Economics will write a new chapter for renewable energy

There's still a lot of work to be done to get us to the sustainable-energy future we must have. But the potential to achieve the goal is there, and the rewards are worth the effort.

Imagine a future in which all the cars on Sheikh Zayed Road are solar-powered. This sounds like a scene from a science fiction novel. But according to a recent UN report it could soon become a reality. The report suggests that renewable technologies, such as solar, could supply 80 per cent of our energy needs by 2050.

This prediction, announced by the UN's Intergovernmental Panel on Climate Change in Abu Dhabi last month, is ambitious to say the least considering that today renewables represent just 12.9 per cent of the global energy mix. Of that, 10 per cent comes from the burning of wood for heat and cooking in developing countries. Solar and wind represent less than 1 per cent each. This begs the question: is the UN outlook realistic or is it just a case of science fiction?

Clearly, some big steps need to be taken if we are to get to that 80 per cent target. The 194 governments that endorsed the report must now take action by implementing policies that promote renewables.

Germany is an excellent example. Last week, it announced that it will phase out nuclear power by 2022 and instead focus on renewable energy. This is a major leap for the country considering that nearly a quarter of its electricity comes from nuclear power. The policy shift will inevitably spur new investments and new innovations in emerging renewable technologies such as geothermal energy and biomass energy from landfill waste.

Despite the high investment costs, the overall economic benefits are significant. For one, relying on renewables will wean us off our dependence on fossil fuels like oil. This is especially important given that our planet is slowly running out of oil. The tank is no longer full. By 2050, even Saudi Arabia might not have sufficient oil to export, according to the CEO of Saudi Aramco, the country's national petroleum company. This startling revelation should serve as a wake-up call for every driver on Sheikh Zayed Road.

There are also environmental benefits. Replacing oil with renewables would result in lower levels of carbon dioxide released into the atmosphere. This would in turn reduce global warming which means fewer floods, droughts, heatwaves and rising sea levels. The importance of this trend will become increasingly visible as the pattern of natural disasters continues to balloon.

In terms of social benefits, renewables could provide electricity to over two billion people who currently have little, or very erratic, access to electricity. This would in turn help raise health and educational standards in developing countries.

Fortunately, we live in a country that, despite holding some of the largest reserves of oil and gas in the world, fully appreciates the socio-economic benefits of renewable energy. In the past five years, the UAE has given us Masdar, a home-grown global renewables champion, and has earned the privilege of hosting the International Renewable Energy Agency (Irena). The UAE is also the first country in the Middle East to propose a definitive renewables target that will see it invest billions of dollars in this sector by 2020. There is more work to be done, namely in the adoption of a regulatory and incentives framework for renewables, but there's no doubt that we're off to a good start.

Other countries are starting to follow in those footsteps. Of the 300 gigawatts (GW) generated by new power plants added globally in 2008 and 2009, more than 40 per cent came from renewables. Today, almost half of global investment in electricity generation is going into renewables.

As investments in renewables go up, prices will continue to go down. In fact, the price of solar power has dropped by 50 per cent in the last 10 years. Not surprisingly, the fastest-growing renewable technology today is solar power, which saw a 53 per cent increase in installed capacity during 2009. At this rate, renewables will soon beat nuclear and fossil fuels in terms of offering the lowest lifetime cost of electricity, according to the UN report.

With our demand for energy rising, there is no better time than now to seriously focus on renewables and turn science fiction into reality.

Vahid Fotuhi is a renewable energy advocate based in the UAE