Clean energy from the other side of the world

Last Monday I visited the US Commercial Service in Ho Chi Minh City, a trade promotion unit of the International Trade Administration (part of the US Department of Commerce; http://www.trade.gov/cs).  Their role is to act as contact point in Vietnam for American companies wanting to sell their products or services in the Vietnamese market.  Their help is directed towards companies keeping jobs in the US.  It was an excellent presentation from which I want to bring up one issue to frame and motivate my discussion below.  Emerging countries tend to suffer from weak political and legal frameworks.

[More on this later]

New Energy Finance reports that in 2009 USD 145BN were invested in clean energy globally.  Also in 2009, governments around the world allocated USD 177BN of stimulus money for the development of clean energy.  Out of this pot, last year, only USD 25BN, or 17% of the actual investment, was actually spent.  It is anticipated for this number to increase over the next few years, as private investment picks up, until funds are consumed.  As seen below, it is of interest that out of the USD 177BN committed, the top 5 contributors (US, China, South Korea, Japan and Spain) allocated USD 147BN or 83%.  Where is everybody else? [1]

Some of the players missing are the emerging economies.  To further impulse this discussion, I show below statistics evidencing the momentum behind these countries: [2]

These stats paired with energy consumption and use projections offered by the Energy Information Administration, images shown below, can be interpreted as threatening to the pool of available energy and the environment. [3]

Emerging countries are creating most of the burden and carrying almost none of the load.

To put this situation in perspective, New Energy Finance also comments that to achieve 2020 CO2 peak emissions, an investment of USD 500BN per year by 2020 is needed.  Furthermore, the report also addresses the need of USD 250BN per year until 2030 to help developing countries fight climate change and satisfy the goals of the Copenhagen Accord.

So far, private investment in clean energy has been largely stimulated by public money and government involvement, and, as mentioned before, only a few nations are participating.

[Returning to the initial discussion]

When asked about the challenges faced by American, or other foreign companies when attempting to enter the Vietnamese market, our point of contact referred to the weak political and legal framework in the nation.  Vietnam is ranked 120 as per the Corruption Perception Index, an index that measures the perceived level of public-sector corruption in 180 countries and territories around the world.  The United Stated is 19 followed by Brazil at 75, China at 79, India at 84 and Indonesia at 111. [4]

Therefore, how realistic is it to expect or assume commitment from governments with weak political and legal frameworks to clean energy development?  How long will it take before emerging countries can carry most of the burden?

It will still be some time before emerging countries have in place great policy and government support needed to, as New Energy Finance states, not only “drive the transformation of the current energy infrastructure, but in the case of the developing world, leapfrog the developed world’s historic carbon-intensive technology choices, in favor of newer and cleaner alternatives.”

My newfound American colleague in Vietnam offered one solution.  “Patience.”

Now, I wish cost was the only obstacle to develop clean energy.

Sources:

[1] http://www.newenergymatters.com/UserFiles/File/Presentations/Green_inv_report_2010%20FINAL.pdf

[2] http://www.businessmonitor.com.ezproxy.lib.utexas.edu

[3] http://www.eia.doe.gov/oiaf/ieo/world.html

[4] http://www.transparency.org/policy_research/surveys_indices/cpi/2009

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