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Economy

Renewables bringing down the cost of clean energy

PARIS -- As alarm bells over global warming get louder, the public and private sectors around the world are increasingly banding together to overhaul energy policies and promote renewables.

     Advances in technology have pushed down the cost of green energy to the point where, in some countries, generating power using renewables costs the same as using fossil fuels.

     On Oct. 16, the leaders of 10 major oil and gas companies, including France's Total, Britain's BP and Anglo-Dutch Royal Dutch Shell, gathered in Paris for the Oil and Gas Climate Initiative summit. They issued a statement pledging to make long-term investments in renewable energy to reduce greenhouse gases.

     Total CEO Patrick Pouyanne told The Nikkei earlier in the month that his company will invest $500 million a year to develop renewables. The Paris meeting also drew representatives from state-run powerhouses Saudi Aramco and Petroleos Mexicanos, better known as Pemex. An official of a Japanese energy company who attended the summit said the big industry players "have no choice but to develop renewable energy" because of the large amount of carbon dioxide fossil fuels spew into the environment.

     In many major industrialized countries, the government is working with companies to reduce reliance on coal. In September in France, Prime Minister Manuel Valls said the government would immediately stop helping exports of coal-fired power plants, one of Alstom's areas of strength. Meanwhile, British newspaper The Times reported that the U.K. government is considering closing all 12 of the country's coal-fired plants by 2023.

     In August, U.S. President Barack Obama announced a plan to slash CO2 emissions by thermal plants by 32% by 2030 from the 2005 level. On Oct. 19, the White House said 81 U.S. companies, including Apple, Google, General Motors and Coca-Cola, pledged to support the Obama administration's initiative to fight climate change. 

     All of these moves will make it necessary to step up the use of renewables. 

Clean and affordable

Data released in early October shows that wind power has become the cheapest electricity source in the U.K. and Germany. According to Bloomberg New Energy Finance, this has been made possible by technological advances driven by the large-scale introduction of wind power. Despite its drawbacks, such as being highly susceptible to weather conditions, wind power is becoming as cost-competitive as coal, even without subsidies from the government.

     The use of green energy is steadily increasing in the U.K. Government data shows that renewables accounted for a quarter of total power generation in the country in the April-June quarter. In the same period, renewables overtook coal for the first time as an energy source, putting it behind only natural gas. Offshore wind power and biogas are still not cost-competitive, but the costs of onshore wind and solar power are reaching parity with those of fossil fuels, said Aurelie Faure-Schuyer, a research fellow with French think tank IFRI.

     The International Energy Agency estimates that power generated from renewable sources will surge 32% from 2014 to 7,150 terawatt-hours by 2020, accounting for more than 60% of growth in the world's total power-generation capacity over that period.

     Emerging economies, such as China and India, are also starting to embrace renewables, with growth in energy output from fossil fuels and green sources roughly the same. 

     It is not only the "major" emerging economies that are turning to cleaner energy. In February, a large geothermal plant was completed in Olkaria, Kenya, some 100km northwest of Nairobi. Japanese companies Toyota Tsusho and Toshiba and South Korea's Hyundai Engineering were awarded the contract by Kenya's public utility. The plant can crank out 280,000kW, or roughly 20% of the country's total output.

     In July, major Norwegian energy player Scatec Solar announced plans to construct a large solar farm in the western African country of Mali. In developing countries, where power demand is surging, the potential for renewable energy is especially strong, said Achim Steiner, executive director of the United Nations Environment Program.

     In Japan, despite its green image, renewables still take a back seat. All of its nuclear plants were taken offline after the devastating earthquake of March 2011. As a result, the country's reliance on coal has increased. Energy produced with coal accounted for 33% of the total in 2014, up from 27% in 2010.

     But the government is trying to bring that number down. In addition to moving toward restarting idled nuclear plants, it is working on developing the renewables sector. Still, critics accuse Japan of dragging its feet and clinging to coal while the world goes increasingly green.

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