Last April at a meeting in Dhaka, Bangladesh, representatives of African and Asian governments formed an alliance to support their efforts to factor climate change into national development planning. The new Government Network on Climate Change Mainstreaming and Development now comprises members from Bangladesh, Cambodia, Ethiopia, Kenya, Mozambique, The Gambia and Zanzibar— and will doubtless expand to include other nations.
Back in 2005, this alliance would have represented an anomaly. Indeed, just eight years ago, developing and emerging economies accounted for less than one-third of all nations with policy support for renewable energy. Today, they account for more than two-thirds and that number is growing, according to a new report from the Worldwatch Institute, which is a globally focused environmental research organization based in Washington, D.C.
Throughout much of the world, support policies for renewable energy technologies have increased dramatically over the last decade, states Worldwatch Research Associate Evan Musolino in the Institute’s latest “Vital Signs Online” trend report. Starting in the mid-2000s, deployment-focused policies have been enacted at a rapid pace—mushrooming from 48 countries with policies in place in mid-2005 to a total of 127 countries as of early 2013.
(Figure above courtesy of Worldwatch Institute)
The economic diversity of countries enacting support policies for renewable energy also has greatly increased. High-income economies accounted for 69 percent of all policy support in mid-2005, but by early 2013 this had declined to 30 percent. The other economic groups each increased their share by more than 10 percent.
Most Likely to Succeed
The majority of renewable energy support policies worldwide support electricity generation. Regulatory policies such as feed-in tariffs (FIT), net metering/billing, and renewable portfolio standards (RPS) or quotas have been developed to encourage the introduction of renewable energy technologies in the power sector.
The popularity of these plans varies, as follows:
- Feed-in tariffs (FITs) remain the most widely adopted. Altogether, 99 FIT policies are now in place worldwide at the national or state/provincial level. In addition, the introduction of FITS by municipal governments is becoming more common.
- Renewable portfolio standards (RPSs)—quotas for a specific required minimum share of renewable energy— have been adopted in 76 countries, states, or provinces, up from 34 in 2004.
- Policies supporting greener transportation through mandates and obligations are now in place in 51 countries at the national level.
- Biofuel blend mandates, which require a specific quantity of biofuels to be incorporated into transport fuel, are in place in 27 countries at the national level and in 27 states or provinces.
- Tax incentives are being used to spur developments in the renewable energy sector in some 66 countries as of early 2013.
Tax incentives can take many forms. Production tax credits, a main driver of the renewable energy sector in the United States, or investment tax credits allow for investments or stakes in renewable energy projects to be deducted from tax liabilities. Many countries have also enacted measures to reduce or exempt specific taxes on renewable energy technologies—such as value added tax, sales tax, or import duties—in an effort to decrease costs of project development.
Regional Diversity
As more policies have been enacted, regional diversity has greatly expanded. Of countries enacting policies by mid-2005, most (58 percent) were found in Europe and Central Asia, followed by East Asia and the Pacific (21 percent) and by Latin America and the Caribbean (LAC). By 2013, the share of Europe and Central Asia declined to slightly more than one-third of the global total. Developing nations are taking the lead—notably, within the past decade:
- Sub-Saharan Africa has expanded from no renewable energy support to policies on the books in 25 countries, accounting for one-fifth of all nations enacting these policies worldwide;
- A significant increase of 17 countries has been recorded in the LAC region; and
- One dozen countries enacted policies for the first time in the Middle East–North Africa (MENA) region.
Challenges Ahead
“As the renewable energy sector continues to mature, policymakers [will] face a host of new challenges,” said Evan Musolino, trend author. “While the pace of countries adopting new renewable energy support policies has slowed somewhat in recent years, the sector has experienced a flurry of activity centered on revising existing policy mechanisms. Policy changes have been driven by a variety of factors, both positive and negative.”
Rapidly changing market conditions for industry sectors such as solar photovoltaics—which has seen module costs decline by 80 percent since 2008 and by 20 percent in 2012 alone—have dramatically reduced the level of support needed to make projects attractive to investors and feasible for project developers. Simultaneously, the global economic slowdown left many countries with continuously tight national budgets, which has threatened support for the renewable energy sector. The combination of factors has led to a number of cuts to existing incentive programs.
Additional challenges to the sector have come from the introduction of taxes or tariffs on renewable energy installations or components. Taxes on renewable energy were enacted in Bulgaria, Greece, and Spain in 2012. Trade disputes centered on the international trade of renewable energy components have also become prominent in recent years.
As countries begin to have higher shares of renewable electricity in their national energy mix, policymakers need to address new challenges, according to the trend report. Policy priorities are shifting from a need to incentivize market takeoff to a need to ensure favorable market conditions and seamless integration of renewable generation into grid networks.
Despite substantially different degrees of market maturation, renewable energy technologies continue to get support from government policymakers worldwide. This support is expected to continue, and to evolve, as the sector develops.
Edited by Alisen Downey