Excerpts from an Interview on Energy and Decarbonisation- the Extract Newsletter June 2020
Following the concluding phase of the forthcoming decarbonization and energy handbook project, it was a pleasure to have been interviewed by the Extractive Hub Initiative for the June 2020 (issue 48) of the Extract Newsletter. This note aims to briefly highlight some of the interesting issues and questions that were considered in the interview.
A 'transition' in energy systems and industry contexts is not necessarily a new phenomenon. For instance, due to a mix of factors (such as efficiency, scale, and affordability), the modern economy and societies evolved from reliance on horses for transportation or other socio-economic uses to mass-transit systems powered by the internal combustion engine, and now to a considerable extent the trending electric vehicles (EV) or fuel cell EVs. Likewise, one of the greatest innovations of the 20th Century was the development of long-distance energy networks operated by vertically-integrated utilities as a means of delivering affordable and reliable energy services to an increasing number of people and large-scale demand points such as steel and manufacturing plants. In several jurisdictions or contexts, such systems gradually gave way to the increasing interest in creating competitive wholesale markets complemented by open access to those networks and now more recently an increasing array of distributed energy resources and/or variable renewable energy systems as part of the drive towards decarbonization and sustainability.
What are the top six take-away messages from this book project?
Industry stakeholders and regulatory institutions have a pivotal role to play in the decarbonization of energy systems globally. Also, energy policy instruments and documents that are decades old would need to be revisited to ensure that the pathways, tools, and incentives required for a just and reasonable low-carbon energy transition are coherent, comprehensive, and accessible
Understanding the trade-offs as well as the costs (including the 'opportunity cost') and benefits of the various pathways is useful in making informed decisions. It is also important in enhancing the full range of decarbonization technologies such as power-to-gas, renewable natural gas facilities, hydrogen-compatible networks, Carbon Capture Utilisation and Storage.
In a global context, international investment law has a role to play in acting as a catalyst for human and economic development in countries that will host several essential multinational and cross-border low-carbon energy investments and projects.
Equity and fairness implications should be factored into the process of decarbonization, especially in setting a price for carbon emissions.
Regulatory and policy instruments such as feed-in tariffs or premiums, renewable portfolio standards for utilities, tradeable green certificate schemes, net metering, tax rebates, and capital grants have a considerable impact on easing the upfront costs for development and installation of renewables energy projects.
The transition to low-carbon energy and economic system presents considerable challenges for developing countries, it also presents unique opportunities in ensuring a sustainable path towards industrialization and economic growth. In some of these contexts’ gas-to-power systems, LPG or biogas for clean cooking and off-grid systems powered by renewable energy that meets the affordability and reliability criteria are poised to play significant roles going forward.
What is the significance of the "law-in-context" approach that the book adopts?
The growth in alternative energy sources such as renewables or schemes comprising distributed energy resources, energy efficiency, and demand response, etc. comes with peculiar regulatory and legal implications especially in countries or societies that hitherto rely extensively on hydrocarbons and the systems that come with such reliance. Hence, the approach adopted in this research project is to examine such energy transitions and decarbonization issues in the context of (i) highly industrialized and developed economies such as the US, EU and Australia; and (ii) resource-rich developing countries such as Nigeria, a major emerging economy such as China and region such as and Southern Africa, who hitherto relied mostly on conventional energy systems and hydrocarbons.
.As the costs for renewables fall, how will the trend impact progress in reducing energy-related greenhouse gas (GHG) emissions?
Mostly due to decreasing upfront costs, more than 48% of the world's additional electricity generation capacity in 2018 came from renewables. Even though renewables currently account for about 25% of global electricity output, protections for Sustainable Development Scenario (SDS) in energy suggests the need for sustained annual growth in added renewable energy capacities of 7% from 2019 to 2030 in other to meet the required decarbonization objectives for the SDS scenario. There is also the need to develop the required regulatory and institutional frameworks to facilitate the efficient integration of a growing array of alternative energy resources (which are often intermittent and variable) with existing networks (see my recent presentation the topic and the ongoing project on "renewable energy integration, decarbonization, and power-to-gas" at the Vermont Law School's Institute for Energy and the Environment). The project currently involves working papers on (i) energy transitions and the nexus between resources, institutions, and operators; (ii) Hydrogen-compatible networks and renewables; and (iii) siting and access to transmission networks.
What is the significance in Southern Africa, specifically, of downstream energy affordability and universal energy access?
A significant proportion of oil and gas discoveries over the past two decades are from the region e.g. South Africa, Tanzania, and Mozambique, while traditional biomass and
coal have plaid a major role in energy supply in the region’s Southern African Development Community (SADC). Furthermore, the region holds a substantial portion of the raw minerals necessary for meeting most of the global clean energy, storage, and renewable energy project goals. For instance, the Democratic Republic of the Congo accounts for two-thirds of global cobalt production and South Africa produces 70% of the world’s platinum. So, the region is very significant in the discussion of global decarbonization and a just energy transitions towards the evolving sustainable development scenario. The region’s policy and decision-makers will need to engage in strategic thinking on future energy investments, and seriously consider developing local market and economic potentials, transparent resource revenue management and efforts to diversify economies. National institutions, private corporations, and organizations that see the abundant energy and natural resources as a means of creating local value and economic growth rather than a means of earning foreign exchange will need to be developed. Additionally, mini-grids and systems that can bring reliable and clean energy sources to rural and growing urban areas in an affordable and cost-efficient manner will also be key. A comprehensive energy transitions policy roadmap for the region should also include a robust legal and regulatory framework for addressing the negative impacts of increased mining and energy resource development on the environment.