Extreme weather and climate events such as storms, floods, droughts and wildfires visibly impact not only our communities and livelihoods, but also our resources and related infrastructure. In its latest report, U.S. Energy Sector Vulnerabilities to Climate Change and Extreme Weather, the U.S. Department of Energy (DOE) warns that domestic energy supplies are likely to face more severe disruptions given rising temperatures that result in extreme weather events. The report accurately outlines the risks climate change poses to the energy sector in the United States and serves as a wake-up call on this critical issue, which I highlighted in my testimony before the Energy and Power Subcommittee of the House Energy and Commerce Committee earlier this year.
While manufacturing is a critical part of the U.S. economy, it’s struggled over the last several years—both financially and environmentally. Overall U.S. manufacturing employment has dropped by more than one-third since 2000. Meanwhile, U.S. industry—of which manufacturing is the largest component—still uses more energy than any other sector and serves as the largest source of U.S. and global greenhouse gas emissions.
The good news is that energy efficiency can help U.S. manufacturing increase profits, protect jobs, and lead the development of a low-carbon economy. The Midwest’s pulp and paper industry is a case in point: New WRI analysis finds that the pulp and paper sector—the third-largest energy user in U.S. manufacturing—could cost-effectively reduce its energy use in the Midwest by 25 percent through use of existing technologies. These improvements could save hundreds of thousands of jobs, lower costs, and help the United States achieve its goal of reducing emissions by 17 percent by 2020. As the White House moves to cut carbon dioxide pollution in America, energy efficiency improvements in Midwest pulp and paper mills are a tangible example of the win-win-win emissions-reduction opportunities in U.S. industry.
A social entrepreneur invests the little working capital she has to bring solar electricity to a community that –like 1.2 billion people worldwide– lacks access to electricity. The community used to use dirty, expensive and choking kerosene for light to cook by and for children to learn by. The entrepreneur knows she can recoup her costs, because people are willing to pay for reliable, high-quality, clean energy – and it will be even less than what they used to pay for kerosene. Sounds like a good news story, right?
Three months later, the government utility extends the electrical grid to this same community, despite official plans showing it would take at least another four years. While this could be good news for the community, one unintended consequence is that this undermines the entrepreneur’s investment, wiping out their working capital, and deterring investors from supporting decentralized clean energy projects in other communities that lack access to electricity.
The White House’s climate action plan aims to transform the U.S. electricity system in the coming decades. The President directed the Environmental Protection Agency (EPA) to develop and implement standards to reduce carbon dioxide pollution from power plants, double renewable energy in the United States by 2020, and open public lands to an additional 10 gigawatts of renewable energy development, enough to power more than 6 million homes.
The big question is: Are renewable energy sources up to the task of taking on a significant portion of the country’s electricity? Recent trends and data show that the answer to this question is a definitive “yes.”
Four big signs that renewable energy is ready for the limelight include:
WRI provides strategic advice on the development of best practices, regulations, and standards for CCS and participates in the development of national and international strategies for CCS deployment, consistent with environmental and social integrity.
Building the capacity of developing countries to effectively track progress toward meeting domestic climate, energy, and development goals.
Developing countries will need about $531 billion of additional investments in clean energy technologies every year in order to limit global temperature rise to 2°C above pre-industrial levels, thus preventing climate change’s worst impacts. To attract investments on the scale required, developing country governments, with support from developed countries, must undertake “readiness” activities that will encourage public and private sector investors to put their money into climate-friendly projects.
WRI’s six-part blog series, Mobilizing Clean Energy Finance, highlights individual developing countries’ experiences in scaling up investments in clean energy and explores the role climate finance plays in addressing investment barriers. The cases draw on WRI’s recent report, Mobilizing Climate Investment.
The development of Indonesia’s geothermal energy sector—and the starts and stops along the way—provides an interesting case study on how to create readiness for low-carbon energy. By addressing barriers such as pricing distortions and resource-exploration risks, the country has begun to create a favorable climate for geothermal investment.
The History of Geothermal Power in Indonesia
Indonesia holds the world’s largest source of geothermal power, with an estimated potential of 27 GW. However, less than 5 percent of this potential has been developed to date. Indonesia began to explore its geothermal resource in the 1970s, with support from a number of developed country governments. The country made some progress in advancing geothermal development by the 1990s. However, development stalled during the Asian financial crisis in 1997-98 and was slow to recover.
In the early 2000s, a number of barriers limited investment in the sector, including a policy and regulatory framework that favored conventional, coal-fired energy over geothermal. Plus, the high cost and risk associated with geothermal exploration deterred potential investors and made it difficult to access financing from banks.
The Indonesian government took a number of steps to try to advance geothermal development and received support from a wide range of international partners, including multilateral development banks and developed country governments. In 2003, it passed a law to promote private sector investment in geothermal, establishing a target of 6,000MW installed capacity by 2020.
Data for the Power Almanac come from a variety of sources, primarily government agencies and laboratories such as the U.S. Environmental Protection Agency, the U.S. Department of Energy, the U.S. Geological Survey, and the National Renewable Energy Laboratory.