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Asia switches slowly to green power

SINGAPORE (Reuters) -- Rising oil prices and pollution are fueling interest in green power in Asia but experts see no prospect of a rapid switch from the region's growing dependence on oil, coal and gas.

The problem is the high cost of renewable energy projects such as solar, wind, geothermal and biofuels, lack of government incentives and vested interests who believe green power is unviable or a threat to their wallets.

"We have to work very hard to convince governments that this is something they should focus on," said Samuel Tumiwa, renewable energy specialist at the Asian Development Bank (ADB).

"You have factions in governments that want renewables and others that don't. There are a lot of vested interests be they old power companies or oil companies."

Environmental groups such as Greenpeace and lending agencies such as the ADB say renewable energy is crucial for Asia's economic future.

Renewables would help trim dependency on oil, minimise exposure to oil price spikes and cut pollution in a region that is home to more than half of the world's population.

U.S. crude oil prices have averaged $38.67 a barrel so far in 2004, up more than $10 from the average for the previous five years. U.S. benchmark crude hit a record $49.40 last month.

The International Energy Agency, the world's energy watchdog, predicts Asia, particularly China and India, will need to make trillions of dollars of energy investment by 2030, much of it to build power stations to connect more people to national grids. Transport is also booming.

Analysts say renewable energy can help meet some of these energy demands but most governments need to change the way they think and pass laws that level the playing field for green power. Already there are signs of change.

Fueling the future

China, the world's largest oil consumer after the United States, has ambitious plans to boost renewable energy use that include raising wind power generating capacity from 570 megawatts today to 20,000 megawatts by 2020 and 50,000 megawatts by 2030.

One megawatt of electricity can supply 1,000 homes.

A push to use more biofuels such as marsh gas, straw, sugarcane residue and garbage to fuel power plants could eventually save China 28 million tonnes of coal a year.

In Japan, one of the world's top oil importers, automakers are investing in fuel cells to power new models using hydrogen, though costs remain out of reach for ordinary motorists.

India's prime minister urged scientists and officials last month to speed up development of renewable energy sources for Asia's third largest oil consumer.

The record rally in crude futures is expected to raise India's oil import bill by 50 percent to $27 billion in the year to March 2005.

To reduce oil consumption India has started blending petrol with ethanol and has begun tests for running vehicles with a mixture of bio-diesel extracted from plants and diesel.

India's Ministry for Non-conventional Energy Sources has estimated the country has a potential to generate 80,000 megawatts from renewable sources yet produces only 5,000, half from windmills.

Pakistan is turning to wind power and several foreign companies are vying to set up windfarms. Bangladesh, too, is studying wind power and hopes to promote greater use of solar cells in remote villages.

The Philippine government is to start work on its first sugar-fuelled power plant next year. Already, in July, government vehicles started using a one percent blend of coconut methyl ester in their diesel.

The country, already the world's second top producer of geothermal power, wants to boost investment further in that sector to help meet power shortages.

Indonesia, too, is turning to geothermal power to help meet its 10 percent annual growth demand for electricity, while Thailand wants to replace regular gasoline with a mix that includes 10 percent ethanol and aims to raise daily consumption of ethanol 12-fold by 2006.

Small part

While such measures are positive, analysts say renewables will make up only a fraction of the total energy mix in Asia for the foreseeable future.

"There is always a lot of talk of renewables and alternative energy when oil prices increase," said Jeffrey Brown, chief economist of FACTS consultancy.

"But the reality is that renewables will remain a very small part of the overall energy picture for the next few decades. This is true even under the most optimistic scenarios."

Athena Ronquillo, Greenpeace's international climate and energy campaigner for Asia, says there are several reasons for this, including cost and policy barriers such as a lack of supporting laws and incentives.

"There are lot of hidden subsidies, and concessions are given to traditional energy areas such as coal and gas," she said. This further undermines the ability of renewable energy to compete.

Robert Kleiburg, head of strategy for Shell Renewables, said the solar power industry was growing globally by 30 percent a year because the cost of the technology was falling and many people in the Asia-Pacific region lacked access to the grid.

"In these applications, solar can already be competitive to conventional fuels," he said. The company was also a big investor in wind power, but not yet in Asia.

"There needs to be a planning process to take into account the environmental and social impact of wind turbines on the local community. There needs to be a support or policy framework for potential investors to generate an economic return," he said.

A key problem for renewable energy is that it needs further development to bring down costs. Governments need to offer incentives.

"Unless we get the pricing formula right for renewables, it is never going to take off," said Tumiwa of the ADB, adding it was a mistake to sell renewables only on environmental grounds.

He urged wealthy donors to fund more renewable projects in Asia to prove to governments that the technology was viable.

Promoting the use of solar, wind, biomass and small hydro plants in remote areas cut off from the grid would help reduce demand for fossil fuels and raise living standards.

Cornie Huizenga of the ADB's Clean Air Initiative sees a danger in blindly pursuing renewable energy.

"There is a danger in focusing too much on the alternatives and not enough on cleaning up the traditional fuels."

For example, China is the world's largest coal producer and the IEA estimates its annual output will nearly double to 2.3 billion tonnes by 2030. Huizenga said it was crucial for governments to focus on making coal power cleaner.

"For long-term sustainability things have to change," said Tumiwa. "But it is like moving a mountain and I am not optimistic."

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