How to create an energy miracle

The last decade in energy and climate affairs evokes mixed feelings.

On the one hand, it has been a time of alarming events. Unstable prices and growing global demand intensified competition for energy resources. Economic crises, the power of monopolies and a denial of humanity’s impact on the climate combined to thwart technological advancements and a major diplomatic breakthrough. No wonder that climate conferences were failing and warming remained uncontrolled.

When the global economy recovered, billions were put into disputable and uncoordinated schemes to support energy production and consumption. States kept imposing diverging rules that hurt their economies and distorted competition instead of stopping waste of resources and creating unified European subsidy principles. Public spending which was aimed at “breaking the ice” in fact prevented changes with little merit and large burden on the consumers.

At the same time natural shift to innovative energy solutions, including the reduction of the cost of renewables was slow. Climate change-related obligations went unenforced, as oil and gas monopolies got even stronger. Traditional energy infrastructure that connects markets remained underdeveloped. Energy was repeatedly used as an instrument for the “divide and rule”, “punish or reward”, “blackmail or bluff” policy in international relations. Even the related global consequences – growing global extremism and increasing migration – did not inspire a breakthrough. A low-carbon, reliable and depoliticized energy sector remained a dream in the overwhelming majority of states.

American shale, Chinese solar panels

On the other hand, over the last five years things got changing. American shale caused a revolution in energy geopolitics: dependencies that seemed perpetual vanished nearly overnight. The EU states and supranational institutions took the decisions that helped to solve the problem of “energy islands” - isolated and inefficient energy markets - and reject the consumption of coal, replace considerable portion of fossil fuel with saved energy and renewables. China turned from the key oil, gas and coal importer and the biggest carbon emitter into the world’s largest solar panel maker and exporter.

Governments in the entire world realized that goals related to climate change prevention could boost, not impede, economic development. As renewables became competitive, economics (not politics, fears or beliefs) started to change the prevailing rhetoric from “should be done” to “will be done”.

Nevertheless, much is left to accomplish if nations want to integrate renewables into the grid, ensure reliability of service and prevent irreversible processes related to climate change.

From fossil fuels to renewables in Lithuania

In the Baltic Sea region, in a very short period we have shifted from almost complete dependency on fossil fuels and single suppliers to the position where we can choose the source, supplier or even opt to produce energy instead of only consuming it.

Lithuania has reached a stage where energy production from renewables accounts for more than half of the whole electricity and heat production. In 2016 we will double the installed capacity of wind energy and expand our biomass exchange. Electricity interconnections that we built with Poland and Sweden will solve the problem of reliability – so crucial for energy production from renewables.

However, these achievements are not a miracle: they were a low-hanging fruit from a tree that we had successfully planted. We cannot build our future on the centralized provision of fossil fuels (even if they are cheap). Nor can we trust energy that is intermittent and survives only through subsidies. Therefore we will support innovations that will enable considerable energy savings and entrench the consumption of clean energy.

At the final stage, fossil fuels must be replaced, emissions downsized, the consumer satisfied and climate change prevented. Downsizing the costs of clean energy is the first task if governments, business people and scientists want this dream to come true. In this regard, the existing constraints will be gradually removed if, or when:

1) Available energy infrastructure is fully employed. In the Baltic Sea region, we reached a consensus on priorities and adjusted the legal framework; we built interconnections and LNG (Liquid Natural Gas) terminals; we invested into market instruments, secured a reliable supply and energy independence. All of this should contribute to citizens’ welfare, not increase the burden on them. But for this, we need management innovations to follow infrastructure development: consumers finally need to be treated differently, and their interests must become a priority.

2) The momentum of global and regional political consensus is not wasted. Political support for the next “energy transition” and climate change prevention is higher than ever before. Therefore, each state, industry, citizen must get the best from the EU Energy Union and COP21 accords. Shifting subsidies from one type of energy to another is not a solution. National laws, action plans and projects must be developed, but they will be accepted (not bypassed) by consumers only if effective and affordable technologies are in place. Therefore,

3) More finances must go to R&D. There is a need to double and even triple investments into research and development that promotes effective energy consumption and the expansion of renewables. We do not expect a fall in energy consumption so we need innovations that not only make energy supply secure, clean, reliable, and affordable but also provide a new impetus for the industry. With increased financial focus we must change the situation where much-needed energy start-ups are almost non-existent compared to those in IT, telecommunications or pharmacy.

4) More ambitious plans and roadmaps are set. The outline, politically agreed upon, is perfect but not enough. Postponing the toughest work to the next generation is unacceptable as results may simply come too late. Therefore, voluntary obligations must be achievable but at the same time legally binding and ambitious from the very start. Free-riding must become detrimental even if states or industries think they are “so poor” or “so small”, or “so strategic”. On the other hand, balance should be kept: targets must be set with responsibility, meaning that commitments are based on scientific calculations, modeling and simulations.

The power of making miracles is in our hands. Let’s hope that with scientific research, investment in technologies and political commitment, we will manifest a new miracle in the nearest future.

Author: Dalia Grybauskaite is President of Lithuania. She is participating in the World Economic Forum’s Annual Meeting in Davos.