Energy Security, and the Economic Realities Driving Clean Energy Policy in Portugal

by Devin James Benavidez

Leaders in Portugal have taken the initiative to reduce their country’s dependence on fossil fuels and harness its multifarious sources of clean energy. Five years ago, Portugal received only 17 percent of its electricity from renewable sources, but through aggressive national policies, that number has risen dramatically.  According to a report done by Eurostat, close to 45 percent of Portugal’s electricity will come from renewable energy sources in 2010. Lacking domestic reserves of traditional fossil fuels such as oil, coal, and natural gas, leaders in the Portuguese government took advantage of the opportunity to produce energy domestically. Harnessing Portugal’s abundant sunlight, wind, and hydro power, leaders in Portugal have established a paragon of large-scale clean energy production. They have also effectively demonstrated that a clean energy transition can be achieved in a relatively short period of time.

Portugal has focused primarily on expanding their wind and hydro power production, but has also worked to facilitate the growth of solar power and has made strides to promote the development of wave power capacity. Portugal was situated in a strategic position to become a leader in renewable energy policy because it has vast untapped resources of cost-effective sources of clean energy like hydro and wind power. The Portuguese government began this transition toward a more sustainable energy infrastructure in 2001 when it launched a new energy policy called the E4 Program (Energy Efficiency and Endogenous Energies). This program consists of a set of multiple, diversified measures aimed at promoting a consistent, integrated approach to energy supply and demand. Government officials claim that this energy transformation has not led to an increase in taxes or public debt because the new technologies, which require no fuel, have replaced systems that required the purchasing and importing of natural gas and oil.  

Portugal is not the only European country taking great steps forward in fostering the development of clean energy production. According to a recent report done by IHS Emerging Energy Research, an energy consulting firm from Massachusetts, Ireland, Denmark and Britain are also on track to get 40 percent or more of their electricity from clean sources by 2025. The lack of naturally occurring fossil fuels in Europe combined with the European Union’s emissions trading system, which penalizes industries for excessive CO2 emissions, have made renewable energy in Europe a viable and cost-effective option. The energy policy shift in many European countries toward using domestic sources of energy alleviates, at least modestly, the need to import oil and natural gas from abroad. This will ensure a more secure and stable energy supply for Europe in the future.

By 2020, Portugal hopes to reach its goal of obtaining 60 percent of its electricity, and 31 percent of its total energy, from renewable sources. Although the aggressive clean energy policies in Portugal have been driven largely out of economic necessity, the clean energy sector currently provides jobs for tens of thousands of people. In addition, some of Portugal’s largest clean energy companies have become global players, including EDP Renovaveis, the third largest  company producing wind-generated electricity in the world. Portugal’s aspirations for abundant domestically produced clean energy has established an influential framework that can be used to inspire other countries to consider aggressive clean energy policies of their own.  

Devin Benavidez is a Research Intern at Bridging Nations in Washington, D.C.

Producing Clean Cars as Extensively as Mobile Phones

By Jinping Huang; translated and edited by Yan Liu

The eruption of Eyjafjallajökull in Iceland did not stop CEOs of European auto corporations from attending the 2010 Beijing International Automotive Exhibition (Auto China 2010). Under the slogan “For a Greener Tomorrow,” ninety five types of clean-energy cars—approximately 10 percent of the exhibition—came under the spotlight in April 2010. Automakers seemed to be sending a clear message: applying renewable energy technology in the auto industry is an easy task.

Source: Global Times

As Common as Cell Phones?

“Like mobile phones… previously only the rich were able to afford them, now everybody has one. Clean-energy vehicles will follow the same path,” said Nanshao Xu, the VP of the Research Department at Lifan Group—a Chinese automobile manufacturer.  

Best known for its motorcycles, Lifan was the most surprising exhibitor at Auto China 2010. Without any prior notice, the company presented two electric cars. “Many people make a lot of noise before taking action, but Lifan has a different style: we talk after we meet our target,” said Lifan’s sales manager. A month ago, Lifan had produced a small number of electric cars and donated them to Shanghai’s police force for Expo 2010.

This new product was the result of a joint effort between Lifan and the Chinese Academy of Sciences. The power system came from the Academy, the control system was designed collaboratively, and the battery was purchased from a domestic maker. The entire process took only one year.

Source: infzm.com

Nanshao Xu indicated that Lifan would establish its own taxi company with 100 electric cars in Shanghai and Chongqing, as a preparatory step before such products enter the real market. When these electric vehicles prove reliable, production will extend to meet private demands. 

Lifan’s production schedule was almost synchronous with Beijing’s policies. In early 2009, China’s State Council released a plan that would increase the number of clean-energy vehicles to half a million by 2012. That is about 5 percent of all cars in China. By 2020, the proportion is supposed to rise to 50 percent.

Another big surprise was Hunan University’s Technology Garden LLC. They presented a self-designed electrical car as well. The University’s President, Zhihua Zhong, is one of the two automobile experts at the Chinese Academic of Sciences. He has always been an advocate for domestic innovation.

Additionally, with approximately $300,000,000 dollars, the Beijing Automotive Industry Holding Co. Ltd. has established an industrial area in Beijing’s suburbs. By 2012, this area is supposed to be capable of producing 500,000 electric cars annually.

Regionally, Guangdong Province released its own plan regarding electrical vehicle development in March 2009. The plan explicitly listed the region’s automobile industry as a “new strategic” sector. By 2015, Guangdong is supposed be capable of producing 200,000 electrical cars annually.

According to a report from Roland Berger, the gross production of China’s electric car market will exceed 10 billion Euros ($13.6 billion) by 2020.

Fake Clean Cars or a New Path?

In June 2009, the Chinese government issued a law stipulating that only manufacturers with “core technology” will be issued the certificate to produce clean cars. Most Chinese automakers, however, lack the expertise in producing reliable batteries and have to purchase them from abroad. This is not an embarrassing fact since most automakers in the world lack such knowledge and skills. Only a few Japanese auto companies are able to produce their own batteries.

China has started to invest in car energy research (source: Qipei.com)

In October 2009, the Chinese media covered a scandal involving “fake” electrical cars. These vehicles ran not on renewable energy, but on lead-acid batteries. On the one hand, although these cars were poorly designed and short of safety measures, they more or less reflected China’s demand for clean-energy cars. On the other hand, this case indicated that producing electric vehicles could be a simple process. Cars that run on lead-acid batteries may set the stage for more advanced electrical cars in the future. This strategy has been practiced by ZENN, a Canadian automaker that had started with cars powered by traditional batteries and, after taking root in the market, decided to research new power systems.

Joint products—Chinese clean cars with foreign power system—might eventually challenge the role of traditional cars. Yongyuan Automobile, a Chinese firm, has collaborated with ZAP (U.S.) and exhibited their most recent product ZAP Taxi at Auto China 2010. With Yongyuan producing the body of the car and ZAP the power system, the production process took slightly over a year. These mixed products will be introduced to California’s car rental market.  

Source: JRJ.com

A study shows that without the price factor, 75 percent of Chinese consumers would like to purchase electric cars. Other consumers expressed concerns regarding the reliability of the new technology, especially in terms of battery charging. In response, several Chinese manufacturers have started investing in replaceable batteries.

Between the Exhibition and the Road

Multiple exhibitors expressed interest in future government subsidies. They believed that subsidies were the key to the growth of the clean car market.

“Like mobile phone batteries… without a market, battery won’t reduce in size, the price won’t fall. The only way to spread renewable-energy cars is through the market. When the market is mature, government subsidies will become unnecessary,” Nanshao Xu said.

Yet, long before the coming of national subsidies, local governments had found various ways to support clean car manufacturers. In June 2009, the city of Chongqing established a subsidy for private consumers that totaled $6,000.

In spite of that, private purchases were rare. In 2009, China’s manufacturers sold fewer than 300 clean cars, whereas total nationwide car transactions numbered 1,360,000.

                                              

As a matter of fact, aside from lead-acid batteries, most other batteries for car use are still under development. That is to say, the production level of clean cars will remain limited in specified regions and under certain conditions. China’s clean-energy auto industry is still a test.

Additionally, although automakers will eventually find a way to produce electric cars as extensively as mobile phones, consumers won’t be ready to purchase them with the same level of confidence as they buy cell phones.

In January 2010, a Boston-based consulting firm reported that the production cost of car batteries won’t fall rapidly within the next ten years. Electric cars will remain expensive to the majority of consumers. The report predicted that between 2009 and 2020, producing a battery for GM’s Volt will cost 64% less than its current level, that is, a gradual fall to $10,000. Yet, it may still take 15 years before the price of clean cars becomes comparable to that of traditional cars. 

Yan Liu is a Program Coordinator at Bridging Nations. This article was written in Chinese by Jinping Huang. Click here to read the original article.

Biofuels: Environmental controversies, political risks, and economic gains

by Lin Sun Oo


The resurgence of biofuels as a source of alternative energy is certainly not short of controversy. Advocates of biofuels argue that it is a potential replacement for petroleum. Opponents of biofuels have argued that the poor will further be marginalized when agriculture steers away from food to fuel the energy needs of developing countries. The environmental impacts of biofuels have been argued on both sides of the spectrum. Proponents argue that biofuels help in mitigating climate change by replacing carbon emitting fossil fuels. However, environmentalists have stated that biofuels could lead to the loss of topsoil. Certain environmentalist have expressed concerns over the  water intensive agricultural practices, use of pesticides, and the negative effects of large scale agriculture that biofuels could cause to an ecosystem. The benefits and disadvantages of biofuels have often been compared with its performance to petroleum. Biofuels are a leading candidate to replace petroleum as a renewable source of energy for transportation. As such, a historical exposition of the battle between biofuels and petroleum would help us to understand the controversies, political risks, and economic gains of biofuels.

Biofuels were once touted as a potential contender to petroleum during the infancy of the automobile industry. As the automobile industry matured, petroleum became the preferred choice for fuel. Several political, technological, and economic factors favored petroleum over biofuels. Government incentives, subsidies, and encouragement from political actors had aggrandized the oil industry to ensure that petroleum was the leading source of fuel for the automobile industry. Technologically, the extraction of oil provides more than just petroleum for automobiles. Petroleum based products are versatile and have been used extensively in products ranging from household items, commercial retail and industrial products. Economically, petroleum as a fuel source provides a higher yield of energy return on invested (EROI). Currently, petroleum plays an integral role in world energy consumption. In the United States, the Department of Energy indicated that 37.4% of energy use is derived from petroleum. In comparison, renewable energies such as biofuels only account for about 7.3%.  The oil crisis of 1973 and the resulting scare over energy security placed biofuels back into discussion as a means to offset heavy reliance on oil from the Middle East. In discussing alternative energy solutions, agriculture dominant regions favored initiating more biofuels projects. Political advocates promote biofuels under the banner of energy sovereignty and economic growth of fuel through agriculture. 

                          Image Source: BBC News

The introduction of first generation biofuels drew criticism over the use of feedstock such as grain that was being used as a fuel source and diverted from food consumption. With an increasing population concerns were expressed amidst the shift of food products over to fuel. The first generation biofuels projects were seen as diverting critical food sources from marginalized populations to fuel the energy needs of expanding developing countries. Moreover, environmentalist argue water intensive large scale agricultural projects for biofuels will cause an decrease access to much needed ground water, increases the loss in topsoil, and destroy native ecosystems as countries find biofuels more profitable and decide to expand. With opposition over the use of food crops as feedstock, the second generation of biofuels concentrates on non food crops such as algae, waste biomass, and cellulosic biofuels. Despite criticism and concerns over environmental impacts, ethanol has gained popularity among political actors looking to increase energy sovereignty.

Widespread mandates in various countries have increased the use of biofuels in a range of measures. Brazil produces 3.2 million gallons of biodiesel fuel per year. As such, Brazil meets 17% of its transportation needs from bioethanol. Biomass feedstock in the biofuels industry of Brazil consists of sugar cane, soy beans, and castor bean. Similar to initiatives introduced in Brazil countries such as China, Australia, the European Union, and the United States have taken various legislative initiatives to increase the use of biofuels. EU countries have targeted an increase in biofuels to 20% of the market share for energy production by the year 2020. In the United States, the 2007 Energy Security and Independence Act allowed for the use of 36 billion gallons of biofuels by 2022. Currently about 10% of ethanol is added with standard gasoline in the United States. In Europe similar programs have been mandated for the expansion of biofuels, such as ethanol, in public transportation and at the fuel pumps.

Despite the increase in biofuels programs worldwide, environmental concerns still remain a crucial test for biofuels as a renewable energy alternative. Despite introducing non food crop feedstock for biofuels sources, water pollution, and loss of forests have been a huge factor in environmental opposition for an increase in biofuels. Environmentalist argue that burning down forests, and destroying native ecosystems for agricultural purposes could potentially create more green house gases than gained through biofuels. Despite potential for energy security, environmental concerns, and food security will remain a critical obstacle for the biofuels industry to overcome. Sustainable biofuels such as jathropa, switch grass, and algae are still in their infancy. If they are going to develop, greater subsidies and research are needed to make biofuels more economically viable for public consumption. Until then, opinions over biofuels will vacillate between a blessing and a controversy.


Lin Sun Oo is an environmental policy research intern at Bridging Nations in Washington D.C.