The Political Economy of Renewable Energy and Energy Security

Energy issues are at the forefront of the political discourse as never before. In a world of $100-per-barrel oil, potential peak oil, and with climate change looming ever larger on the horizon, there is an obvious need for a fresh and critical look at energy politics. The idea of this book, stemming from a conference on renewables and energy security in Japan, East Asia and Norway, hosted by the Japan Program at the Norwegian University of Science and Technology in 2011, has been to blend not only perspectives on renewable energy and energy security, but also those of the natural and the social sciences. Building on the conference, this book has developed into a volume on renewables and energy security in Japan, China and Northern Europe. It offers a distinctive blend of theories, methodologies and geographical cases. One of its cornerstones is the notion that energy security and renewable energy, while often treated as distinct in the general literature, are inextricably linked. Blending perspectives of the natural and the social sciences has also been important. Too long has the field of energy been dominated by a discourse of technical problem-solving. But few areas are now more political. Energy is becoming a strategic resource to an extent that we have not seen since the 1970s oil crises. There is growing concern that energy is not just another tradable commodity in a smoothly functioning and apolitical and global liberal market economy, but that in the future its abundance and ubiquity cannot be taken for granted.

Energy (supply) security has always been a major security concern of Japanese governments, both before and after WWII. Securing access to raw materials and oil, for instance, drove Japan into WWII. As the third-largest economy in the world, the fourth-largest energy consumer, the third-largest oil consumer and importer, the second-largest coal importer as well as the world’s largest LNG importer (already before the Fukushima nuclear catastrophe in 2011), Japan’s lack of domestic energy resources, has determined the country’s energy policies domestically as well as driving its energy foreign policies abroad. The expansion of nuclear power since the oil crisis in 1973–74 is the result of Japan’s heavy dependence for oil and LNG from the Middle East, which accounts for almost 90 percent of its imports.

Ever since Japan began industrializing in the late 19th century the country has lacked sufficient energy resources to meet its needs, a situation that continues to this day. Starting in the 1960s, and especially since the oil crises of the 1970s, Tokyo has promoted nuclear power as the primary means for enhancing Japan’s energy security, along with efforts to increase energy efficiency. It is widely recognized that the Great East Japan Earthquake of March 11, 2011, which triggered a massive tsunami and a major nuclear accident, undermined this strategy. This in turn provoked a national debate over Japan’s energy policy, especially the role of nuclear power versus renewable energy in supplying electricity.

In less than two decades, China has gone from being a petroleum exporter (1992) to becoming the world’s largest net oil importer (2013). How has China adapted to its increasing reliance on imported crude oil and petroleum products, and what strategies has China developed to strengthen energy security by reducing its exposure to potential supply disruptions and sudden price rises? The Chinese government has combined security and profit considerations to minimize the risk that increasing reliance on imported crude oil, exceedingly high oil prices and oil supply disruptions will negatively affect China’s economic growth and domestic stability. China’s leaders have also developed policies to manage and minimize the risk that the commercial interests of China’s national oil companies (NOCs) would undermine China’s diplomatic and national interests. These strategies and policies are best understood as hedging.

The main goal of this chapter is to present recent developments in the Norwegian debate on energy security and to place this debate in a broader historical and geographical context. There are several factors making the study of the Norwegian debate on energy security an interesting undertaking.

The power of wind has been utilized by humans for thousands of years. Wind has been used to propel sailing ships, to mill grain in windmills and, more recently, for electricity production in wind turbines. The first experimental wind turbines for electricity production were installed in the late 1880s. These were not economical and, hence, were not considered a viable alternative to fossil-fuel-powered electricity production.

Strategies for reducing global warming have led to high expectations for the incredible potential of solar photovoltaics (PV) as a renewable energy technology, and research and development are proceeding in many countries. Japan is one of those countries, and was the world leader in the PV market through and after the late 1990s.

Electricity grids in Europe are currently undergoing numerous changes. New grid development projects are proposed everywhere. This is partly caused by the Renewable Energy Sources (RES) directive of 2009 that specifies national targets that all countries must achieve by 2020. In Norway the on-shore renewable share is already high — around 60 percent, but as an EEA (European Economic Area) country Norway has agreed to increase this share to 67.5 percent. In Sweden the target is 49 percent, but the government has published the ambition to reach a renewable target beyond 50 percent by 2020. As a consequence, a number of efforts are being made to stimulate renewables. From 2012, a joint certificate market has been established between Norway and Sweden and, for 2020, a target has been set of 26.4 TWh of renewable electricity production. The political commitment to be submitted in accordance with the RES Directive targets will be shared equally between Norway and Sweden, with 13.2 TWh each, but given the market orientation of the policy scheme the actual investment will be located where investors find it most attractive. There are a lot of opinions and much public discussion surrounding renewables (Toke, 2005; Wüstenhagen et al., 2007), but without well-functioning electricity grids, electricity will never reach the market. In the last few years, investments in the upgrade and development of transmission lines have notably increased.

As a newly emerging industrial nation with a large population, China has experienced rapid growth both in terms of economic output and energy consumption, especially during the last decade (Figure 10.1). Although China’s government, in its 12th Five-Year Plan, announced the goal of keeping annual economic growth rates below 7 percent (China’s State Council, 2011), energy demand is projected to increase over the next two decades, driven by a highly energy-intensive economy and by strong GDP growth (Cherni and Kentish, 2007).

Since the reforms started in 1978, the Chinese development model has been exceptionally successful in delivering growth, but it has also depleted China’s resources dramatically and has been based on the use of highly polluting fossil fuels. On a range of critical environmental parameters, China is now the world’s ‘biggest’ or ’worst’ and it contributes considerably to the decline in the health of the globe as well as of China and its people (Liu and Diamond, 2005). Effectively, the growth-oriented model, dubbed the ‘China model’,¹ which has been pursued during the first three decades of reform, has become environmentally untenable. While the model has been hyped as a unique and successful approach to development,² it has gradually been realized that it needs to be more sustainable (Pan, 2011). Following years of criticisms of China’s environmental destruction from within and outside the country,³ new development concepts such as: ‘science-based development’, ‘sustainable development’, ‘green transformation’, ‘low-carbon development’, ‘circular economy’, and ‘green development’ are now being propagated by the Chinese leadership to move China away from the seriously ‘worn’ China model towards a more sustainable ‘green’ China model.

In 2009, the 15th Conference of the Parties (COP 15) to the United Nations Framework Convention on Climate Change (UNFCCC) in Copenhagen solidified China’s place as a pivotal player in climate-change negotiations. But with growing recognition of China’s new status came divergent views of its motivations. For some, China was trying to capture the reputational benefits from appearing on a global stage with other major powers, while refusing to cede ground on controversial elements of a future climate regime (Broder and Kanter, 2009; Hood, 2009; Levi, 2009). This chapter argues that playing global politics was not the only motivation for China to engage in climate negotiations. Rather, we maintain that China became more actively engaged in international climate politics for reasons related to domestic energy policies.

In the past decade, Germany has become the world leader in photovoltaics (PV) promotion via an aggressive national feed-in tariff (FIT) policy. This chapter traces the evolution of the German solar PV promotion policy since 1990, highlighting the major policy innovations implemented by German policy-makers. The chapter discusses the major design features creating investment security for the German PV sector: a purchase obligation for renewable electricity, cost-based tariff levels, priority grid access, and tariff degression. In addition, the chapter discusses the major policy amendments in 2000, 2004, 2009, 2010, 2011 and 2012.

This book looks at many different aspects of renewable energy and renewable energy policy. In the rhetoric of almost every country, energy issues, including the installation and phasing-in of renewable energy, have a high priority. Both for peak oil and climate reasons, credible alternatives to fossil fuels ought to have a bright future. We pretty much know that an energy transition, away from fossil fuels, must eventually take place. And still, despite a certain amount of policy convergence, if we look at the enthusiasm with which various countries have implemented renewable policies, we see major differences. This chapter suggests one answer as to why.

This book has attempted to bring together social science perspectives on energy security and renewable energy with engineering and natural science perspectives on energy technologies. The idea has been to combine deep insights about emerging energy technologies with analysis about the social impacts of these technologies. At the same time, technological diffusion and application are not simply a function of the technology itself. Rather than following a technological dynamic, the diffusion and application of technology often follows a social logic. This is especially the case with the energy sector, where pre-existing institutions, stake-holders, and ideas often have a powerful impact on which new technologies are adopted and which are not. This cross-national study has proven to be the idea vehicle for analyzing this dynamic. Although the technology available in China, Japan, and Northern Europe is essentially the same, the choices and adoption of technologies have varied tremendously among these countries.