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What can national efforts to transition to renewable energy-based economies contrasted with international agreements to mitigate climate change tell us about the potential for collective solutions to a collective problem?
The relevance of the topic of renewable energy sources taken on a national scale can be justified by the intensification of demand for alternative energy due to rising prices, their development of the offer in connection with scientific and technological progress. The energy resource market has been the engine of modern industrial development for a long period of time. At the same time, the ongoing process of globalization of the world economy and world commodity markets, in effect, turns commodities into the material basis for the global redistribution of income among the largest holders of such assets. Further transformation of the international oil market proceeds under the influence of other factors that form new patterns of development, which have not yet been fully studied in theoretical terms.
Global climate change, which is caused by human activities, is undoubtedly an important and complex problem, and calls for effective collective decisions to be made on a global scale. The consequences of climate change do not quite proportionally affect countries with a high GDP, having a fairly strong impact on social justice in the world, which consequently leads to a decrease in food production, such countries cannot adapt quickly enough to climate change, including for lack of financial resources.
The development of mankind and the global economy is closely related to the use of energy. In antiquity and in the period of antiquity, man used the simplest forms of energy that exist in nature. A significant increase in the use of energy occurred in the Middle Ages, and then in the modern era with the development of maritime transport and especially with the development of industry in the 18th and 19th century. The first statistics of energy production and consumption appeared in the economically developed countries of the world only after the First World War, but still there was no assessment of global energy production and consumption. Only after the Second World War, and especially after the oil crisis of the 1970s, were measures aimed at creating a system of statistics on the energy market that published data on global energy production and consumption, as well as data on comparable energy for individual countries of the world.
Depending on the state of aggregation of energy resources, as well as transportation conditions, infrastructure needs, markets differ in the degree of globalization.
The energy market is a category (economic, legal, commercial and, at the same time, technical, technological, because without knowledge and compliance with technical and technological norms and rules, the normal functioning of energy markets is impossible, which is used to characterize the relations arising in the field of sales and energy supply .
The energy market is a set of structurally related sellers and buyers, other (infrastructure) links involved in promoting energy from a generator (source) that generates energy (the seller) to consumers (buyers). The energy market can be defined as an institution (mechanism) ensuring the functioning of the sphere of circulation (exchange, purchase/sale) of energy, organized in accordance with the laws of commodity production.
The International Energy Agency (IEA) is an autonomous international body of the Organization for Economic Cooperation and Development (OECD). It consists of 28 participating countries, was formed in Paris in 1974. Its main objective is to promote international cooperation in improving global supply and demand in the field of energy resources and energy services.
Energy efficiency is the answer to creating a safe and sustainable energy system. Energy efficiency can bring significant economic, social and environmental benefits. But while energy efficiency is increasing worldwide, its positive impact on global energy use succeeds in increasing economic activity in all sectors.
Energy Efficiency 2018 describes a global strategy aimed at what national governments can do to consider the economic, social and environmental benefits of energy efficiency. The IEA Global Energy Efficiency Analysis identified key actions that could have the most positive impact. This includes improving the efficiency of buildings and industry. It also emphasizes the importance of areas such as aviation and shipping, where energy efficiency is becoming increasingly important. “While different countries are endowed with different energy resources – be it oil, gas, wind, solar energy or hydropower, each country has the potential for energy efficiency,” said IEA Executive Director Dr. Fatih Birol. “Efficiency can contribute to economic growth, reduce emissions and improve energy security. The study shows that the right energy efficiency policy can only allow the world to achieve more than 40% of the emission reductions needed to achieve climate goals without requiring new technologies. Due to the critical importance of energy efficiency in building a safe and sustainable future, the IEA considers it the “first fuel” and facilitates the exchange of advanced technologies.
Figure 1. – Production of renewable energy sources by region of the world from 1990 to 2017
The share of renewable energy sources (RES, including hydropower) in the global electricity generation system, which has been growing rapidly since the late 2000s, increased by almost 1 percentage point in 2017 to almost 25%. The revival of wind and solar energy has gained momentum, helped by ambitious climate policies in the European Union, the United States, China, India, Japan and Australia, as well as a sharp drop in the construction costs of the solar and wind industries in recent years, which allowed renewable opportunities. Solar was responsible for 20% of additional electricity generation in 2017 and by 30%. Renewable energy sources now cover 1/3 of the energy mix in Europe, 1/4 in China and 1/6 in the United States, India and Japan.
In the European Union, the share of renewable energy sources remained stable in 2017, as a significant increase in the production of renewable energy in Germany and the United Kingdom was offset by unfavorable hydraulic conditions in southern Europe (France, Italy, Spain).
The share of renewable energy sources is gradually increasing, the share of coal is decreasing, and energy efficiency is increasing. The improvement of technology plays a huge role in relieving tension from supply side in the market; without the use of renewable energy sources, the projected increase in end-use energy will more than double. Renewable energy sources satisfy a 40% increase in primary demand, and their explosive growth in the energy sector marks the end of the “coal” era. Since 2000, coal-fired power generation has grown by almost 900 gigawatts, but the net energy from this type of fuel from now until 2040 is only 400 GW. For example, in India, the share of coal in the energy sector decreased to 25% in 2016, a further decrease in 2040 to 50% is predicted.
Renewable energy sources absorb 2/3 of global investment in the energy industry until 2040, as they become for many countries the least expensive source of energy for the new generation. The rapid deployment of elements of the solar photovoltaic system, led by China and India, helps solar energy to become the largest source of low-carbon power by 2040, by which time the share of all renewable energy sources in total electricity production is expected to reach 40%.
In the EU, renewable energy accounts for 80% of new capacity, and wind energy is becoming the leading source of electricity after 2030 due to strong growth of winds both on land and at sea. The policy continues to support renewable electricity throughout the world, increasingly through competitive auctions, rather than tariff rates, and the transformation of the energy sector is being amplified by millions of households, communities and enterprises that invest directly in solar photovoltaic cells.
Growth in renewable energy is not limited to the energy sector. The direct use of renewable energy sources for heat and mobility around the world is also doubled. In Brazil, the share of direct and indirect renewable use in final energy consumption is currently increasing from 39% to 45% in 2040 compared with an increase from 9% to 16 % for the same period earlier
The Chinese government planned to reduce carbon density (carbon emissions per unit of GDP) by 17% between 2010 and 2015, and energy intensity (energy consumption per unit of GDP) by 16% over the same period, according to the 12th Five-Year Plan (2011 -15), but the growth rate of emissions grew, in 2017, China accounted for about 28% of world emissions, an increase of 3.5% compared with 2015. The reason for the growth of the indicator was a decrease in the water level in the rivers of China, and the amount of electricity generated by hydroelectric power plants decreased accordingly. In order to eliminate the difference in energy volumes, China covers the disadvantage through the use of gas and coal. China also intends to reduce its total CO2 emissions by at least 40% between now and 2020. The current climate change plan has strengthened China’s commitment to reducing its carbon footprint mainly in energy-intensive industries and construction by 2020.
China’s internal energy strategy includes the following main points:
1. Strengthening the exploration, development and refining of oil and natural gas, creating a stable and reliable internal system for the supply of oil and natural gas.
2. Energetic development of energy saving and increasing energy efficiency in order to cover the shortage of energy supply
3. Development of the production and use of new energy sources and renewable energy sources, including wind energy, solar energy, biomass energy, water, etc., in order to improve the structure of energy consumption, reduce pollution, protect the environment and combat climate change.
China at the domestic level is actively developing the production and use of renewable energy sources.
The United States is a leader in the production and supply of energy, is one of the world’s largest energy consumers. Energy companies produce oil, natural gas, renewable fuels, and electricity from environmentally friendly sources of energy, such as wind, solar, including nuclear energy. US energy companies continue to transfer, distribute and store energy through sophisticated infrastructure networks that are supported by new products and services, such as smart grid technology. Growing consumer demand and world-class innovation — combined with a competitive workforce and supply chain capable of building, installing and servicing all energy technologies — make the United States one of the world’s most attractive markets with total investments in the US energy sector of 276 billion dollars in 2016 (the second largest in the world).
The United States is home to the renewable energy sub-sector, with globally competitive firms in all the sub-sectors of this technology, including wind, solar, geothermal, hydropower, biofuel sectors. Currently, the US produces more geothermal energy than any other country (2,542 MW); more biofuel power than any other country (14,278 MW); are the second largest wind industry (82,735 MW); the third largest hydropower (80,244 MW); and the fourth largest production of solar energy (41 825 MW).
Philosopher John Locke is credited with one of the earliest descriptions of this economic law in its publication in 1691, “Some Considerations on the Consequences of Reducing Interest and Raising the Value of Money.” Locke did not actually use the term “supply and demand”, which first appeared in print in 1767 in Sir James Stewart’s Question of the Principles of Political Economy. Adam Smith covered this topic extensively in his epic work in 1776, The Wealth of Nations.
In accordance with this law, a rise in prices for goods leads to a decrease in the magnitude of demand for goods, other economic conditions being equal, thus a higher price leads to a decrease in the magnitude of demand, a lower price leads to an increase in the magnitude of demand. Demand curves and demand graphs are tools used to summarize the relationship between demand and price.
The laws of demand form the basis of the modern economy. Each particular product or service will have its own demand patterns, based on price, utility, and personal preferences. Reducing the cost of energy production using renewable sources leads to an increase in demand and supply in the market. In addition, many countries in the world are introducing new technologies for the production of photovoltaic modules that are more efficient, etc. Demand is based on needs, the consumer can distinguish between his needs and desires, but from an economist’s point of view, they are one and the same. Demand is also based on solvency.
Each particular product or service will have its own demand and supply patterns based on price, utility, and personal preference. As the supply increases, the price will fall at the same level of demand. Ideally, the markets will reach an equilibrium point when the supply will meet the demand (without excess supply and no shortage) for this price point.
Commodity producers proceed from the needs of people and produce goods and services on the market. Consequently, the set of producers ensures the satisfaction of their effective demand, thus forming the supply. The amount of energy based on renewable energy sources that producers want to produce depends on many factors, the main ones being: the price of the product itself; the price of resources used in the production of this product; technology level; the goals of the company; taxes and subsidies; manufacturers expectations. Accordingly, mainly national governments, mainly developed countries of the world, as well as BRICS countries, take part in this issue. International agreements on climate change mitigation affect the development of renewable energy production directly, especially in China, forcing it to switch from coal to gas, solar, wind, etc.
- Statute of the International Renewable Energy Agency. International Renewable Energy Agency. URL: www.irena.org/menu/(appeal date: 01/11/2018)
- Thomas W. Malone and Mark Klein Harnessing Collective Intelligence to Address Global Climate Change URL: https://www.mitpressjournals.org/doi/pdf/10.1162/itgg.2007.2.3.15 (appeal date: 01/11/2018)
- Barry S.Levy M.D. Climate Change, Human Rights, and Social Justice URL: https://doi.org/10.1016/j.aogh.2015.08.008 (appeal date: 01/11/2018)
- Zvirevich, V. T. Ancient and Medieval Philosophy: A Textbook for Academic Baccalaureate / V. T. Zvirevich; under the scientific ed. S.Purgina. – M.: Yurayt Publishing House, 2018. – 322 p.
- International Energy Agency URL: https://www.iea.org/russian/ (appeal date: 01/11/2018)
- M. Child O. Koskinen, L. Lindane, C. Breyer URL: https://www.sciencedirect.com/science/article/ (appeal date: 01/11/2018)
- V. Costantini, F. Crespi, E. Paglialunga The employment impact of private and public actions for energy efficiency: Evidence from European industries URL: https://doi.org/10.1016/j.enpol.2018.04.035
- А.М. Jaffe Green Giant URL: http://www.amymyersjaffe.com/(appeal date: 01/11/2018)
- Global Energy Statistics Yearbook URL: https://yearbook.enerdata.net/renewables/ (appeal date: 01/11/2018)
- Dynamics of the green transition URL: http://www.jstor.org/stable/j.ctt1kft8m1.7 (appeal date: 01/11/2018)
- N. ScarlatJean-François, D. Fabio Monforti-Ferrario Renewable energy policy framework and bioenergy contribution in the European Union – An overview from National Renewable Energy Action Plans and Progress Reports URL: https://doi.org/10.1016/j.rser.2015.06.062 (appeal date: 01/11/2018)
- E. Dogana F. Seker Determinants of CO2 emissions in the European Union: The role of renewable and non-renewable energy URL: https://www.sciencedirect.com/science/article/pii/S0960148116302622 (appeal date: 01/11/2018)
 Statute of the International Renewable Energy Agency. International Renewable Energy Agency. URL: www.irena.org/menu/(appeal date: 01/11/2018)
 Thomas W. Malone and Mark Klein Harnessing Collective Intelligence to Address Global Climate Change URL: https://www.mitpressjournals.org/doi/pdf/10.1162/itgg.2007.2.3.15 (appeal date: 01/11/2018)
 Barry S.Levy M.D. Climate Change, Human Rights, and Social Justice URL: https://doi.org/10.1016/j.aogh.2015.08.008 (appeal date: 01/11/2018)
 Zvirevich, V. T. Ancient and Medieval Philosophy: A Textbook for Academic Baccalaureate / V. T. Zvirevich; under the scientific ed. S.Purgina. – M.: Yurayt Publishing House, 2018. – 322 p.
 International Energy Agency URL: https://www.iea.org/russian/ (appeal date: 01/11/2018)
 M. Child O. Koskinen, L. Lindane, C. Breyer URL: https://www.sciencedirect.com/science/article/ (appeal date: 01/11/2018)
 V. Costantini, F. Crespi, E. Paglialunga The employment impact of private and public actions for energy efficiency: Evidence from European industries URL: https://doi.org/10.1016/j.enpol.2018.04.035
 А.М. Jaffe Green Giant URL: http://www.amymyersjaffe.com/(appeal date: 01/11/2018)
 Global Energy Statistics Yearbook URL: https://yearbook.enerdata.net/renewables/ (appeal date: 01/11/2018)
 Dynamics of the green transition URL: http://www.jstor.org/stable/j.ctt1kft8m1.7 (appeal date: 01/11/2018)
 N. ScarlatJean-François, D. Fabio Monforti-Ferrario Renewable energy policy framework and bioenergy contribution in the European Union – An overview from National Renewable Energy Action Plans and Progress Reports URL: https://doi.org/10.1016/j.rser.2015.06.062 (appeal date: 01/11/2018)
 E. Dogana F. Seker Determinants of CO2 emissions in the European Union: The role of renewable and non-renewable energy URL: https://www.sciencedirect.com/science/article/pii/S0960148116302622 (appeal date: 01/11/2018)
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