Growth of competitive renewable energy could be ‘game changing’ for Paris climate talks 

Source: Lisa Friedman, E&E reporter • Posted: Friday, June 5, 2015

Adnan Z. Amin is the director-general of the International Renewable Energy Agency (IRENA). Established in 2009, the organization is based in Abu Dhabi, United Arab Emirates, and serves as a global hub for cooperation on renewable energy development, supporting countries in their transition to zero-carbon options.

IRENA has 140 members, including the United States, and is in the process of signing up 32 more. During a visit to Washington, D.C., earlier this week, Amin spoke with ClimateWire about falling solar prices, falling oil prices, why Gulf nations need renewable energy and the implications of an expected new global climate change agreement. The conversation has been edited slightly for length and clarity.

Question: Obviously, everyone is focused on the Paris climate deal expected in December. But let’s start with the day after Paris. Under this new agreement, all nations will be expected to take responsibility for addressing climate change. IRENA works on the ground with governments to help them boost their levels of renewable energy. As you look across the landscape at countries, especially developing countries, are they ready for this challenge?

Answer: Actually, we are seeing phenomenal change happening in global energy. We’re going from a situation where just four or five years ago renewables were considered a niche technology, and the discussion was about things like efficiency-only, or nuclear, or what route to decarbonization we could pursue. It was essentially an agenda of limitation. Climate change became associated in the minds of the people with growth limitation.

The transformation that has taken place has really transformed the possibility of what we can do. Over the last four years, the majority of global capacity additions have been from renewables, more than fossil fuels and nuclear combined every year for four years. The cost of renewables has just fallen through the floor.

In more and more markets, renewables are competing on the grid with conventional generation or beating it. In 26 or so markets, and it’s growing quickly, renewables are competitive on the grid with any form of conventional generation. This is a game-changing event. For us, the issue no longer can we get to 20, 30 percent renewables. The issue is, what do we do when we get there? That’s going to require much more fundamental work on the transformation of power.

Q. If the cost is no longer the main hurdle, then what are the other big challenges countries face?

A. [Governments] must have a firm, transparent long-term policy and regulatory framework that gives confidence to investors for the duration of the project. The finance and structuring of renewable energy finance is very specific. It’s all upfront money. With conventional energy, you have a lot of the costs of power generation, in terms of fuel, down the road. Here you’re paying 100 percent upfront.

Countries also need to build capacity. They can get projects, but many of them don’t have the skilled personnel. We really need to ramp up training.

Q. How has the plunge in oil prices affected investments in renewable energy?

A. There is actually very little correlation between oil prices and renewables. If you’re talking about renewables for power generation, the share of oil in power generation is low. They don’t compete head to head. In places where they do compete, like off-grid diesel generation, that’s still more expensive than power generation. I told a BBC reporter [in another interview], “I don’t really understand why it’s such a huge story for you that oil is falling in price, and it’s not a story that solar has fallen 70 percent in the last five years.”

Q. Let’s talk the state of play in a few specific countries, starting with Saudi Arabia, which I understand has been backing away from its renewable energy targets.

A. Purely from an economic point of view, we have a fast-growing energy demand. Some people say within a decade, a decade and a half, Saudi Arabia faces the possibility of being a net energy importer. This would be a devastating situation for the Saudi Arabian economy, given its reliance on fossil fuels. No. 2, when Saudi Arabia uses its domestic oil for power generation, it’s at a cost of between $2 and $9 per barrel. With the drop in oil prices, it is clearly an uneconomic use of a very valuable resource.

Saudi Arabia has one the best potential renewable mapping I’ve seen anywhere. It’s a very ambitious program they’re talking about, an investment of 54 gigawatts of renewable energy action by 2032. That’s about a $110 billion commitment.

Q. Will India be able to meet its ambitious goal of 100 gigawatts of new solar power by 2022?

A. It’s still early days … but just the sheer scale of that is massive, and their ambition is to do it in seven years. At the same time, India is pursuing an agenda of industrialization. … They are seeing renewable energy as an economic opportunity and not purely as a de-carbonization initiative.

Q. I’m also very curious about Turkey, which has about 80 coal plants in the pipeline and really seems to be betting its future on coal.

A. Turkey is concentrating on building their economy. They’re one of the fastest-growing economies in the world. Their rate of growth is impressive, but their energy demand has been equally impressive. One huge geo-strategic advantage Turkey has is that it’s a link between east and west, north and south. It’s a transit country for huge energy supplies of all types. At the same time, it has immense resources of solar, hydro and wind. Turkey has moved very fast on wind. From day one, it’s been without subsidies, and the fact that it is a profitable industry speaks volumes about its strength.

They’re going to use whatever they can for power generation. Coal is unfortunately still part of the equation, but it’s becoming less a part of the equation every day. I think the sunset days of coal are very much on the horizon.

Q. IRENA is based in Abu Dhabi, which is famous for its sustainable city, Masdar. But outside of Masdar, the region is hardly known for its commitment to renewable energy. What’s it like being based there?

A. The first question people ask is, “Why are you in an oil economy?” The answer is, anyone who has any vision for how the world of energy has changed understands that energy is going to be different, and they want to be part of the clean energy revolution.

The UAE is also at a crossroads, which provides you access to every part of the world fairly easily, and a lot of people increasingly come through the Gulf. As a place to convene, it is ideal with world-class infrastructure.

In fact, a growing number of major, international climate-focused organizations are no longer based in the traditional power centers of Europe and the United States. I’m thinking offhand of the Green Climate Fund and the Global Green Growth Institute, both in South Korea, for example.

We are becoming a flatter world. The center of gravity is much more diffused, and it is becoming a richer ecosystem of sustainability.

Q. I notice your members include nearly every OPEC country. Was that a hard sell?

A. They came themselves. They didn’t have to be lobbied. Many OPEC countries basically see economic diversification as a critically important issue for them in the future. The energy economy is changing very fast. It’s going to be a very diversified economy in the future.

Q. IRENA has 149 members, including the United States, China, India and so many other big players. What country is your biggest hold-out?

A. We would love to have Canada.

Q. What are your expectations for Paris?

A. For me, the most encouraging thing about Paris is apart from the negotiations. There is a new sense of action outside the formal agreement which bodes very well. We cannot have a de-carbonization agenda that is not also a growth agenda, and people are starting to realize that. This is what Paris can put on the table.