Renewable Energy for Sustainable Development: A Space for Legal Innovation

Author: Achinthi Vithanage
Visiting Associate Professor and Environmental & Energy Law Fellow, GW Law

Harnessing the infinite power of the sun, the wind, the seas and the available bio resources of the Earth is no longer wishful thinking. Unprecedented technology developments have made these clean energy sources readily available for the world’s energy consumption. Over time, these technologies have also become increasingly affordable. That a global energy transition is well under way is certain. How viable a 100 percent renewable energy target is on a global level, on the other hand, is less so.[1]

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Presuming the lofty international renewable energy goal is feasible, achieving it is bound for failure if access to energy goals are not simultaneously aligned. With more than 1.1 billion of the global population lacking access to energy today,[2] the access issue is not one to be ignored. The Sustainable Development Goals (SDGs) have played a pivotal role in propelling the issue of access to energy to the forefront of the international stage. SDG 7, which calls on States to “ensure access to affordable, reliable and sustainable energy for all,” and which constituted one of the foci of the recent High Level Political Forum held in New York in July 2018, provides the international legal policy backdrop for this issue.

The Legal Challenge

Despite the technological breakthroughs, whether you are striving to achieve 100 percent renewable energy consumption globally or universal energy access through clean energy, the challenges remain steep. Whilst the most obvious challenge is financing these endeavors, the more pressing challenge is the lack of regulatory governance in the emerging field. The 2017 Global Status Report of the Renewable Energy Policy Network for the 21^st Century (REN21) identified “policy uncertainty” as one of seven[3] main barriers to off-grid market expansions.[4] In fact, roundtable discussions at a gathering of industry leaders in the clean energy space at the seventh Clean Energy Ministerial (CEM)[5] in 2016, revolved around legal barriers, regulatory tools, policy frameworks, solutions and best practices for deploying clean energy technologies.[6] The absence of supportive national energy policies was subsequently identified as the greatest obstacle to accelerating access to decentralized renewable energy.[7] This year proved to be no different with regulatory barriers again featuring in the CEM9 discussions and policy solutions repeatedly being called for.[8]

With the commercial and industrial sector accounting for 64 percent of global electricity use,[9] combined with many leading corporations committing to 100 percent renewable energy goals,[10] the critical role of the private sector as a driver of investment in renewable energy technologies is undeniable. However, clean energy industry leaders point to inadequate encouragement from national policies and emphasize the need for policy and regulatory adjustments designed to encourage corporate demand for scaling up renewable energy investment.[11]

The International Energy Agency (IEA), an autonomous agency representing 29 Member countries with an overarching collective goal of ensuring energy security, also provides authoritative research and analysis on ways to ensure reliable, affordable and clean energy. In its 2017 report, the IEA noted that “policy drivers do not always have sufficient market impact to steer technology choices in an optimal direction. Energy security and sustainability benefits need adequate market signals and regulations to encourage investments directed at long-term impacts.”[12] Thus in order to boost renewable technology investment, innovation in policy needs to occur at a multi-sectorial level. Supporting energy policy objectives with consistent coordination across taxation, finance, international trade, urban planning, research and development, and other relevant sectors, may provide the optimal conditions needed to fuel corporate demand.

The Developing Country Context

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Owing to technological advancement and its increasing affordability, bringing electrification to distant communities in need of energy access is now a reality. The appearance of distributed renewable energy options, battery storage, and a variety of solar products on the market, will facilitate even more electrification in areas that historically have not had access to electricity. Yet, the electrification rates across the developing states are uneven. The rate in sub-Saharan Africa for instance currently stands at just 43 percent,[13] whilst India claims to have achieved 100 percent village electrification, well ahead of its national deadline.[14] However, the Indian government deems a village “electrified” if 10 percent of its households and all public places, including inter alia schools, village council offices, and health centers, have electricity access from basic infrastructure, such as a distribution transformer and distribution lines, serving the locality.[15] A new government scheme has since been introduced targeting the remaining un-electrified homes, with accommodation made for the households located in remote and inaccessible areas through solar photovoltaic-based stand-alone systems.[16] Yet, concern remains whether reliable electricity supply will be secured for these households or whether merely access to electricity infrastructure is the likely outcome.[17] Furthermore, improvements in global electrification levels may not be as great as they initially seem. A study of all those who obtained electricity access worldwide in the 16 years since the Millennium, indicated that almost all gained electrification via new grid connections, mostly powered by fossil fuels.[18] States need to ensure meaningful access to “sustainable” energy for all by utilizing renewable energy sources and not simply focus on ‘universal access’ using carbon-based sources that do not contribute to long-term sustainability.

Domestic and regional energy policy have a significant role to play in promoting access to energy through technologies that are both reliable and sustainable. Largely spurred on by the international momentum built at the 21^st Conference of the Parties in Paris, 2015 witnessed a significant uptake in renewable energy policies.[19] Most notably, a plethora of national governments spanning Africa, Asia and Latin America announced new or expanded targets and policies specifically promoting distributed renewable energy systems.[20] This is in addition to the Pacific Island countries that had already pledged national policy targets of 100% renewable energy under the Barbados Declaration back in 2012.[21] At the twenty-second session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), the 48 developing countries of the Climate Vulnerable Forum (CVF) committed jointly to achieving 100% renewable energy in their respective nations.[22]

This trend has continued to expand. Regional organizations, like the Economic Community of West African States (ECOWAS), adopted a Quality Assurance (QA) framework for off-grid-rechargeable lighting appliances for uptake through national law and policy.[23] QA frameworks serve to reduce the supply of below-par offerings on the market.[24] Indeed, the African continent has shown a remarkable political willingness to promote renewable energy at a regional level. For instance, the Regional Center for Renewable Energy an Energy Efficiency (RCREEE) serving North Africa, have developed initiatives aimed at funding a more open renewable energy market.[25]

Such political willingness is not as strong on the national level. Half of the low energy access countries in the African and Asian regions lack national energy access targets, 58 percent lack rural electrification targets and almost 80 percent fail to set any targets specific to distributed renewable energy.[26] Many countries still promote energy policies that favor grid-centric, fossil fuel approaches[27] or fail to properly implement national renewable energy targets by not following through in practice what they warrant to do on paper.

Strong laws and policy can provide the necessary backbone for proliferating the availability of renewable energy technologies. Dedicated electrification targets with specific reference to rural electrification and use of off-grid technologies are gradually being taken up. For example, Rwanda set targets to increase electrification to over 70 percent by 2018, out of which 22 percent is to be achieved through off-grid connections.[28] Nigeria’s Minigrid Regulations provides developer protection and its rural electrification policy creates an enabling environment for off-grid market growth.[29] Since 2003, at least 14 policies addressing renewable energy and distributed generation remain in force in China.[30] However, the positive impact of national policy and regulation is contingent on commensurate implementation. India’s draft microgrid policy for renewable energy-based electricity generation,[31] for instance, has remained in draft form since 2016. Notwithstanding the delayed implementation, some states have forged ahead and established their own microgrid policies.[32]

Legally enforced fiscal incentives are also important. Indonesia introduced a rural electrification regulation that sets the framework and subsidies for electrifying those villages currently without energy access.[33] However, limitations on foreign project ownership regulations still pose a challenge.[34] In contrast, Myanmar’s Foreign Investment Law encourages foreign country participation by allowing 100 percent ownership on any remote microgrid project, as well as general renewable energy financial incentives like 5-year income tax holidays for foreign investors, custom duty exemptions for importing associated equipment and rights to carry forward and offset related losses, amongst others.[35] Tax exemptions and net metering regulations targeting distributed solar photovoltaic systems have also been utilized to spur on the energy transition in India.[36]

In this vein, developing countries continue to grapple with how to best introduce policies suited to their individual transition into renewable energy-based economies. What is clear, however, is the need for a clear and holistic commitment towards renewable energy that is streamlined through policy, law and national mindset. In envisioning a global energy transformation to 60% renewables by 2050, the International Renewable Energy Agency identifies the timely introduction of regulatory and policy frameworks that: (i) provide an unambiguous long-term guarantee of energy system transformation in alignment with international climate goals; (ii) deliver economic incentives that accurately reflect the true costs of fossil fuels; and (iii) remove barriers to accelerate deployment of low carbon solutions.[37]

The United States Context

Of course, when it comes to renewable energy, legal and regulatory issues arise here in the United States as well. Where the country once witnessed a transitioning of its national energy policy towards smarter energy technologies and policies,[38] recent shifts demonstrate a return to unsustainable non-renewable sources of energy.[39] Notwithstanding federal back-pedaling, individual states[40] have forged ahead in keeping with the international policy of promoting renewable energy for sustainable development. A variety of regulatory drivers, such as Renewable Portfolio Standards,[41] which have been adopted in 29 states and D.C. representing 56% of total U.S. retail electricity sales,[42] and grant programs promoting renewable energy technologies, which have seen implementation in 24 states,[43] have continued to push the renewable energy agenda forward. 

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The effects of these positive efforts are still limited by other regulatory hurdles. State experience with microgrid projects, for instance, have demonstrated five legal and regulatory challenges affecting the successful deployment of this emerging renewable energy urban technology and infrastructure in the United States.[44] Namely, (1) the legal definition of ‘microgrid’; (2) the granting of franchises across public streets; (3) liability for service quality issues; (4) tariff issues for energy buyback and supplemental service; and (5) other customer service issues. Recognizing these regulatory gaps, GW Law’s Sustainable Energy Initiative will soon release a template for code revisions that would facilitate greater deployment of microgrids.[45]

As the earlier discussion points out, it is clear that law and public policy is lagging behind technology, resulting in important missed opportunities to align the goal of energy access for all with the critical goal of expanding deployment of sustainable renewable energy. Whilst the misalignment of policy and technology is now a fairly common phenomenon in a number of fields, it is also true that the future of sustainable development is not possible without renewable energy at its core.[46] States everywhere need to embrace renewable energy technologies, like microgrids, rather than putting off the inevitable need to deploy sustainable technologies.  There is space for law and policy to innovate to drive the use of more sustainable technology to meet access goals and states should do so now.

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[1] Renewable Energy Pol’y Network for the 21^st Century (REN21), Renewables Global Futures Report: Great Debates Towards 100% Renewable Energy 28 (2017), http://www.ren21.net/wp-content/uploads/2017/10/GFR-Full-Report-2017_webversion_3.pdf (analyzing the results of a survey of world energy experts, which found that whilst an interviewed majority (35%) of experts agreed or strongly agreed (36%) that a global 100 percent renewable energy target was feasible and realistic, 17 percent disagreed and 12 percent maintained neutral positions.)

[2] Int’L Energy Agency (IEA), World Environmental Outlook 2017 11 (2018), https://www.iea.org/publications/freepublications/publication/WEO2017SpecialReport_EnergyAccessOutlook.pdf [hereinafter IEA WEO 2017 Report].

[3] The others being, lack of access to finance for both companies and consumers; kerosene and diesel subsidies; fiscal and import barriers; lacking consumer awareness; absent product standards; and a lacking qualified and skilled workforce.

[4] REN21, Renewables 2017 Global Status Report 108 (2017), http://www.ren21.net/wp-content/uploads/2017/06/17-8399_GSR_2017_Full_Report_0621_Opt.pdf [hereinafter REN21 GSR 2017].

[5] The Clean Energy Ministerial (CEM) is a high-level global forum to promote policies and programs that advance clean energy technology. Its members represent 90 percent of global clean energy investment and 75 percent of greenhouse gas emissions. CEM7 was attended by energy ministers and high-level delegates from 23 countries and the European Union as well as nearly 60 companies and non-governmental organizations, and 10 subnational governments.

[6] CEM 7, Roundtable Topic Summary Report (2016), http://www.cleanenergyministerial.org/sites/default/files/2018-07/CEM7%20RT%20Summary%20report.pdf.

[7] William Brent, Policy, Not Finance, Biggest Obstacle to Scaling Decentralized Renewable Energy: Energy Access Summit, Renewable Energy World (Jun. 13, 2016), https://www.renewableenergyworld.com/articles/2016/06/policy-not-finance-biggest-obstacle-to-scaling-decentralized-renewable-energy-energy-access-summit.html

[8] CEM 9, Summary of CEM9 Public-Private Roundtable Discussions (2018), http://www.cleanenergyministerial.org/sites/default/files/2018-07/Summary%20of%20CEM9%20Roundtables.pdf [hereinafter CEM 9 Summary].

[9] Int’L Renewable Energy Agency (IRENA), Corporate Sourcing of Renewables: Market and Industry Trends – REmade Index 2018 56 (2018), http://www.irena.org/-/media/Files/IRENA/Agency/Publication/2018/May/IRENA_Corporate_sourcing_2018.pdf.

[10] RE100 is a collaborative, global initiative with 140 influential companies, such as IKEA, Apple, Bank of America, eBay, Facebook and Google amongst them, committing to source 100% of their global electricity consumption from renewable sources by a specified year: RE100, http://there100.org/re100.

[11] CEM 9 Summary, supra note 8.

[12] (IEA) / Organization for Economic Cooperation and Development (OECD), Energy Technology Perspectives 2017: Catalyzing Energy Technology Transformations 3 (2017) [hereinafter IEA/OECD Report].

[13] IEA WEO 2017 Report, supra note 2.

[14] @narendramodi, Twitter (Apr. 28, 2018, 9:58 PM), https://twitter.com/narendramodi/status/990455176581517312 (stating “we fulfilled a commitment due to which the lives of several Indians will be transformed forever! I am delighted that every single village of India now has access to electricity.”)

[15] Scheme of Gov’t of India for Rural Electrification (Deendayal Upadhyaya Gram Jyoti Yojana), http://www.ddugjy.gov.in/portal/definition_electrified_village.jsp (last visited Sep. 9, 2018).

[16] Gov’t of India Ministry of Power, Pradhan Mantri Sahaj Bijli Har Ghar Yojana Saubhagya – Frequently Asked Questions (FAQs) – For Helpline (1912), https://powermin.nic.in/sites/default/files/webform/notices/FAQs_helpline_for_Saubhagya.pdf (last visited Sep. 9, 2018).

[17] Rajesh K. Singh and Saket Sundria, India Nears Power Success, But Millions Still in the Dark, Bloomberg (Apr. 26, 2018, 12:30 PM), https://www.bloomberg.com/news/articles/2018-04-26/india-nears-power-success-but-millions-are-still-in-the-dark.

[18] IEA WEO 2017 Report, supra note 2, at 12.

[19] REN21, Renewables 2016 Global Status Report 20 (2016), http://www.ren21.net/wp-content/uploads/2016/10/REN21_GSR2016_FullReport_en_11.pdf [hereinafter REN21 GSR 2016 Report] (stating “as of year-end 2015, at least 173 countries had renewable energy targets (not considering INDCs), and an estimated 146 countries had renewable energy support policies, at the national or state/provincial level.”)

[20] Id., at 95.

[21] The Cook Islands, Fiji, Niue, Solomon Islands, Tokelau, Tuvalu and Vanuatu are among the Pacific Island nations signatory to the Declaration: Small Island Developing States (SIDS), The Barbados Declaration on Achieving Sustainable Energy for All in Small Island Developing States (May 8, 2012), http://www.sids2014.org/content/documents/258Barbados%20Declaration.pdf

[22] The Climate Vulnerable Forum [CVF], The Marrakech Communique, Annex 7, (November 17, 2016).

[23] Antoinette Price, Electricity Access for Everyone, Everywhere: Facilitating Rural Electrification in Developing and Newly Industrialized Countries, Int’L Electrotechnical Comm’n (2016), https://iecetech.org/issue/2016-04/Electricity-access-for-everyone-everywhere.

[24] REN21 GSR 2017, supra note 4, at 108.

[25] L’Afrique des Idées, Potential, Policies, Financing, and De-Risking in Renewable Energy Sector in Africa 29 (Dec. 2017), http://www.lafriquedesidees.org/wp-content/uploads/2017/12/ADI_G11_Renewable_Energy-Final-Review-20171114-CLEAN.pdf (noting that initiatives for renewable energy financing include feed-in tariffs, energy audits, certification, network codes, and grants for young researchers.)

[26] Powerforall, Decentralized Renewables: From Promise to Progress 3, 12 (March 2017), https://static1.squarespace.com/static/532f79fae4b07e365baf1c64/t/58e3f73ce4fcb5a3a0989855/1491334979777/Decentralized-Renewables-From-Promise-to-Progress-March-2017.pdf

[27] Id., at 3.

[28]  Republic of Rwanda Ministry of infrastructure, Rural Electrification Strategy  7 (Jun. 2016), http://www.mininfra.gov.rw/fileadmin/user_upload/aircraft/Rural_Electrification_Strategy.pdf

[29] See The Int’l Bank for reconstruction and Dev. [IBRD], Minigrids in Nigeria: A Case Study of a Promising Market (Nov. 2017), http://documents.worldbank.org/curated/en/352561512394263590/pdf/ESM-dNigeriaMiniGridsCaseStudyConfEd-PUBLIC.pdf

[30] See “Table 5. Energy Policies Considered for Microgrids in China” in Amjad Ali et al., Overview of Current Microgrid Policies, Incentives and Barriers in the European Union, United States and China, 9 Sustainability 12 (Jun. 29, 2017).

[31] Ministry of New and Renewable energy, Draft National Policy on RE Based Mini/Micro Grids, 30/05/2012/NSM (Jun. 1, 2016), https://mnre.gov.in/file-manager/UserFiles/draft-national-Mini_Micro-Grid-Policy.pdf

[32] Rahul Tongia, Microgrids in India: Myths, Misunderstandings  and the Need for Proper Accounting, Brookings India 9 (2018), https://www.brookings.edu/wp-content/uploads/2018/02/impact_series_microgrid-folder_feb10-2.pdf

[33] Ministry of Energy and Min. Res. (Kementrian Energi Dan Sumber Daya Minerla Republik Indonesia), EMR Minister Regulation Number 38: Effort to Meet an Electricity Remote Areas (Mar. 18, 2017), https://www.esdm.go.id/en/media-center/news-archives/permen-esdm-nomor-38-tahun-2016-upaya-pemenuhan-kelistrikan-daerah-terpencil (last visited Sep. 9, 2018) (regarding the introduction of Ministerial Decree - Minister of Energy and Mineral Resources (ESDM) No. 38/2016 on Accelerating the Electrification of underdeveloped Rural area, Isolated, Border and Small Island population area of Through Implementation of small scale Electricity Supply.)

[34] Louis Brasington, Power to the People: Remote Microgrids Across Southeast Asia, Clean tech. Group (Jul. 26 2018), https://www.cleantech.com/power-to-the-people-remote-microgrids-across-southeast-asia/  (noting that Indonesian national law forbids foreign ownership of microgrids providing less than 1 MW, and permits only 50% foreign ownership of microgrids providing between 1 and 10 MW and 95 percent ownership for those delivering 10MW or more.)

[35] Myan. Inv. Comm’n, The Foreign Investment Law, The Pyidaungsu Hluttaw Law No 21/2012, The 3rd Waning of Thadingyut, 1374 ME (Nov. 2, 2012),  http://www.iea.org/media/pams/myanmar/2012_ForeignInvestmentLawEngMyan.pdf.

[36] Madhya Pradesh Urja Vikas Nigam Limited, Madhya Pradesh Policy for Decentralized Renewable Energy Systems, 2016, (Sep. 24, 2016), http://www.mprenewable.nic.in/Decentralized%20RE%20Policy%20in%20English%2024.09.2016.pdf.

[37] IRENA, Global Energy Transformation: A roadmap to 2050 15 (2018), http://www.irena.org/-/media/Files/IRENA/Agency/Publication/2018/Apr/IRENA_Report_GET_2018.pdf?la=en&hash=9B1AF0354A2105A64CFD3C4C0E38ECCEE32AAB0C

[38] See Kevin B. Jones & David Zoppo, A Smarter, Greener Grid: Forging Environmental Progress Through Smart Energy Policies and Technologies 3 (Benjamin K. Suvacool, 2014).

[39] President Trump’s America-First Offshore Energy Strategy enabled the largest lease sale for oil and gas exploration and development in U.S. history: see Press Release, U.S. Department of the Interior, Interior Announces Date for Largest Oil and Gas Lease Sale in U.S. History (Feb. 16, 2018), available at https://www.doi.gov/pressreleases/interior-announces-date-largest-oil-and-gas-lease-sale-us-history (last visited Sep. 4, 2018).

[40] Examples, among others, include California, which set a state target of 50% of the state’s electricity to come from renewable resources by 2030 and is presently on track to surpass this goal: see Cal. Energy Comm’n, California’s 2030 Climate Commitment Renewable Resources for Half of the State’s Electricity by 2030, available at  https://www.arb.ca.gov/html/fact_sheets/2030_renewables.pdf (last visited Aug. 31, 2018); and New York, which followed suit:, see Energy to Lead: 2015 New York State Energy Plan, New York State Energy Planning Board, Vol 1, at 112, available at https://energyplan.ny.gov/Plans/2015.aspx.

[41] These standards obligate all retail electric providers to ensure that a percentage, or a specified amount, of the electricity they sell comes from renewable resources.

[42] Galen Barbose, Lawrence Berkeley National Laboratory, U.S. Renewables Portfolio Standards: 2017 Annual Status Report 6 (2017).

[43] U.S. Envtl. Prot. Auth. [EPA], EPA Energy and Environment Guide to Action: State Policies and Best Practices for Advancing Energy Efficiency , Renewable Energy, and Combined Heat and Power 3-3 (2015), https://www.epa.gov/sites/production/files/2017-06/documents/guide_action_full.pdf

[44] Keven B. Jones, et al, The Urban Microgrid: Smart Legal and Regulatory Policies to Support Electric Grid Resiliency and Climate Mitigation, 41 Fordham Urban L.J. 1753 (2015).

[45] Forthcoming paper by Donna M. Attanasio, Senior Advisor for Energy Law Programs, The George Washington University Law School.

[46]IEA/OECD Report, supra note 12, at 2 (confirming that a number of trends show a changing global energy system, most notably that renewables and nuclear energy are supplying the majority of demand growth).