To enjoy growth and expansion while maintaining its competitive edge any business requires a reliable and affordable supply of energy. Historically, fossil fuels have fulfilled these criteria but non-renewable energy resources are becoming increasingly depleted. In addition, as their supply becomes increasingly more unreliable the need for industry to diversify its energy sourcing practices is becoming ever more apparent.
Put simply, fossil and nuclear fuels by definition will eventually run out whereas renewable sources by definition will not. Little wonder that, Fossil fuels are slowly, but progressively being phased out as solar and wind power become the primary drivers behind successive renewable directives and policy statements.
For example, EU Directive 2009/28/EC mandates that all member states derive 20% of their energy from renewable sources by 2020. Within the EU, member states such as Germany and Sweden have pledged to be carbon-free by 2050, whilst the 100 biggest companies in the world have pledged to meet all their energy needs from renewable sources by 2020. Globally, Peru plans to derive 60% of its energy by renewable means by 2025. In addition, Chile is looking to double its renewable portion to 20% by 2025 with (perhaps ironically), the mining sector being a principal customer of the country’s burgeoning renewable energy industry. Furthermore, almost 150 countries have some sort of pledge or renewable energy target, with a further 50 embracing pledges to be completely carbon free by 2050.
As if to nail the point home that renewable energy is here to stay, over 100 countries have pledged to be carbon free by the end of the 21st century.
A Scottish Perspective
Scottish business in conjunction with the Scottish Environment Protection Agency (SEPA) will undoubtedly play a major role in enabling the UK to meet its renewable energy targets. Overall, utilising renewable energy is about providing energy security and while it is spurious to state the renewable energy sources do not have a negative environmental impact the potential for energy self-sufficiency in Scotland cannot be ignored.
For example, a recent SEPA report states that Scotland has the potential to meet 30% of the electricity needs of the UK if its wave and tidal resources were fully exploited. In late 2014, an article in the Scotsman based on analysis conducted by the worldwide fund for nature (WWF) put the argument for renewable energy with eminent succinctness. Almost 985,000 megawatt hours (Mwh) were generated by wind turbines in October 2014. This represents the possibility of providing electricity for every home in Scotland (some 3 million residencies), with plenty of capacity spare.
In the same month buildings with solar panels fitted were able to provide up to half their demand for both electricity and hot water. It is important to state that renewable energy is not an energy panacea and such figures do not consider the role of transport in energy security. However, it seems that the business case for embracing a renewable portfolio must be considered as a serious proposition at the very least.
Economic benefits of renewable energy for Scotland
Taken as a whole, the Scottish economy is worth an estimated £60 billion annually. Thus organisations including SEPA are committed to working with Scottish business and industry under the auspices of the Climate Change Scotland Act of 2009, to ensure that the negative impacts of climate change are kept to a minimum.
The reality is that if left unchecked climate change will have severe impacts on the Scottish economy, its environment and population. The figures mentioned above are the energy equivalent of 1 billion barrels of north sea crude oil per year which represents a carbon dioxide (CO2) saving of over a billion tonnes by 2050. As of 2015, SEPA is in direct regulatory control of almost 8000MW of installed wind-generated electricity with a further 2600MW coming from hydroelectric power and the balance coming principally from solar electricity.
Little wonder that Scotland as a nation has real potential to reduce its carbon footprint by anything up to 50% by 2020, with all the inherent economic and financial benefits of doing so. Overall, figures from SEPA state that Scotland has doubled its power output from renewable sources since 2007 and as of 2014/5 approximately 12,000 full-time jobs are filled across the nation. In addition in 2013 alone over £1Billion was invested in the Scottish economy through renewable energy initiatives. Finally, opinion polls consistently express the view that renewable energy is supported by the population and is bringing in long-term economic and environmental benefits.
An international and financial perspective
The International Renewable Energy Agency (IRENA) is an international body that as an absolute minimum seeks to foster dialogue and solutions between providers and users of all forms renewable energy. Their research indicates that if global business doubled the size of its renewable portfolio to about 40%, the worst aspects of climate change may well be avoided. There would be long-term financial and economic benefits of doing so. Research outlined in the Guardian in late 2013 suggested climate change is wiping billions of dollars off global GDP, and if nothing is done then the global business community can expect to see its assets continually decrease in value.
The research estimates that the cost of climate change and air pollution combined will remove 3.2% of global GDP by 2030. Additionally, IRENA asserts that this kind of switch to renewable energy could save up to £500 billion per year by 2030. If such savings were effectively monetised and transferred through the global economy, they could become cheaper than fossil fuels. In terms of jobs and sustainability, almost 6.5 million people are employed in renewable energy around the world. If the above doubling were to happen by 2030, over 16 million people could find they have long-term employment in the sector.
Currently, 7 million people are employed in coal mining around the world, and so the potential for a transition to long-term sustainable jobs and economic stability should be obvious. Finally, under the umbrella of the UN climate summit called by Ban Ki-Moon called for 2015, over 350 global investors with a portfolio valued at over $24 Trillion have called on world leaders to provide a framework that will ensure stability and reliability in carbon pricing as well as contraction and convergence protocols. The aim is to facilitate the redirection of investment into renewable energy as a whole and remove the $600 billion annual subsidy that the fossil fuel industry currently enjoys.
In conclusion, the strands of argument presented above indicate that the renewable sector will enjoy sustained growth and as technology improves this is a trend that can only continue.