Climate change on Earth is a global problem. Recognizing this, countries have convened for several climate conferences. The best known and most important conference was surely the Kyoto conference. At this conference, countries agreed to climate goals, which mainly targeted CO2-emission reduction. China agreed and committed itself to this goal on the 30th of August 2008, at the climate conference in Nigeria.
All three big players have action plans in place to work toward these agreed-upon goals. However, all three countries are struggling at the present time to achieve these goals. In all three countries, there are economic problems to implementing their action plans. Why do we have this situation?
The three countries are working toward the same goal: to reduce CO2 emissions, but the ways in which they are implementing their actions are different. These different ways are economically interfering with each other’s actions. This is almost inevitable as it is not only the climate but also our economy that is global. To achieve the global goal of CO2-emission reduction, these three countries need to align their actions toward their common goal.
One example of how one country’s actions hinder that of others is the development of hydropower in China. In China’s Three Gorges Dam project, only Chinese or Chinese-affiliated companies were allowed to invest, a restriction that is still in effect today. Similarly, biddings for wind power parks are shaped in a way that foreign companies have nearly no chance to participate. This kind of protectionism prevents globalization of business. Former market leaders in the wind power business, like Vestas or Gamesa, are not really playing an important role in China and are now struggling economically. Meanwhile, the Chinese wind power industry has picked up technically, even though the bad economic situation of the market leaders has blocked their development activities. Due to this situation, the progress in wind power development is very slow at the present time.
Even worse is the situation for photovoltaics. Without an internal market, Chinese companies have developed a large capacity for photovoltaic production and exports with the help of government investment. Photovoltaics is a very young technology and is just at the beginning of development. A lot of research and development is still necessary in this field. Due to the large supply in China that has no market, prices have dropped so quickly and dramatically that the advanced European solar industry has no chance to develop further.
China built up its photovoltaic industry because countries like Germany have invited its business, due to comfortable subsidies for photovoltaics provided through EEG law. Development speed in Europe has been slow and the economic straightness of the European companies was pure, because the situation with the EEG has been too comfortable.
In the US, the big energy producers have been blocking the development of renewable energies because they are trying to protect their historically-grown business models and power plants. However, in the end, the low cost of Chinese photovoltaics has destroyed the photovoltaic industry in the US as well. To prevent a complete loss of the photovoltaic industry, the US has implemented high customs duties against Chinese photovoltaic products.
This short description shows that we cannot reach the global goal for CO2-emission reduction if we do not align our economic policies, for production and development of renewable energies.
All the above described protectionism has had at least one positive effect: The prices for renewable energies have dropped dramatically. Currently, renewable energies are already very close in price to fossil and nuclear energies. But now is also the time stop protectionism in the fossil and nuclear energy industries. These industries are, at the present time, not really concerned with the consequential costs they cause. Policies and legislation should immediately begin charging the fossil energy industry for the damage fossil energies do with their CO2 emissions. Moreover, nuclear waste storage has still not been resolved. If we charge the fossil and nuclear energy industries immediately for their consequential costs, they are becoming a price, which we also achieve with renewable energies.
This situation would give us the chance to stop all protectionism and provide subsidies for renewable energies. In such a situation, the global market mechanism could be applied. This would pave the way in the future for renewable energies and quick CO2-emission reduction.
It is not the missing grid or the development of energy storage possibilities; it is the missing economic environment that slows down the development of clean energy production.