Will the Shift to Clean Energy Lead to The Next Generation of Asian Tigers?
Jennifer Morgan & Athena Ronquillo-Ballesteros
The West created the automobile, led the space race, and invented the Internet. Each of these innovations transformed society, powering rapid economic growth and enabling people to reach new frontiers in ways that had never been imagined before.
Now, however, it is Asia that is poised to lead the next revolution: the clean energy revolution.
A few weeks ago, the Intergovernmental Panel on Climate Change created by the United Nations released a report showing that the world can shift to 80 percent renewable energy by mid-century. Much of this potential rests in Asia — which has been rapidly advancing its renewable energy production and is becoming the top destination for clean energy investment.
The financial firm Ernst & Young recently named China as the No. 1 country for clean energy investment, with India third, and the United States sandwiched in at second. A recent report from the Pew Climate Charitable Trust found that in 2010 clean energy finance and investment grew globally to $243 billion. Of that, Asia was the fastest-growing region, as investment in clean energy climbed to $82.8 billion, a 33 percent increase from 2009. In China, clean energy investment reached $54.4 billion in solar, wind and other clean energy technologies. By comparison the United States saw $34 billion in investments.
Why have Asian countries surged forward in the transition to clean energy investment and production? The first reason is economic growth. Many Asian countries are looking for new ways to power their economies while meeting their development goals, and they understand that investing in innovation can make them leaders in the global clean energy market. For example, China is already the world’s largest producer of wind turbines and solar modules. The Philippines declared a goal of becoming the world’s top geothermal electricity producer by 2030. Meanwhile, in India, the company Suzlon was launched in 1995 and is now is the third-largest wind turbine manufacturer in the world.
The second reason is energy security. Many Asian countries depend heavily on fossil fuels, especially gas and oil, meaning that their security is tied to international markets and foreign countries. China, India, Japan and South Korea are all among the world’s leading oil importers (along with the United States and Germany). But none of the Asian countries are top oil exporters.
Several countries in Asia, especially China, are also heavily dependent on coal, a limited resource that carries additional concerns, especially around greenhouse gas emissions. In addition, the recent disaster in Japan reminded the world of the low-probability, but high-impact risks of nuclear power. As a result, many countries are now turning to renewable energy sources, like wind, solar and geothermal, which can be produced at home, carry lower risks, and have a virtually limitless supply.
The shift to renewable energy has a third driver: climate change. Nearly all Asian countries have experienced recent impacts of extreme weather events, whether it’s deadly typhoons in the Philippines, drought in China, or flooding in Pakistan. These are the type of events that are expected to increase in frequency and intensity if climate change continues unchecked. Unfortunately, the International Energy Agency announced that global carbon dioxide emissions — the leading cause of climate change — reached a record high in 2010. In order to slow climate change, the world needs to significantly increase its production of renewable energy.
While Asia’s leadership on clean energy is commendable, it is still not on pace to keep up with the population growth and demand for more energy. Asian countries need to consider how to increase their renewable energy production while meeting the energy needs of their people. According to the International Energy Agency, nearly 800 million people in Asia lacked access to electricity in 2009. This inequality prevents many people from having access to basic energy services, including modern appliances for cooking, computers or even lights for reading.
What will it take for Asia to truly transform its energy production from fossil fuels to renewable energy? And, can it do that in a way that is affordable, sustainable and safe?
Top minds in business, policy and NGOs are gathering this week in Manila for the Asia Clean Energy Forum, hosted by the Asian Development Bank, US Agency for International Development, and the World Resources Institute, where leaders will explore what is needed to build a clean-energy economy.
One thing is clear: in order to drive investment, governments need to put the right policies in place. The WRI recently convened a workshop with representatives from 12 developing countries, and the consensus is that the right policies are the key to making renewable energy more competitive.
This week’s energy forum will inform an ongoing dialogue among government officials, business leaders, investors, and policy makers that will help shape the direction of Asia’s energy future. With the right investments and policy decisions, Asia’s tigers will lead the clean energy race.
Jennifer Morgan is director of the World Resource Institute’s Climate and Energy program and Athena Ronquillo-Ballesteros is project manager of WRI’s International Financial Flows and Environment Project.