Rodrigo Osorio
General Director
Agency of Energy of Puebla
/
Expert Contributor

Energy Well-Being: A Possible Horizon

By Rodrigo Osorio | Mon, 08/31/2020 - 09:04

Part of being optimistic is keeping one's head pointed toward the sun, one's feet moving forward. There were many dark moments when my faith in humanity was sorely tested, but I would not and could not give myself up to despair. That way lays defeat and death.

 – Nelson Mandela [ref1]

 

The disruption to the global economy following the pandemic of SARS-CoV-2 requires us to reconsider the balances deemed necessary by an energy system during economic recovery. The idea of energy welfare is a possible route that helps promote value creation in three areas (social, economic and environmental) to guide a fair and planned energy transition. While climate change requires an accelerated decarbonization of the economy, not only must the use of renewable technologies be considered but also their social implications to make this technological revolution one in which we build a less unequal society.

The rapid adoption of fossil fuels in the 20th century has been one of the main factors leading to living in a more interconnected world, but it has not necessarily guaranteed energy well-being. Today, as in the post-war economy, we are faced with a scenario of new energy technologies and growing investment in them. However, despite the growing competitiveness of renewable sources, the route to a sustainable economy has an ethical, rather than a technical, justification due to the existence of an abundant reserve of fossil fuels for the rest of the 21st century.  
In this article, energy welfare is presented, for the first time, as a guide for public policies toward a fair and planned energy transition. Below are some examples of policies that seek to promote energy well-being under three interdependent spheres: social, environmental and economic.

SOCIAL: JUST TRANSITION

Energy welfare must guarantee social justice. In this sense, there are two critical aspects to be considered: the inclusion of vulnerable sectors in the energy transition and the eradication of energy poverty; that is, universal access to clean and affordable energy.

First, people employed in carbon-intensive industries will face structural adjustments to meet the Paris Agreement targets. Against this backdrop, how can we ensure the participation of those working in polluting sectors instead of becoming victims of disruptive transitions? The main objective should be, first of all, the creation of green jobs to enable a transfer of human capital from polluting sectors to those with low emissions. This process is part of a just transition: the route to a green economy in which no person is left behind, regardless of gender, social class, sexual preference or beliefs.  

Second, energy well-being promotes the eradication of energy poverty. Households with limited income to access quality energy services imply damage to their health and productivity. According to the multidimensional energy poverty index, it is estimated that 30 percent of the population in Mexico lives in these conditions. This situation suggests that the electricity subsidy has not been sufficient but that, in addition, it is necessary to consider the multidimensional aspect in order to set new goals in terms of clean energy and assuming the unequal effects, still unknown in Mexico, of the phenomenon. As a first step, it is urgent that there be an official indicator to evaluate the regional conditions of this problem outside of a binary access approach but rather a qualitative one that takes into account inequalities and sustainability.

ENVIRONMENTAL: SUSTAINABLE FINANCE
The environmental aspect of energy welfare is based on preventing a greater increase of 1.5º C in the temperature of the planet by the end of the 21st century to avoid catastrophic and irreversible climate change. This temperature increase may seem small, but it is a warming of the planet greater than the temperature with which our civilization began 10,000 years ago. Such evidence is sufficient justification for the energy transition, which must be driven by the ethical foundation of ensuring the well-being of future generations.

The financial sector is among those that have provided the most interesting innovations for environmental protection. From the issuances of green bonds to the expansion of carbon markets, sustainable finance has emerged as a mechanism that can direct capital toward projects that comply with stricter measures to protect biodiversity and reduce greenhouse gases. In addition, options such as a carbon tax are based on a notion of social justice in the sense that costs are distributed according to who contributes most to environmental degradation. Thus, creating environmental value means avoiding the loss of natural capital and the degradation of ecosystems.

The Network to Green the Financial System, established in 2017 by central banks and supervisory agencies, including the Bank of Mexico, is one of the most important international cooperation initiatives to promote a sustainable financial system. The network's main objective is to move toward a financial system that is resilient to climate risks to mobilize capital for investments that promote and preserve the environment. Redirecting capital to sustainable energy infrastructure, for example, would help improve the reliability of Mexico's electricity system, accelerating the deployment of variable renewable energies such as solar and wind. At the same time, this would help reduce the incentives for fossil-fuel electricity production.

ECONOMIC: REGIONAL ENERGY TRANSITIONS

How does energy welfare generate value in the economic field? A relevant case study to reflect on this question is the case of China's modernization between 1980 and 2015. Despite accelerated economic growth, which has resulted in a four-fold increase in energy consumption per capita, its environmental costs have increased to the point that it has been the nation with the highest GHG emissions since 2008. However, since 2015, China has shown significant progress in global energy sustainability that is not seen in indicators such as GHG emissions. For example, one of the Chinese government's major commitments has been to invest in technological innovation. Proof of this has been its global leadership in the manufacture of photovoltaic panels and wind turbines. In the local sphere of China, the ambitious project of Zhangjiakou stands out. The city of 4.4 million inhabitants will be the host of the 2022 Winter Olympics. Zhangjiakou has begun a process of industrial and energy reconfiguration, where two transitions converge toward 4.0 industries and sources of renewable energy (solar and wind) and clean energy (green hydrogen). In this sense, Zhangjiakou is positioned as an urban experiment in which China's main cities will be able to guide themselves toward a sustainable urban transformation while maintaining energy welfare.

THE POSSIBLE HORIZON

The reality of today does not determine the possibility of tomorrow but what defines it is the imagined and constructed future out of consciousness. Similarly, the idea of energy well-being is a viable and fair option of cooperation to reach the Sustainable Development Goals. This approach provides us with an alternative route that contributes to a sustainable and necessary economic recovery following the ravages of the COVID-19 pandemic. In the face of the global crisis, for the same reasons that we cannot abandon a ship in a storm because we cannot control the winds, we must not give up on the common good. Today, Mexico is facing unprecedented challenges, with economic and social forecasts deteriorating as the pandemic progresses. Faced with this, energy welfare is a possibility for our country's recovery, where a healthy and conscious path toward a social justice-led resilient project is established.

[ref1] Nelson Mandela (1994). Long walk to freedom. Londres: Little, Brown and Company. Edición Kindle. Capítulo 60.

Photo by:   Rodrigo Osorio

MORE BY THE AUTHOR

Energy
by Rodrigo Osorio