Clean technology: what is the future of green energy?

Fiona Harvey

Guardian Professional

Despite predictions about the decline in the use of coal, there has been an increase in Europe, partly due to increased use of shale gas in the US which has lowered coal prices. Photograph: Greg Wood/AFP/Getty Images

The inauguration of the Sheringham Shoals wind farm on 27 September, off the coast of north Norfolk, marked an important milestone for offshore wind power in the UK and beyond. For the first time, the UK could boast more than 2GW of offshore generation capacity – more than anywhere else in the world.

Ed Davey, secretary of state for energy and climate change, hailed the opening as confirmation of the future direction of UK energy policy. "We believe that offshore wind power has a major role to play in the UK's future energy, and as more developments such as these come along, costs will come down," he said. "We need a diversified energy mix to keep energy bills down."

Sheringham Shoals also shows the direction of UK energy for another reason – its major investors were also present, accompanied by the Crown Prince of Norway. Statkraft and Statoil, Norway's national energy utility and oil company respectively, are estimated to be investing £1.2bn in the new offshore wind farm. This illustrates that the majority of the UK's investment in renewable energy is now coming from overseas, including Norway, Denmark and Germany. It also reflects, in part, the nature of the UK's energy market, where the majority of the big six energy suppliers – Eon and RWE of Germany, EDF of France and Iberdrola of Spain, which owns Scottish Power — have overseas origins.

Christian Rynning-Tønnesen, chief executive of Statkraft, said the UK was a particularly attractive area for investment in renewable energy because of its large wind resource – about 40% of Europe's wind capacity, according to estimates – but also its regulatory regime. "We find the regulatory regime provides enough incentive – but not too much – to make it viable to site offshore wind farms here," he told the Guardian.

He said: "We are actively seeking new sites for offshore wind projects." But he added: "If we cannot find any projects that are suitable, we will invest elsewhere."

The future growth of clean technology

Rynning-Tønnesen's words are likely to cheer investors in offshore wind in the UK, who have been under some pressure in recent months because of political rumblings from the rightwing of the UK's coalition government against the subsidies accorded to wind power. But they also underline the political risk attached to renewable energy investment in the UK.

Clean technology is growing in the UK – about 80% of the UK's top new infrastructure projects can be classified as "green", according to the Labour party. But the UK's clean technology industry is acutely aware that future growth is not guaranteed – it depends on government policy, investor appetite and the continued reduction of costs.

Gaynor Hartnell, chief executive of the Renewable Energy Association, says: "We need a consensus across the political spectrum in favour of renewable energy, and that will unleash investment and jobs."

Around the world, clean technology investment is still strong, despite slowing economies even in powerhouses such as China. In 2011, according to the Global Wind Energy Council, more than half of the global market for wind power installations was accounted for by China and India combined, with China taking about 43% of the market.

Beyond China and India, other nations are eager to catch up on clean energy. South Korea, for instance, recently became world leader in tidal power – a technology in which the UK had hoped to be a pioneer – with a new tidal farm capable of supplying energy to 500,000 homes. Its first offshore wind turbines have also begun generating, and the country, which has a wide variety of suitable locations, hopes quickly to become a world leader in this technology too.

Connie Hedegaard, the European Union's climate change commissioner, characterises the drive for clean energy as a competition between Asia, including China, India and their neighbours, and Europe. "China is moving ahead very rapidly on these technologies," she says. "Europe must not fall behind, and that will take effort from governments and industry."

A new lease of life for fossil fuels

But it is a race not only among countries, but among a variety of different fuels and technologies. Jeremy Leggett, founder of the solar technology specialist SolarCentury, is a former oil expert turned clean technology evangelist. He warns that fossil fuels have been making a comeback around the world, amid the recession and a newfound abundance of fuels such as shale gas. "Society currently allows the carbon fuel incumbency – the coal, oil and gas companies, their bankrollers and their institutional supporters – to get away with a deeply dysfunctional defence of their narrow short-term interests," he says.

In Europe, according to the International Energy Agency, there has been an increase in the use of coal in the past year, in defiance of long-term predictions of its decline. The resurgence has been partly the result of the US moving away from coal towards shale gas, which has lowered prices for coal, but also because of low prices on carbon within the European Union's emissions trading scheme.

The EU ETS was supposed to encourage a move away from high carbon fuels such as coal, because under the scheme companies are allocated a quota of greenhouse gas emissions and must pay for extra permits to produce more carbon. This should benefit lower carbon fuels, such as renewables, and penalise coal.

But the recession has resulted in a large excess of cheap carbon permits on the market, which has made coal – the highest carbon form of electricity generation – more economic. So companies that had been preparing to put their coal-fired power plants out of action now see a new lease of life in their operation.

There could be few clearer indications that the future of energy supply in Europe and around the world, and of clean energy in particular, are determined as much by governments and their policies as by the companies involved.

Source: Guardian