Achieving the Benefits of a Green Economy through Clean Energy

How can policymakers deliver low-carbon development, particularly clean energy, at affordable costs? What strategies have countries used to attain the economic benefits of building a clean energy industry while keeping the burden to consumers low —and who is succeeding, and why? These are just a few of the questions that policymakers grapple with when tackling the challenges associated with transitioning to a green economy, one of the key themes of the Rio+20 conference. They’re also questions that WRI seeks to answer through our upcoming, cross-country analysis of clean energy industry development.

What is the Green Economy?

The green economy presents an alternative vision for growth and development , in which economic growth and improvements in people’s lives are generated in ways consistent with sustainable development. While there are varying visions of what the green economy encompasses, this concept has piqued the interest of policymakers and businesses alike because it presents the possibility of new opportunities for economic growth.

The Potential Benefits of Clean Energy Are Clear

The clean energy sector has the potential to deliver on both environmental and economic objectives of the green economy. Clean energy’s long-term benefits—improved energy security and environmental and public health—are well understood. A growing body of research confirms additional near-term benefits, which include the potential to create more and better jobs.

Investments in the clean energy sector reached a record of $257 billion in 2011 —600 percent more than in 2004 and 93 percent higher than in 2007—driving unprecedented growth in the sector globally as governments support clean energy deployment. The International Energy Agency (IEA) projects that renewable energy will attract $5.9 trillion in investment between 2011 and 2035, representing a truly massive opportunity to deliver on these benefits and advance economic development more generally.

But Who Is Achieving These Benefits and How?

To ensure support for the policy frameworks that will underpin and enhance this growth, however, the promise of jobs, investments, and manufacturing must be delivered while keeping energy costs affordable for consumers. So which countries have managed to strike this balance, and how?

The World Resources Institute, under the Open Climate Network and in partnership with Renmin University in China, Oko Institute in Germany, The Energy and Resources Institute in India, and the Institute for Global Environmental Strategies in Japan, are undertaking a unique, cross-country analysis to find out. The analysis examines the creation of the wind and solar industries in these countries over the last 10 years to identify where and how jobs and low-cost energy are delivered. It’s revealing which countries are most effective in achieving both goals and what strategies they used to get there.

The full analysis will be launched later in the summer. Early results from our analysis of solar photovoltaics (PV) development reveal some important insights specific to that industry, including:

• Using targeted deployment policies to actively drive down the cost of installed systems, not just deploy as many as possible, is the best way to build a large and active “downstream” industry of installers, project developers, and generators. This strategy delivers the largest industry for the smallest impact on consumers per kilowatt hour of energy generated.

• Creating a robust manufacturing sector requires much more than just a strong deployment policy (though that can help). Success depends on an explicit strategy to either compete on price (China) or on performance (Germany), as well as a broad public / private partnership in the industry to execute that strategy.

• Despite drawing significant investment, the United States has relatively high system costs, and thus a small annual deployment as well as a struggling manufacturing sector.

There seems to be a virtuous cycle, wherein actively driving down system costs builds greater deployment, creates local industries that support deployment, and delivers abundant and relatively low-cost, low-carbon energy. But successfully competing for the “upstream” manufacturing portions of a globally traded commodity requires an active strategy and partnership between the government and industry. In the end, the two goals – low-cost energy and creating an industry – can reinforce each other, building momentum and amplifying each other’s results.

A preview of these findings, along with first-hand insights from in-country experts including Jochen Flasbarth, president of the German Federal Environment Agency, will be presented at “Achieving the Promise of Green Jobs and Investments” at the Rio+20 conference on Sunday, June 17, from 3:30 – 4:45 p.m. at Forte de Copacabana. Registration is still open.