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					     Special Feature: Renewable Energy Technologies

                 Renewable energy development
                       in Asian nations

                          Policy mechanisms and institutional settings

                                 Noim Uddin, Thierry Lefevre and Ros Taplin

              Recent global efforts towards climate change mitigation via adoption of the Kyoto Protocol
              are reinforced with strong commitments to address global energy security and accessibi-
              lity. Advancement of renewables is a strategic path to address these challenges. While
              most developing Asian nations have significant potential for exploitation of renewables,
              their application has been limited. Appropriate policy and institutional mechanisms are
              essential for harnessing renewable energy potential. This research investigates such
              mechanisms for renewables in Bangladesh, Bhutan, Thailand and Viet Nam.

           Dr. Noim Uddin
 Graduate School of the Environment,
        Macquarie University
      North Ryde 2109, Sydney
       Prof. Thierry Lefevre*
    Centre for Energy Environment
       Resources Development                                                     the Clean Development Mechanism
   SLD Building 7B, Soi Saladaeng 1
                                                                                 (CDM)1 (Uddin, 2009). Despite these
   Rama IV Road, Silom Sub-district
                                                                                 early initiatives, developing nations

   Bangrak District, Bangkok 10500              number of energy strategies
               Thailand                         directed towards creation of a   could learn effective strategies and
        Tel: +66 (2) 235 5817                   low-carbon economy has been
        Fax: +66 (2) 236 9574            devised in industrialized nations in    1
                                                                                   CDM is one of the project-based mech-
     E-mail:         response to climate change mitiga-      anisms under the Kyoto Protocol that aims
          Prof. Ros Taplin               tion. Some of these strategies relate   to reduce emissions of greenhouse gases
    Mirvac School of Sustainable         to advancement of renewable ener-       (GHG) and to contribute to sustainable
    Development, Bond University                                                 development in host nations. CDM gives
                                         gies. At the same time, a few devel-
    Gold Coast, Queensland 4229                                                  industrialized nations the opportunity to
                                         oping nations are in the early stages   finance GHG mitigation projects and thus
                                         of designing strategies and formula-    earn Certified Emission Reduction units
                                         ting institutional arrangements to-     (CERs) in meeting their GHG emission
* Corresponding author                   wards renewables, for example, via      reduction commitments.

                                                                           TECH MONITOR          Nov-Dec 2009      13
Special Feature: Renewable Energy Technologies

governance from industrialized coun-                              Figure 1: Structure of DNA Bangladesh
tries, and could implement aspects
of these successful strategies in their
                                                                 National Designated Authority (NDA)
own nation’s geo-political contexts.
    This research examines the stra-
tegies and institutional settings that                                                    CDM Board
have been favourable for advance-
ment of renewables in industrialized
                                                         For endorsement
nations and may be applicable also
in developing nations. Australia and
Finland have been selected from in-                                              National CDM Committee
dustrialized nations.2 In addition, this
paper focuses on four developing                           For approval
countries from Asia – Bangladesh,
Bhutan, Thailand and Viet Nam.
                                                                                     CDM Secretariat
Renewable energy
strategies and
                                                                   Project                                        Letter of
institutions                                                                                                      approval
Status in selected
developing countries                                                                 Project participants
In Bangladesh, the 1996 National
Energy Policy marginally emphasized
                                               and others, 2005). The only environ-        Nations Framework Convention on
environmentally sound energy devel-
                                               mental policy framework that refers         Climate Change (UNFCCC) and acts
opment including renewables (Do-
                                               specifically to the advancement of          as the Secretariat of the Designated
raswami, 1996). A draft Renewable
                                               renewables is the 1992 National En-         National Authority (DNA). The Bangla-
Energy Policy was released in 2002,
                                               vironment Policy.                           desh DNA is a two-tier authority: the
but is yet to be finalized or implemen-
                                                   The Ministry of Power, Energy and       National CDM Board that endorses
ted due to lack of political motivation
                                               Mineral Resources is the sole author-       CDM project activities, and the Na-
and strong interest (Uddin and Taplin,
                                               ity administering all activities related    tional CDM Committee that approves
2009). To date, only a few fiscal meas-
                                               to the nation’s energy sector including     CDM project activities (Figure 1).
ures and regulatory policies relevant
to renewables have been designed               renewables. The Department of Envi-             Institutionalization of an indepen-
and implemented in Bangladesh. Fis-            ronment functioning under the Ministry      dent renewable energy agency, to be
cal measures include: exemption of             of Environment and Forests serves as        called Renewable Energy Develop-
import duties and value added tax              Bangladesh’s focal point to the United      ment Authority, was proposed in 2002.
(VAT) on solar PV modules and wind
turbines (Sarkar and others, 2003)                   Figure 2: Implementation approach of the IDCOL programme
and a US$120 subsidy for installing
family-sized biogas plants3 (van Nes                                     Government of
  Australia and Finland were selected as                                  Bangladesh
industrialized countries for this research
because of the diversified types of policy                                                  Soft loans
frameworks and institutional settings each                                                  and grants
nation has implemented and their contex-            Board of                                                 International
tual circumstances. Arguably, their experi-         Directors                                                organizations
ence helps to raise a range of issues that
are important for consideration by other
                                                         Soft loans,                      Repayment of
nations in pursuit of designing effective
sustainable energy strategies. These two               Capacity building                     loans
nations also differ in several ways, with
regard to energy policy history and re-
source availability, institutional settings,                           Partner organi-       Micro credit
and decision-making and governance.                                    zations (NGOs,
                                                                                                               End users
  This assumes a biogas production of 47                                 community
litres per kg of dung. Average capacity                                 groups, etc.)         Repayment
of a biogas plant is about 2.8 m3 gas pro-
duction daily (van Nes and others, 2005).

14      TECH MONITOR             Nov-Dec 2009
                                                                 Special Feature: Renewable Energy Technologies

   Figure 3: Organizational structure of the Bhutan’s NEC Secretariat                    Plan (2002-2007) (RGB, 2002). To
                                                                                         strengthen hydropower development,
                       National Environment Commission                                   the National Environment Commis-
                                     (NEC)                                               sion (NEC) published the Environ-
                                                                                         mental Assessment Guidelines for
                                                                                         hydropower schemes in 1999. Im-
                                  Deputy Minister                                        portantly, the Forest Policy of Bhutan
                                  NEC Secretariat                                        1991 is also a significant policy in
                                                                                         guiding the management and conser-
                                                                                         vation of wood from forest resources
                                                                                         in Bhutan (Penjore and Rapten, 2004;
   Administrative and           Technical Division           Policy and Coordi-          Ura and Kinga 2004).
   Finance Division                  Research and            nation Division                 Before the restructure of the insti-
     Administrative                  Statistics,                 Policy Section          tutional settings of Bhutan’s energy
     Section                         Monitoring Section          Legal Section           sector in 2002, the Department of
     Finance Section                 Environmental               Progress Section        Power within the Ministry of Trade and
                                     Section                                             Industry was the sole authority for
                                     Information,                                        energy sector development including
                                     Communication and                                   renewables. Following administrative
                                     Outreach Section                                    restructuring, the Department of Ener-
                                                                                         gy (DOE) under the Ministry of Trade
However, by the end of 2005, the              ganizations (IDCOL, 2005). IDCOL           and Industry has become the main
government decided to establish an            effectively works to engage local part-    institution responsible for planning
alternative independent unit, the Sus-        ner organizations, such as commu-          and programming of electricity sup-
tainable Energy Development Authority         nity groups and NGOs, and end users        ply in Bhutan. The Renewable Energy
(SEDA), for expediting the use of re-         in projects. IDCOL has adopted a suc-      Division under DOE is responsible
newables and alternative sources of           cessful micro-financing implement-         for renewables. The Bhutan Power
energy for electricity generation (Islam,     ation approach, in association with        Corporation, also under DOE, is res-
2005). Implementation of SEDA has             NGOs as well as community groups           ponsible for implementation of mini/
not been as rapid as was anticipated          (Figure 2).                                micro hydropower schemes and rural
(Islam, 2005) and the full organiza-                                                     electrification programmes through
tional entity of SEDA and its mandate             Bhutan does not have a specific        government and donor-driven activities
are yet to be established. In addition,       policy regarding renewables, but the       (Uddin and others, 2007). NEC acts
the Infrastructure Development Com-           nation has a strong policy focus on        as a DNA (called Designated Opera-
pany Limited (IDCOL), a state-owned           hydropower and on forest resources.        tional Entity) to UNFCCC and is res-
non-banking financial institution that        A strategy towards safe and reliable       ponsible for approval of projects on
was established in 1997, administers          electricity through sustainable and        greenhouse gas emission reduction,
the financing of renewables projects,         environment-friendly development of        including renewables under the CDM
among other infrastructure projects,          electricity from hydropower was an         scheme (Figure 3).
in association with international or-         important goal in the 9th Five Year
                                                                                             Currently, all energy development
                                                                                         and promotion including renewables
      Table 1: Thailand’s renewable electricity development targets                      in Thailand are administered under
                                                                                         the 1992 Energy Development and
    Renewable            Existing in       Target in             Target in               Promotion Act (Sajjakulnukit and
  energy sources         2006 (MW)        2007 (MW)              2011 (MW)               others, 2002). Thailand’s Energy Con-
                                                          RPS Incentives Total           servation and Promotion (ENCON)
                                                                                         Programme, established under this
 Biomass                    1,977             162.4          -        823     2,800      Act, has been instrumental in facili-
 Hydro                         44                18         78         34       156      tating growth of renewables in the
                                                                                         country for over a decade (Pichalai,
 Solar PV                      30                0.2         -         25           55
                                                                                         2007). The 2003 Energy Strategy for
 Wind                            1                 3         1        108       110      Thailand’s Competitiveness projected
                                                                                         the planned share of renewables: the
 Municipal solid
                                                                                         overall renewable energy target has
  waste (MSW)                    4                 1         -         96       100
                                                                                         been set as 8 per cent of final energy
 Biogas                          5                 1         -         25           30   consumption by 2011 and 10 per cent
                                                                                         by 2020, from 0.5 per cent in 2002
 Total                      2,061             185.6         79      1,111     3,251
                                                                                         (PRET, 2006). Table 1 gives specific
                                                                 Source: PRET, 2006      targets for electricity generation from

                                                                                     TECH MONITOR        Nov-Dec 2009     15
Special Feature: Renewable Energy Technologies

                                  Figure 4: CDM organizational structure in Thailand

                            Thailand Greenhouse Gas Management Organization (TGO)

                                                       Board of TGO

                                                                                               Internal auditor

                                                 Executive Director of TGO

                 Deputy Executive Director                                      Deputy Executive Director

        Office of              Investment               Capacity                  Project                      GHG
       Policy and             and Marketing            Building and             Review and                Inventory and
       Planning                   Office                Outreach                Monitoring                 Information
                                                          Centre                  Office                      Office

a range of renewable energy sources        performance of these institutions has      recognize both the importance of
under various policy measures and          often been hindered due to differing,      renewable energy resources and the
schemes.                                   and often overlapping, policies and        potential role of private sector invest-
    In order to achieve the ambitious      legislation governed by a diverse          ments in the nation. Key policies in-
2011 and 2020 targets, the Govern-         range of agencies and ministries that      clude the Energy Sector Policy Reform
ment of Thailand devised many policy       are associated with energy activities      Agenda, the Power Sector Reform
measures including the Renewable           including renewables. This has resul-      Policy, the Rural Electrification Policy
Portfolio Standard (RPS) for new           ted in poor coordination among them        Framework and the 2001 Renewa-
power plants, wherein 5 per cent of        and especially with the private sector     ble Energy Action Plan (Bogach and
their generation capacity must be gen-     (Prasertsan and Sajjakulnukit, 2006).      others, 2001; EVN, 2005; WB, 2000).
erated by renewable energy (MOE,           Realizing the challenge of climate         The Renewable Energy Action Plan
2003). Other policy measures in the        change issues and, in particular, man-     was initiated by the World Bank’s En-
form of investment support for renew-      agement of CDM issues, the relatively      ergy Sector Management Assistance
ables have been implemented; for           new greenhouse gas and CDM insti-          Programme (ESMAP), Ministry of In-
example, provision of 50 per cent and      tution named the Thailand Green-           dustry and Viet Nam Electricity (EVN)5.
30 per cent of capital costs for solar     house Gas Management Organization          The main objective of the Action Plan
and micro-hydro projects, respecti-        (TGO)4 was established in 2007 as          is to support accelerated renewable
vely (TEENET, 2004).                       a public authority to act as the DNA       electricity generation for the nation via
                                           for the CDM Secretariat Office (Uddin      government’s financial and adminis-
    Key agencies that are responsible
                                           and Taplin, 2009). Figure 4 provides       tration support (Bogach and others,
for renewables include: the Depart-
                                           the organizational structure responsi-     2001). Notwithstanding the partial or
ment of Alternative Energy Develop-
                                           ble for overseeing implementation of
ment and Efficiency and the Energy
                                           CDM in Thailand.                           5
                                                                                        EVN is a vertically integrated electricity
Policy and Planning Office under the
Ministry of Energy. Other agencies that      Policies that address the advan-         utility charged with development, manage-
have renewable energy programmes           cement of renewables in Viet Nam           ment and operation of the nation’s elec-
                                                                                      tricity industry assets. EVN cooperates
include the Electricity Generating Auth-
                                                                                      with seven regional electricity companies,
ority of Thailand, Renewable Energy        4
                                             By the Royal Decree on Thailand Green-   four electricity transmission companies,
Centres (responsible for renewables        house Gas Management Organization          four electrical engineering companies, the
in provinces), research institutions,      (Public Organization) Establishment B. E   National Load Despatch Centre and a num-
financing bodies and NGOs. However,        2550 (2007)                                ber of manufacturing companies.

16      TECH MONITOR          Nov-Dec 2009
                                                             Special Feature: Renewable Energy Technologies

               Figure 5: CDM institutional setting in Viet Nam                         ble energy policy measure ever de-
                                                                                       signed and implemented. While the
                              Ministry of Natural Resources and                        success of MRET has been mixed with
                                    Environment (MONRE)                                very low targets on renewable electri-
                                                                                       city (Uddin and others, 2006), MRET
                                                                                       represents the world’s first innovative
                                  CDM National Executive and
                                                                                       and genuinely mandatory rather than
                                  Consultative Board (CNECB)
                                                                                       just aspirational renewable energy
                                                                                       target regime (Kent and Mercer 2006;
      CER buyer                                                                        MacGill and others, 2006).
    (Annex I party)                                                                        The new government led by Mr.
                                                                                       Kevin Rudd, committed to ensuring
                            International Cooperation                                  20 per cent of renewable electricity
     CDM project                Department (ICD)                                       by 2020, legislated an expanded RET
     consultants               Designated National                                     scheme in September 2009 (Govern-
                                  Authority (DNA)                                      ment of Australia, 2008). The target
                                                                                       increases from 9,500 GWh by 2010 to
                                                                                       45,000 GWh by 2020 (ORER, 2009).
        Project                                                                        Other important measures towards
        entities                                                                       advancement of renewables have in-
                                                                                       cluded ratification of the Kyoto Pro-
                                                                                       tocol by the Australian government in
                                                                                       2007, voluntary market-based mecha-
     Stakeholders                                                                      nisms that have been operational in
      (community                                                                       Australia for more than a decade (e.g.
      and others)                                                                      Greenhouse Challenge Plus 6 and
                                                                                       Greenhouse Friendly Programmes7
full implementation of these policies,     Experience from                             at the Federal level and Greenhouse
development of renewable energy            Australia and Finland                       Gas Scheme8 and Renewable Energy
technologies has not been fully real-
ized (Uddin and others, 2009).             Australia’s energy sector and overall       6
                                                                                         Now superseded, the programme has
     EVN and the Institute of Energy       energy policy have been heavily influ-      been in the light of plans for the Carbon
                                           enced by the nation’s natural resource      Pollution Reduction Scheme and the 2008
(IOE), both under the Ministry of Indus-
                                           endowments and general market               National Greenhouse and Energy Report-
try, are the sole agencies responsible                                                 ing Scheme legislations.
for renewable electricity development      approach to economic issues (IEA,
                                           2005). Although energy use is the             The future of these voluntary schemes
and promotion. EVN also encourages
                                           major source of Australia’s green-          is somewhat grey, as they have not led to
development and implementation of                                                      significant reductions of GHG emissions
CDM projects and advancement of re-        house gas (GHG) emissions, energy
                                                                                       to date (Griffths and others, 2007). In
newable electricity in rural and remote    policy and GHG mitigation policy have       particular, concerns about the future adop-
locations (EVN, 2006). IOE facilitates     often been developed along separate         tion of voluntary initiatives include per-
renewable energy development and           paths, with different objectives (Riedy,    ceived transparency issues related to ad-
assists EVN and the Ministry in policy     2005). In the pre-Kyoto regime (initially   ministering the schemes and issues with
development. In March 2003, the gov-       until late 1997 and then until 2005         regard to long-term enforceability and
                                           when the Kyoto Protocol came into           effectiveness (Taplin, 2004), and compli-
ernment designated its National Office
                                                                                       ance of such initiatives with the proposed
for Climate Change and Ozone Pro-          force), energy policy in Australia did
                                                                                       national emission trading scheme (Govern-
tection, which is part of the Interna-     not acknowledge renewables as a             ment of Australia, 2008).
tional Cooperation Department (ICD)        significant contributor to the energy       8
                                                                                        Currently operational in NSW and ACT.
of the Ministry of Natural Resources       sector of the future (Sonneborn, 2004).     While the NSW Greenhouse Gas Scheme
and Environment (MONRE), as Viet           The most important piece of legisla-        or NGAS scheme, designed in early 2003,
Nam’s DNA (the CDM National Autho-         tion with regard to renewables is the       claims being the world’s first such type
rity). After this, a CDM National Execu-   2001 Renewable Energy (Electricity)         of GHG abatement scheme, it lacks cre-
tive and Consultative Board (CNECB)        Act (Kent and Mercer, 2006). The key        dibility with regard to verification currently
was established by MONRE in April          implementation measure of the Act’s         administered by Independent Pricing and
                                           objective was the Mandatory Renew-          Regulatory Tribunal (IPART), which is a
2003. CNECB is composed of gov-
                                                                                       non-technical administrative organ with
ernment officials from relevant energy,    able Energy Target (MRET) – a 2 per
                                                                                       controversial verification procedures that
environment and finance ministries.        cent contribution of renewable elec-        significantly differs from any other scheme
The Director-General of ICD chairs         tricity (9,500 GWh) by 2010 (Kent and       e.g. CDM/JI verification under UNFCCC.
CNECB. The structure of DNA in Viet        Mercer, 2006). Arguably, MRET is the        Similar experiences are also evident from
Nam is given in Figure 5.                  Australia’s most significant renewa-        Greenhouse Friendly Scheme.

                                                                                 TECH MONITOR            Nov-Dec 2009        17
Special Feature: Renewable Energy Technologies

Schemes at state level), and partici-                 Weak institutional governance with      vention on Climate Change in June
pation in the Asia Pacific Partnership            regard to the MRET programme of             1992 and ratified it in 1994. Finland,
on Clean Development and Climate                  Mr. John Howard government and the          as a European Union member, is eli-
(APP),9 which has included pledged                state governments’ own renewable            gible to participate in Kyoto Protocol
financing for renewables R&D under                energy targets have resulted in in-         Mechanisms (Wilenius and Tirkkonen,
its framework for clean energy. Over-             consistent renewable energy policy          1998). Other relevant renewable en-
all, although some progress has been              implementation. However, there has          ergy policies cover investment grants12,
made with renewables policy, further              been a recent shift in institutional        R&D support13 and taxes14. Although
policy support is necessary to optim-             governance after the current Labour         Finland instituted environment-based
ize or reduce utilization of the nation’s         government’s two important pieces           taxation early, investment subsidies
rich fossil-fuel resources and, at the            of legislation mandating a renewa-          for the growth of renewables appear
same time, promote adoption of new                ble energy target of 20 per cent by         to be stagnant. This has been due to
renewables’ capacity.                             2020, as well as the national Carbon        lobbying by large electricity producers
    The Ministerial Council on Energy             Pollution Reduction Scheme (CPRS)           and a decision to establish two nu-
established by the Council of the Aus-            set to start in July 2011. These should     clear power plants.
tralian Government (COAG)10 in 2001               reduce the differences between the              The lead government agency for
oversees the continued development                federal and state governments’ re-          energy issues in Finland, the Minis-
of Australia’s energy policy including            newable energy targets and thereby          try of Employment and the Economy
policies relevant to renewables. The              reduce uncertainties for industry.          (MEE), has an overall coordination and
Department of Resources, Energy and                    Finland’s energy policy is embed-      planning role in the energy policy-
Tourism (DRET) (formerly the Depart-              ded in the nation’s climate strategy        making. When MEE was the Ministry
ment of Industry, Tourism and Re-                 and has had a long development his-         of Trade and Industry (MTI), the Energy
sources), established in late 2007 by             tory. While renewable energy sources,       Department in MTI oversaw energy
the Rudd government, is responsi-                 notably wind and biomass, have re-
ble for development of the new MRET.              ceived various types of support since       12
However, there is no separate agency                                                             The investment subsidy levels in the
                                                  the start of the first national Energy      1990s corresponded to 10-25 per cent of
under DRET that is solely responsible             Programme in 1979 (Ericsson and             investment cost. However, the maximum
for renewables. Currently, the Depart-            others, 2004), the Finnish Energy           available investment subsidy since 1999
ment of Climate Change (also estab-               Strategy of 1997 stipulated objectives      at 30 per cent has been contingent on the
lished in December 2007 by the Rudd               to promote the development and com-         type of project. Further, biomass-based
government) oversees the Australian               mercialization of renewable energy          electricity production as well as wind and
government’s comprehensive action                 technologies for the first time (Vehmas     small-scale peat or hydropower receives
plan towards reducing emissions and                                                           a subsidy per unit electricity produced,
                                                  and Luukkanen, 2005). Since joining
facilitates advancement of renewa-                                                            equivalent to the Finish electricity tax
                                                  the European Union in 1995, the na-         (Ericsson and others, 2004). When fossil
bles. The Department of the Environ-              tional energy policy, especially policies   fuels used for electricity generation were
ment, Water, Heritage and the Arts                on renewables, have been influenced         exempted from the CO 2 tax, a price sub-
(formerly the Department of Environ-              by the European Union Directives and        sidy for renewable electricity was intro-
ment and Water Resources), also                   guidelines. As a result, based on the       duced (Vehmas and Luukkanan 2005) in
established in late 2007, additionally            1997 White Paper on Renewable               1997 as compensation for the replacement
deals with renewable energy program-              Energy by the European Commission,          of the CO2 tax on electricity generation with
mes and GHG abatement program-                                                                an electricity consumption tax (Vehmas
                                                  the 1999 Finnish Renewable Energy
mes. Other entities that have a focus                                                         2005).
                                                  Programme was developed. 11 The             13
on renewables include state govern-                                                             Development of integrated gasification
                                                  objective of this programme was to
ment agencies, research centres in                                                            for biomass fuels.
                                                  increase renewable energy use by 50         14
universities, business groups and                 per cent by 2010 and 100 per cent by           The general level of carbon tax in 2002
companies, and NGOs. However,                                                                 in Finland was 17.2 €/tonne CO2 and 18
                                                  2025. The revised Renewable Energy
their contribution towards national                                                           €/tonne in 2003, except for natural gas
                                                  Plan – the Action Plan for Renewable        which was half of this. The carbon tax
renewables policy-making is minor.                Energy 2003-2006 – included, for the        was originally only 1.2 €/tonne CO 2 in
                                                  first time, reference to the introduction   1990 to 18 €/tonne CO 2 in 2003 (Vehmas
  Partner nations are Australia, China, India,    of a feed-in system for guaranteeing        2005). Peat in Finland is subject to an
Japan, Republic of Korea, Canada and the                                                      energy tax of about 1.5 €/tonne CO2. The
                                                  a minimum price for renewable elec-
United States.                                                                                energy-intensive industry receives a tax
                                                  tricity producers. As part of Finland’s
   The Council of Australian Governments                                                      refund, corresponding to 85 per cent of
                                                  international climate commitments,
(COAG) is a high level of political institu-                                                  the tax that exceeds 3.7 per cent of a
tion in Australia that comprises the Prime
                                                  Finland signed the Framework Con-
                                                                                              company’s value added. Electricity is taxed
Minister of the nation, the State Premiers                                                    on the basis of consumption in Finland.
and Territory Chief Ministers. COAG meets           This replaced two earlier programmes:     The electricity consumption tax is 6.9 €/
at least once a year and considers issues         1993 Wind Power Programme; and 1994         MWh for all users except industrial and
that affect all jurisdictions, including energy   Bioenergy Programme (Vehmas and Lu-         agricultural greenhouses, which pay 4.2
issues.                                           ukkanan 2005).                              €/MWh (Ericsson and others, 2004).

18       TECH MONITOR               Nov-Dec 2009
                                                               Special Feature: Renewable Energy Technologies

issues until institutional reform started   certain geo-political contexts, how-        price for electricity from renewables
in 2004 (Vehmas and Luukkanen,              ever, some alternative energy paths         and provision of investment incenti-
2005). In operation since the begin-        (more concretely, renewables) will not      ves. These options, however, are yet
ning of 2008, MEE was created by the        be realized without supportive policy       to be examined in the developing
merger of MTI, the Ministry of Labour,      measures including financial incenti-       nations’ context. While adopting a
and parts of the Ministry of Home           ves. This is evident in the case of the     harmonized universal instrument is
Affairs (IEA 2007). Currently, MEE’s        advancement of renewables, where            challenging because of variance in
Energy Department is responsible for        market barriers do exist. This occurs       national energy policy orientation and
energy policy-making. The Renewa-           in different settings in developing na-     geographical particularities, a set of
bles and the Energy Efficiency Divi-        tions. Thus, trends in energy decision-     effective instruments could be tested
sion under the Energy Department of         making, particularly within the policy/     and adopted in different developing
MEE oversees activities with regard         regulatory landscape, may decisively        national settings.
to renewables. The Sustainable Dev-         influence the advancement of renew-
                                                                                        Effective institution and governance:
elopment Project, which earlier had         able energies.
                                                                                        Institutional settings and governance
operational autonomy, is now part of
                                            The influence of sectoral policies on       with regard to the advancement of re-
the Renewables and Energy Division.
                                            renewables: It appears that policy          newables spans from global to local
The Ministry of Foreign Affairs serves
                                            relevant to the advancement of renew-       levels. One important aspect is that
as the DNA and UNFCCC Focal Point.
                                            ables is not restricted to energy policy-   institutions that are responsible for
    Other important agencies under          makers in different jurisdictions. Re-      national energy issues should directly
MEE with responsibilities related to        newable energy policy discourse is          oversee the advancement of renew-
renewables include: Finnish Funding         constructed across a complex field          ables. Further, establishment of an
Agency for Technology and Innovation        comprising resources, environment,          independent renewable energy insti-
(TEKES), Technical Research Centre          economy and population – all under-         tution reporting to the national energy
of Finland (VTT), Motiva Oy (formerly       pinned by a discourse of sustainable        authority is necessary and advisable
the Information Centre for Energy and       development. From the industrialized        for all settings.
Renewables), and the Energy Market          nations’ context, strong environmen-
                                                                                        CDM as an effective strategy: Most
Authority (MEA) as Finland’s National       tal drivers appeared to be effective,
                                            whereas energy security and acces-          of the developing nations examined
Emission Trading Authority. Other key
                                            sibility appear as strong drivers in the    have already institutionalized CDM
players in energy issues include the
                                            developing nations’ context. While          strategy at the national level. Al-
energy companies (Mankala Oy, Poh-
                                            taxation has played an important role       though CDM has been instrumental
jolan Voima Oy, Teollisuuden Voima
                                            in Finland to promote renewables            in providing additional financing for
Oy) and some industrial sectors (pulp
                                            (Vehmas and Luukkanen, 2005), the           advancement of renewables, early
and paper industries, the basic metal
                                            RET policy in Australia has been trial-     progress on actual implementation of
industry and the chemical industry).
                                            led and then implemented seriously.         renewable energy projects has been
Factors that affect                         Market barriers to renewables that          slow. This is because CDM faces im-
                                            currently exist in Australia include:       portant challenges: a low quantity of
renewable energy policy                                                                 Certified Emission Reduction Units
                                            lack of consideration of externalities
and institutions                            (Owen, 2006; Sonneborn, 2004); ex-          (CERs) from renewable electricity
                                            isting and historical subsidies that        projects and associated high trans-
Research reveals that a framework
                                            support fossil fuel interests (Riedy,       actional costs for CDM activities; and
for effective renewable energy strategy
                                            2003); and obstacles to distributed         the problem of additionality. Besides
development in Bangladesh, Bhutan,
                                            generation (Sonneborn, 2004).               these challenges, significant uncer-
Thailand and Viet Nam could be de-
                                                                                        tainties exist with regard to balancing
signed via adopting a range of tested       Effectiveness of current strategy:          and/or decoupling cost versus emis-
approaches that have worked effec-          Despite the existence of early policy       sion reductions and with the future of
tively in different developed nation        development and legal instruments           the Kyoto Protocol after the first com-
settings. The key issues that are rele-     that constitute a foundation for renewa-
vant to designing a renewable energy                                                    mitment period from 2008-2012.
                                            ble energy advancement in developing
strategy framework include: realizing       nations, most of the nations examined
the link between energy options and                                                     Challenges to adoption of
                                            in this research still lack broad target-
political decision-making; influences       oriented renewable energy strategies.       effective strategies and
of sectoral policies on renewables;         There are potential instruments that        policy measures for risk
effectiveness of current strategies;        have been implemented in other na-
effectiveness of institutions and gov-                                                  management
                                            tional settings, such as the extended
ernance; and CDM as a potential             RET in Australia and the carbon di-         Lack of adequate policy frameworks
strategy.                                   oxide tax in Finland, which could be        and effective institutional settings
Link between energy options and             used to attain such a target-oriented       have been key challenges for renew-
decision-making: While a number of          approach. Potential approaches could        ables implementation in developing
alternative energy paths may exist in       be the adjustment of the premium            countries (Gilau and others, 2007;

                                                                                  TECH MONITOR         Nov-Dec 2009     19
Special Feature: Renewable Energy Technologies

Painuly, 2001; Yu, 2003). Externality           Enabling institutional settings             2. Doraswami, A. (1996). National
costs also act as market barriers for                                                           energy policy for Bangladesh.
                                                A shift towards orientation of energy
advancement of renewables (Owen,                                                                Energy for Sustainable Develop-
                                                administration from the Ministry of
2006). Lack of political foresight is                                                           ment, III(2): 5-8.
                                                Industry to Ministry of Employment and
also seen as constraining factors in                                                        3. Ericsson, K., Huttunen, S., Nils-
                                                Economy has been noticed in Finland.
achieving renewable energy targets                                                              son, L. J. and Svenningsson, P.
                                                This has driven energy objectives from
in many jurisdictions (Wustenhagen                                                              (2004). Bioenergy policy and mar-
                                                an industry-based approach to one
and others, 2007). Favourable policy                                                            ket development in Finland and
                                                that is based on commodity. In con-
aspects and enabling institutional set-                                                         Sweden. Energy Policy, 32 (15):
                                                trast, a dedicated ministry responsible
tings are important ways to overcome                                                            1707-1721.
                                                for renewables is a much more sound
these challenges.                               and recommended approach. An ex-            4. EVN (2005). Viet Nam’s Electric
                                                ample of this approach is the Ministry          Power Sector: Meeting the chal-
Favourable policy aspects                                                                       lenges of rapid growth. Hanoi:
                                                of New and Renewable Energy in India
In any policy regime, contextual factors,       (Ghosh and others, 2002). Thus, the             Viet Nam Electricity.
changing objectives, priorities and             developing nations could establish          5. EVN (2006). Electricity of Viet Nam
actors, and resource constraints all            a dedicated administrative institution          2004-2005. Hanoi: Viet Nam Elec-
affect policy performance and it is even        that will function as a policy imple-           tricity.
more difficult to judge progress to-            mentation arm for renewables.               6. Ghosh, D., Shukla, P.R., Garg, A.
wards a goal when no specific targets                                                           and Ramana, P.V. (2002). Renew-
have been set (Lipp, 2007). RPS 15              Conclusion                                      able energy technologies for the
could be one possible support policy                                                            Indian power sector: Mitigation
                                                Arguably, a shift towards more sus-
mechanism for developing nations.                                                               potential and operational strate-
                                                tainable energy systems and advan-
RPS – a quota system that requires                                                              gies. Renewable and Sustainable
                                                cement of renewables is necessary
electricity suppliers to source a cer-                                                          Energy Review, 6(6):481-512.
                                                and inevitable. While a number of early
tain proportion of their electricity from                                                   7. Gilau, A.M., Van Buskirk, R. and
                                                successes in advancing renewables
renewables – has been implemented                                                               Small, M.J. (2007). Enabling opti-
                                                have been achieved in some devel-
in 38 jurisdictions of which eight are                                                          mal energy options under Clean
                                                oping nations, amplification of suc-
national governments (e.g. Australia)                                                           Development Mechanism. Energy
                                                cessful approaches through either a
(Lipp, 2007). A Feed-in-Tariff (FIT),16                                                         Policy, 35(11):5526-5534.
                                                top-down or a bottom-up manner can
another strategic approach, has been                                                        8. Government of Australia (2008).
                                                enhance their further deployment. In
shown to be effective in meeting mul-                                                           Carbon Pollution Reduction
                                                addition, there is the opportunity to
tiple objectives compared with the                                                              Scheme - Green Paper. Canberra:
                                                learn from policy discourses and adapt
RPS approach (Lipp, 2007). Also, an                                                             Department of Climate Change,
                                                effective policy instruments from in-
environmental tax in the form of carbon                                                         Government of Australia.
                                                dustrialized nations. Challenges may
dioxide tax can be used successfully
                                                still exist with regard to their success-   9. Griffiths, A., Haigh, N. and Rassias,
to promote renewables as, for exam-
                                                ful implementation in the geo-political         J. (2007). A framework for under-
ple, in Finland (Vehmas, 2005). While
                                                contexts of developing nations.                 standing institutional governance
Thailand has adopted an RPS, other
                                                    Early experience from the CDM               systems and climate change: The
developing nations may examine a
                                                scheme will drive a developing nation           case of Australia. European Man-
mix of available policy mechanisms
                                                government’s motivation towards de-             agement Journal, 25(6):415-427.
to support renewables. Furthermore,
decision-making processes need to               signing a national development agen-        10. IDCOL (2005). IDCOL Renewa-
be oriented towards valuing the syn-            da integrated with CDM. This could              ble Energy Programme. Dhaka:
ergistic and long-term benefits from            further enhance cooperation with in-            Infrastructure Development Com-
renewables. One possible option is              dustrialized nations. While a global            pany Limited.
to seek a range of expert judgements            treaty on advancement of renewables         11. IEA (2005). IEA Energy Policy Ana-
during decision-making processes.               is unlikely to emerge in the short-term,        lysis: Australia 2005. Paris: Inter-
                                                strengthening the CDM approach via              national Energy Agency.
                                                reinforcing it with a target for renew-     12. IEA (2007). IEA Energy Policy Ana-
  Renewable Portfolio Standard (RPS) is         ables could enhance future energy               lysis: Finland 2007. Paris: Inter-
also known as Renewable Obligation in           sustainability for developing nations.          national Energy Agency.
the United Kingdom.                                                                         13. Islam, A. (2005). PM approves in-
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