Energy law and sustainable policies

The Sustainable Development Goals recognise access to affordable and modern energy as essential to sustainable development. Increased diffusion of cleaner forms of energy is a critical step to implementing the 2015 Paris Agreement under the United Nations Framework on Climate Change. In both instances, the commitments made by the majority of nations will require increased deployment of and reliance on energy efficiency and renewable energy, with concomitant need for large new investments in them.

And large they are. According to the latest data around US$13 trillion is needed in zero-carbon energy investment between now and 2040 in order to meet global climate targets. The good news is that the shift from coal to renewables is gaining momentum worldwide. Renewable energy sources are set to attract two-thirds of all investment in power-generating plants between now and 2040. However, this still leaves a shortfall of US$5.8 trillion in zero-carbon energy investment needed to meet global climate targets and prevent a catastrophic 2°C temperature rise.

That is why we must look beyond financing mechanisms alone to trigger the required momentum to accelerate the shift from fossil fuels to renewables. While investment is the primary driver of renewable energy developments, it is laws that are the enablers. Take fossil fuel subsidies as an example. Currently worth around US$452 billion a year to G20 nations, fossil fuel subsidies create an uneven economic playing field for renewables. Laws that help mitigate some of the substantial up-front costs of renewables can be a key determinant of project feasibility. In addition, there are a number of legislative requirements important for environmental management of the energy sector. While the market place will influence much of the transition required for adoption of efficiency measures and the use of renewable energy resources, government regulations are needed to accelerate this transition.

A new law guide

Much has been written about sustainable energy policies, but until now there has been no up-to-date and comprehensive treatment of relevant laws. In response to requests for assistance in drafting legislative provisions for promoting and implementing energy efficiency and renewable energy programmes, UN Environment has published a second edition of the Guide for Energy Efficiency and Renewable Energy Laws. The Guide describes the latest laws in effect worldwide promoting successful energy efficiency and renewable energy projects. Energy efficiency and renewable energy project initiators, government officials and developing country energy law draftsmen are already using it.

From buildings, appliances, industrial and transport efficiency, to energy options, financing and rural applications, the Guide covers an impressive depth and breadth of issues affecting the adoption of renewables worldwide. One of the most important conclusions from the study is the importance of political will in spurring widespread initiation and implementation of renewable energy in developing countries in particular. While there are no hard and fast rules regarding whether law or policy comes first, what is important is the sincerity and determination of government to implement its policies.

In China and India, for example, the central governments take the lead in the initiation of policies on efficiency and renewable energy, but regional and local governments then initiate those policies at the regional and local government levels. On the other hand, in Nigeria and Ghana, there is a dearth of regional, state, and local government initiatives despite the fact that central governments have formulated energy efficiency and renewable energy policies.

Hydro and the law

An example of the regulatory need to promote renewable energy may be found in the treatment of small hydro projects. Hydropower for rural electrification can help minimise local, regional and global environmental impacts in the long run, while ensuring people’s livelihoods. It is an important pillar of economic development in hilly areas, an important source of a country’s fiscal revenues, and an important way for local people to shake off poverty and set out on a road to prosperity. It improves agriculture and rural production conditions and brings about advances in agriculture. And it promotes the comprehensive utilisation of renewable energy resources – wind, water, solar, geothermal and biomass energy.

These benefits, which apply to all renewable energy resources, cannot be realised without a coherent legislative and regulatory framework that sets out the policy, laws and institutional mechanisms that must be in place for the successful application of renewable energy. The problems that permeate efforts to adopt effective laws for promotion of energy efficiency and renewable energy are evident in all countries, but they are particularly prominent in those countries where the need for energy is greatest.

Specific issues

Major obstacles to the uptake of renewables in developing and emerging markets include a general lack of awareness of alternative energy options, as well as a lack of reliable data to undertake specific projects. These considerations, along with limited financial resources, competition from other energy sources, a lack of supportive policies, and inefficient infrastructure and equipment, contribute to the difficulty of accessing the latest renewable energy technology. An adequate regulatory framework must, therefore, specifically address these issues in order to put renewable energy squarely on national agendas.

Renewable energy laws should, among other things, address incentives to harness any form of renewable energy including procedures for facilitating renewable energy technologies through effective implementing institutions. Such laws must provide for the rights and obligations of the host country, its rural communities, and private investors. And they must impose standards. The vagueness of statutory language, weak judiciaries, and poorly trained and ill-equipped workforces in implementing institutions, all combine in varying degrees to deflect regulatory will. Countries with developing and emerging markets must guard against these deficiencies in regulating the renewable energy sector.

Energy efficiency and renewable energy hold great promise for a more secure, safer, cleaner and more economic future for the world. For developing countries, efficiency and renewables present the opportunity for leapfrogging over traditional energy resources and avoiding the myriad of environmental problems that accompany them. Some of the renewable technologies, however, are not yet cost-competitive. There are still many barriers to technology transfer, including financing, pricing, infrastructure and education and training. These must be dealt with before clean resources become universally available. Nevertheless, renewables are the fastest growing of the energy media. It is therefore critical that the countries, states, and cities, and their responsible officials, and implementers, contemplating large clean energy investments and deployment, have the legal tools to do it right.

The Marrakech ‘COP of Action’ is an opportunity to celebrate the early entry into force of the Paris Agreement and to focus in earnest on implementation mechanisms. Laws for the promotion of renewable energy efficiency have a key role to play in supporting technology transfer, mitigation, adaptation and capacity building. This event is an opportunity to ensure that such laws are recognised as an important resource in the quest for a sustainable clean energy future.

Read the full Climate Action 2016/17 Publication here