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| Renewable energy – a market for the future |
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The market for renewable energy sources is driven by a number of difference forces. The total global energy consumption is estimated to increase by 60% by 2030 (EIA). The production of oil can now only just meet the high demand simultaneously as the point in time where production can no longer be raised (”Peak Oil”) is getting ever closer. A global awareness of climate change and its consequences has been established in earnest. Dependency on fossil fuels is not sustainable in the long-term and demands alternative solutions. Simultaneously as the need for alternative energy sources has become more evident, the costs of these have become more and more competitive. Moreover, if the massive and long-term incentive programmes that have been established around the world are included, a view of an industry with great potential appears.
Since less and less new oil reserves are being discovered at the same time as consumption is increasing, we will soon reach the point when production cannot be raised any further. According to the US Department of Energy, the so-called oil gap in the year 2030, i.e. the difference between demand and consumption of oil will be as large as the current level of oil production.
During the autumn of 2006, the Stern report was presented (Stern Review on the Economics of Climate Change). The report describes a scenario where the effects of global warming are measured in monetary terms. The Stern report estimates that the cost of a 5 degree average temperature increase up to the year 2100, would amount to between 5 and 20 percent of the global gross national product. Moreover, the report asserts that it would cost just 1 percent of the world’s combined gross national product up to the year 2050 to check the run away greenhouse gas emissions if it is done in good time.
On 10 January 2007, the European Commission presented a comprehensive energy and climate strategy, the aim of which is to fight climate change through reduced carbon dioxide emissions and improve the security of energy provision and the competitiveness of the Union. The goal can be achieved by developing the internal energy market, increasing the use of renewable energy sources, enhancing energy efficiency and strengthening the regulatory framework within the energy sector. The European Commission wants the Union to commit to reducing greenhouse emissions by at least 20 percent by 2020. This is clearly more than in the Kyoto agreement according to which the EU aims to cut its emissions by 8% from the 1990 level. In order to achieve this, the EU has set a goal that renewable energy shall account for 21% of the energy produced amongst the 25 EU members before 2010. This goal was adopted in the EU directive on renewable energy sources 2001/77/EG.
In Sweden an active shift towards renewable energy is already underway. The current policy is that nuclear power shall be replaced by more efficient electricity use, conversion to renewable forms of energy and more environmentally friendly electricity production techniques. The use of fossil fuels should be kept to a low level. National rivers and the other river stretches that the parliament has excepted from exploitation shall remain protected even in the future.
Since the election in 2006, it is been made apparent that the approach followed earlier will be continued by the new government also. The government declaration from October 2006 establishes that “Energy questions in combination with the climate changes are crucial challenges”. Furthermore, the government has declared that it considers it a prioritized question that Sweden shall assume a leading world role in the shift relating to renewable energy and energy efficiency in order to achieve a sustainable energy system.
Consequently, renewable energy sources such as biofuel, wind power and solar energy will increase significantly in the future, both due to progressively improved competitiveness and since programmes and steering tools are being established around the world which shall further increase use. Just in the EU, renewable energy has increased 50% during the past two years (not including hydro power). The renewable electricity consumption within the EU amounted to 15% in 2005 and is rising by 2% per year (EU Commission, Follow-up measures for the green paper). The conclusion is simple. The conditions look promising for profitable investments in renewable energy.
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