A Journey to Energy Sustainability

With each passing day, sustainability plays a more important role in our existence. We're realizing our socio-economic activities can not continue to grow in their current form because of the impact it has on the environment, deeply affecting - if not threatening - our quality of life and the rules of our markets. We need to correct the path. This is particularly true in the energy sector, perhaps the biggest player in the modern game, where sustainable policies and solutions have been gaining great importance over the last lustra.

In light of all this, European Energy Review has decided to disrupt itself. EER will take a radical turn reshaping our publication to reflect the most important developments in the world of energy: the shift from fossil resources to renewable energy technologies, systems integration and innovation. To mark the transition between old style EER and our future sustainability-focused publication Elektor Energy, we've asked to Dr Alessandro Costa to give a broad overview of the road to energy sustainability.



Dr Costa is Head of Strategic Development and International Cooperation at the Venice International University. With a PhD in environmental sciences, Dr Costa established the Europe-China Clean Energy Centre in Beijing in 2010. In 2012 he started up the Enel Foundation, the research centre of the Enel Group. Since 2013, he has been a member of the Studies Committee of the World Energy Council. Join us in this journey toward energy sustainability, with Dr Costa as our guide.

We have witnessed a lot of changes in the energy sector in recent times. What is the link between those changes and the increasing awareness of sustainability issues?
When it comes to energy, it is often said we live in disruptive times. And this is certainly true, as we have seen many game-changers during the last 10-15 years. It is reasonable, however, to take a little tour on what the drivers and boundary conditions are of such a fast-paced dynamism. For this journey may give us some hints on why the global transition towards a cleaner energy setting is undeniably happening. And on why sustainability is, today, possibly the most trendy word coupled to the energy concept.

There are several theoretical definitions of energy sustainability. Which one should we adopt for our present journey?
Well, this abundance of definitions is linked to the empirical nature of the matter. For our purposes, the approach put forward by the World Energy Council serves well. According to the WEC, energy sustainability is the solution of the energy trilemma equation, that addresses three fundamental issues: ensuring energy security, reaching energy equity/affordability, while minimizing the impact of energy production/uses on the environment.
 

As, clearly, energy is the basic enabler for every human activity, taking this approach constitutes an interesting way to analyze how energy is actually entangled with corresponding socio-economic aspects. How this entanglement leads - or not - to sustainable development often depends on identifying solutions that do not necessarily decouple environmental protection from socio-economic prosperity. That is where I would focus to find best practices and disseminate them in different geographies.

Are there some major factors defining whereto energy sustainability has been moving?
Yes indeed. To my understanding, four distinct but interacting factors have been important in setting the stage, these are: the availability of green energy technologies and processes; the financial crisis and its aftermath - together with the declined oil price; the Earth Overshoot Day as a symbolic proxy of global environmental impact; and the revolution driven by the development of Information and Communication Technologies (ICTs).

You mean technology today is not the limiting factor in the push for sustainable development?
Quite much so. There are no doubts about the fact that renewable energy and energy efficiency technologies have been developing quite fast, especially in this millennium. A mere comparison over time of the performances – and production costs – of a watt of PV cells confirms such a statement. We can observe something similar when we look at the constantly growing variety and effectiveness of energy efficiency solutions available on the market. Or when we take a look at the technological development of wind turbines: bigger, better performing and more resilient than ever.

Are there multiple reasons for the adoption of renewable energy technologies? Or is the single driving force that they are a more responsible way of implementing our economic development, complying with environmental & climate legislation?
It is not just environmental awareness. As I have indicated before, the success of the technologies is the greatest when they manage to couple environmental compliance with socio-economic factors, like savings, earnings and employment. For example, energy efficiency solutions are as much about saving resources and costs, and fostering new jobs, as they are about environmental considerations. Renewable generation - especially wind and solar - clearly has the supplementary added value, that it needs a shorter time for its commissioning, from green field to market, compared to conventional plants, like coal-fired or gas-fired ones. Such a choice impacts business plans and market demand.  

Companies go where the market seems more promising. Or is there more to life than pure profit?
Companies are certainly not charity-driven, but particularly after the beginning of the international financial crisis, we noticed a widespread tendency in large private players to intensify their social commitment. For instance, and this remark is valid more generally as well, we have seen the progressively increasing involvement of the private sector in institutional initiatives, such as the Sustainable Energy for All program or the relatively new International Transport Forum’s Decarbonising Transport project: this unusual type of Public Private Partnerships (PPP) allows for private finance and expertise to better assist the implementation of the public-driven initiative. Moreover, we could observe several cases where the declining public expenditure on R&D has been backed-up by private actions. And this is particularly true in the energy sector, where corporate initiatives fostering the development of start-ups through the creation of either accelerating or incubating programs are well established. So, today it is not uncommon that when public finance is suffering, private players move in to lend a hand, at least in those areas of mutual interest, like innovation or social development, where such initiatives can consolidate the market or stimulate new ones.

Talking about stimuli, the creation of a market around new technologies generally receives a great boost by the adoption of specific subsidies and incentive schemes . There is no doubt this approach helped the dissemination of Renewable Energy Sources (RES) in many European states. But now such a bonanza seems over...
Unfortunately, while navigating through the aftermath of the 2008 financial crisis, several countries could not keep up with the intensity of public support and had to downsize them or quickly withdraw from them. Italy and Spain are two examples of how the season of generous PV incentives has quite abruptly come to an end. The contraction in the availability of finances that can be witnessed in many places, however, has not stopped the deployment of sustainable energy solutions. Investing in efficiency is still a reasonable, logical allocation when financial resources are not abundant: on top of what we've discussed so far, investing in RES looks like a good strategy in terms of increasing energy security in those areas that do not possess enough energy resources, a condition that applies to a good part of the European continent. In general terms, the return on investment expressed by this approach is correlated with the price of oil (and gas) and current low figures do not help showing the full potential of RES deployment. Still, every day more RES generation is moving towards grid parity, and I wonder what will happen when grid parity will eventually hit, a very interesting question posed by Ernst & Young in a publication earlier this year. For our continent I foresee in the medium term the arrival of technology neutrality in electricity auctions, similarly to what happens already in other parts of the world like Brazil.

You mentioned the symbolic value of the Earth Overshooting Day. Could you elaborate on that?
To some extent, the greatest disruption that occurred in our times was when we first realized we would not be able to match our economic growth with the carrying capacity of our planet anymore. This called for the need of finding a viable alternative to such a path, eventually embracing the quest for sustainable development, setting into motion the drive for a greener economy. Earth Overshoot Day is that moment in every year when we start to accumulate our ecological debt. When the anthropic consumption of the world's natural resources exceeds the Earth’s capacity to regenerate them in that very same year. Since it was first calculated in 1987 [1], when it was set on December 19, such a date has been constantly pulling back, reaching the threshold of August 8 almost 30 years later. This simple indicator shows the extent to which we need to reduce our impact on the environment. Energy production is definitely one of its biggest causes of environmental depletion, that is why the energy sector is a major target for environmental action, as reflected by international agreements as well as by local initiatives. The command and control approach has been proven to be more effective if complemented with market policies and tools, like climate mitigation credit exchange systems or green certificates issuance. Once again, the theoretical leverage of these solutions depends on closing the gap between environmental action and economic viability.



You also mentioned the role of ICT development in fostering energy sustainability. ICT is in itself an enabler of technologies and processes and it deeply affects most of human activities. Is energy sustainability the result of the encounter of two enablers, in the end?
Indeed. ICTs are a great ally for energy sustainability and, more generally, for modernization. ICTs, for instance, have been the key factor in the transition from conventional to distributed generation, allowing for management of multiple sources (for example, supporting the integration of RES in the energy grid), with multiple uses, and today with multiple storage solutions. This new, enhanced operability, commonly referred to as smart grid, also helps to establish a closer feedback between utilities and users, therefore multiplying and optimizing demand response solutions. On top of that, the added value of digital capabilities spans from big data analysis to extensive sensor networks, in order to shape efficient solutions for our homes, working spaces, and mobility choices. But ICTs have an additional, relevant property: they enable free and easy dissemination and sharing of information. Therefore, they're a powerful tool to promote awareness-raising, or to exchange best practices across different geographies and among different stakeholders. Better informed customers have a better understanding of sustainability issues, and might lead them to demand better performance of energy service providers. In that sense, awareness stimulates innovation. At the same time, more fluid communication allows for the creative interaction of diverse stakeholders, that determines an hybridization of ideas, a wonderful breeding ground for new solutions to come to light. In this respect, I see the Internet of Things as the next promising field for innovation and disruption. What we have seen so far is only the tip of the iceberg of the range of possible solutions this area can bring.

Under this scenario, is there still room for further development of conventional generation?
As a matter of fact, we could not support our current lifestyle without relying on fossil energy sources or nuclear. The International Energy Agency believes conventional generation will still be a prominent factor all over the 21st century and there is no reason to doubt that. However, there are two aspects of conventional generation dynamics that should be taken into consideration. On the one hand, a shift towards a cleaner use of fossil sources is already in place: coal has been progressively replaced by gas in many countries, carbon capture & storage (CCS) costs are at last showing some promising figures, so that CCS can become a useful tool to help states to comply with international climate commitments. On the other hand, the ultimate destination of conventional generation shall be that of serving as a grid stabilizer or as back-up to overcome the intermittent nature of variable renewable sources. By the way, it is good to remember that fossil resources are not evenly distributed around the globe, something that has been a constant source of geopolitical tensions. In terms of security of supply, harvesting energy from RES offers a far more democratic approach to the distribution of energy.

Finally, could you name some of the areas and trends in sustainable energy that you think are interesting to keep an eye on?
I am very interested in exploring the effects of energy dynamics in complex systems, such as urban areas, where the energy system architecture is the result of the entanglement of multiple urban functions. Another interesting dynamic is how interaction among different stakeholders affects the availability, effectiveness and sustainability of energy solutions. That is why I welcome a debate on energy sustainability that involves participants from the academic realm, the industrial domain, the institutional world, together with representatives of communities and NGOs. A classification of socio-economic players commonly referred to as the quadruple helix.

I'm also very interested in understanding the factors that transform a NIMBY approach into an IMBY [2]  one, through the production of energy business shared value. Moreover, there is also a lot to observe within the clean energy technologies and processes area, where the radar spans very wide from the sustainable mobility to domotica and to the Internet of Things, from smart microgrids to new energy technologies (like those harvesting energy of the sea), from the combination of RES with storage devices to a cleaner use of fossil fuels, just to name some categories. At the end of the day, system integration of innovative solutions is the key to understand where we are heading to. These are all aspects that we need to monitor and talk about. For disruption isn't a novelty anymore, it is the new business-as-usual.

1. This is the same year when the sustainable development principle became public through the Brundtland Report.
2. IMBY: In My Back Yard (instead of the popular NIMBY: Not In My Backyard).

Dr Alessandro Costa is Head of Strategic Development and International Cooperation at Venice International University. He is a member of the World Energy Council's Studies Committee as well as a member of the Advisory Board of the European Institute for Comparative Urban Studies. He is Senior Advisor to Europe-China Municipal Development Commission.

Image: The Solar Settlement, a sustainable housing community project in Freiburg, Germany. By: Andrew Glaser. CC-BY licence.