Engineering an energy miracle

Looking back at the last decade in energy and climate policy evokes mixed feelings. Progress toward a more sustainable economy has been alarmingly slow. But there have been some promising recent developments.
For a long time, it was difficult to see the light at the end of the tunnel. The global economic crisis, together with a politically influential fossil-fuel sector promoting denial of decades of scientific research, hampered technological progress and prevented a diplomatic breakthrough. Demand for fossil fuels continued to grow, and so did competition for energy resources.
Even after the global economy began to recover, governments channelled their resources toward dubious and uncoordinated schemes to support energy production and consumption, rather than effective investments aimed at driving a shift toward more sustainable energy systems. In Europe, individual countries implemented divergent rules that hurt their economies and distorted competition, instead of developing common subsidy principles. The result was a heavy burden on consumers – and not much else.
Exacerbating the situation, climate-change-related obligations went unenforced. Little progress was made in developing traditional energy infrastructure linking markets. In international relations, energy was used as an instrument for “divide and rule,” “carrot and stick,” and “blackmail or bluff” policies. Oil and gas monopolies continued to get stronger. A low-carbon, reliable, and depoliticized energy sector remained a distant dream in the overwhelming majority of countries.
Over the last five years, however, a glimmer of hope emerged. In the United States, a shale-gas revolution transformed energy geopolitics, as US dependence on foreign oil and gas vanished virtually overnight. European Union countries and supranational institutions took decisions that helped to address “energy islands” (isolated and inefficient energy markets), while increasing the role of renewables in energy provision. And China – long the world’s largest oil, gas, and coal importer and leading carbon emitter – became the world’s largest manufacturer and exporter of solar panels.
All of this contributed to reductions in the prices of renewables. World leaders increasingly recognized that, far from dragging down their economies, climate-change mitigation could boost growth. This progress culminated in the breakthrough global agreement reached at last month’s United Nations climate conference in Paris. Despite this progress, however, much remains to be done to integrate renewables reliably and cost-effectively into energy grids and prevent irreversible damage from climate change.
In a sense, Lithuania’s story mirrors this global process. Not long ago, the Baltic Sea region was almost completely dependent on fossil fuels from particular suppliers. But we have managed to get rapidly to the point where we can choose the source and supplier of our energy; we can even opt to produce energy ourselves. In Lithuania, renewables now account for more than half of total electricity and heat production. And new energy linkages with Poland and Sweden are set to improve the reliability of renewable energy.
Like the rest of the world, however, we have much more to do. For example, we will double the installed capacity of wind energy and expand our biomass exchange this year.
In the longer term, we must transform our energy system even more fundamentally. We cannot build our future on the centralized provision of fossil fuels (even if they are cheap). Nor can we rely on renewable energies that provide inconsistent supplies and require subsidies. That is why we must take steps that will facilitate energy savings as well.
For starters, available energy infrastructure must be fully employed. In the Baltic Sea region, we have already adjusted the legal framework to reflect our priorities, built energy links and liquefied natural gas (LNG) terminals, invested in relevant market instruments, and secured a reliable energy supply. But building the infrastructure is just the first step; now we must ensure that it is serving consumers’ needs and interests.
Moreover, research and development aimed at reducing the cost and improving the reliability of renewable energies is critical. Governments must double or even triple investment in energy R&D, while ensuring that energy start-ups have the same access to finance as, say, telecommunications or pharmaceutical companies.
This is all the more urgent, given that consumers will not accept policies aimed at reducing emissions, such as a carbon tax, if they do not have an affordable alternative; after all, no one is expecting a drop in overall energy consumption. But with political support for a clean-energy transition and climate-change mitigation stronger than ever before, the time is right to implement such policies.
In fact, governments should be even more ambitious, implementing national laws and action plans that tackle the problem now, instead of kicking the can down the road for future generations to deal with. While the voluntary obligations contained in the Paris agreement are important, what is really needed is legally binding commitments (based, of course, on scientific calculations, modeling, and simulations). That way, states or industries cannot simply decide that they are too poor, too small, or too strategically important to do what is necessary.
Humanity has proven time and again its ability to make miracles with technology. There should be little doubt that greater investment in renewable-energy R&D, together with strong political commitment, will enable us to make another one soon. - Project Syndicate