothing [electricity] will be consumed in abundance. If you put a price on it, it will be used less. We are talking about costs, fiscal systems, and the development of alternatives,” van der Hoeven said.
Expanded Coverage
IEA advises 28 of the 34 member countries of the Paris-based Organization for Economic Cooperation and Development, including the world's biggest market economies, and thus its big energy users and polluters.
The new publication also looked at renewable energy policies of the so-called BRICS countries—Brazil, Russia, India, China, and South Africa—which are not IEA members but which the agency said will account for about 90 percent of energy demand growth in the period ending in 2035.
The report also included other emerging Asian economies for a total of 56 countries.
IEA's World Energy Outlook 2011, released earlier in November, said the world needs to quickly implement “stringent” new energy infrastructure investment policies if it is to avoid climate calamities linked to global warming
IEA said renewables are the second-most important component, after energy efficiency, of energy policy aimed at heading off the worst effects of climate change and increasing energy security.
(Appeared Dec. 7, 2011)
