event 01 Nov 2020

Publication // Towards sustainable renewable energy investment and deployment; Trade-offs and opportunities with water resources and the environment

By United Nations Economic Commission for Europe (UNECE). This report offers a non-comprehensive “toolkit” to enable policy-makers to identify, evaluate and act upon the synergies and trade-offs introduced by the deployment of renewable energy. This approach aims to help policy-makers in: broadening cooperation across sectors; exploring financing and partnership opportunities; maximizing the benefits of renewables and reducing their negative impact on the environment.

category Research Papers, Publications and Books tag Nexus Methodology tag Methodology tag Energy tag Renewable Energy tag Governance tag Policy
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Executive Summary

Renewable energy will increasingly drive the transformation of the energy sector. Global energy demand is foreseen to almost double until 2050. Over the next 30 years, the energy sector will undergo major, structural transformations, including decarbonization, electrification and decentralization of production. Electrical power produced from renewable energy has a crucial role to play in this transition, as the declining cost of technologies – notably, solar photovoltaic and wind – are making renewable projects more viable and often competitive with conventional alternatives. Despite variations across countries and fluctuations over time, renewable energy markets are expanding, and policy-makers are being called to facilitate investments through appropriate instruments and regulations. At the same time, they face the complex challenge of maximizing the impact of renewable energy as a catalyst for development while ensuring that its deployment is sustainable.

Renewable energy can drive sustainable development in the agricultural and water sectors, provided that synergies and trade-offs in the water-food-energy-ecosystem nexus are appropriately addressed. The 17 Sustainable Development Goals (SDGs) adopted in 2015 by the United Nations Member States span the economic, social and environmental dimensions of sustainability. Progress towards each of the goals is intertwined with progress towards the others. Together, they form a complex network connected by linkages that are both positive (synergies, reinforcing each other’s progress) and negative (trade-offs, hampering each other’s progress). Renewable energy technologies can be used to improve access to water and to increase food production, but their deployment can also compete with other needs, bringing unintended cross-sectoral impacts, including on biodiversity and ecosystems. These considerations underline the importance of considering intersectoral impacts and sustainability priorities as early as possible in the renewable energy planning process, and ensuring that they are addressed consistently through well integrated, sustainable renewable energy projects.

This approach requires the effective implementation of multi-stakeholder, cross-sectoral dialogue along three parallel “tracks”: strategic planning, policy design and project development. This report offers a non-comprehensive “toolkit” to enable policy-makers to identify, evaluate and act upon the synergies and trade-offs introduced by the deployment of renewable energy. The aim is to upscale renewable energy while simultaneously facilitating (or at least safeguarding) progress in the other sectors, with a special focus on water, agriculture and environment. Crucially, this must occur at all levels of decision-making: – strategic planning, policy development and project development. The toolkit includes step-by-step guidance to operationalize the identification of key cross-sectoral linkages and sustainability issues at these three levels, and proposes tools and methods to address them in practice. It is thus designed to support a multi-stakeholder, cross-sectoral dialogue process that aims to help policy-makers uncover common context-specific synergies and trade-offs.

Transboundary cooperation and coordination are necessary to exploit regional synergies and to ensure the sustainability of renewable energy deployment. There are significant advantages to cooperating on renewable energy across national borders, notably the opportunity to exploit resource complementarities and pursue common objectives and interests. As renewable energy projects can have transboundary impacts, effective cooperation is also crucial to prevent tensions and ensure appropriate coordination at the basin planning level. Regional cooperation platforms such as international river basin organizations can play a major role in facilitating such dialogue.

Multi-stakeholder dialogue should involve policy-makers from relevant sectors as well as key actors from civil society, industry and investment groups. While energy policy-makers can be regarded as the primary owners of the sustainable renewable energy planning process, the approach proposed in this publication emphasizes the importance of coherent planning across sectors, and calls for all concerned policy-makers to act in concert. The main areas where policy needs to be coherent with renewable energy are water, agro-forestry and the environment, as well as cross-sectoral areas such as climate change, health, employment, tourism and rural development. Multi-stakeholder dialogue must also involve civil society organizations, renewable energy industry representatives, and bankers and financiers. The aim of this heterogeneous approach is to afford the many aspects of renewable energy due consideration. These range from public interest, ownership and awareness, to technical feasibility, bankability, and eligibility for developmental or impact financing.

Strategic planning should not be limited to assessment of the potential of different renewable energy technologies; it must also consider other sectors’ priorities. The sustainability of renewable energy deployment begins with resource assessment, spatial planning and target setting. These activities should incorporate geographic, technological and cross-sectoral aspects as well as “nexus priorities” into the strategic planning process. To this end, the report suggests mapping three types of scenarios resulting from intersectoral linkages: “win-win” situations – where the renewable energy potential and synergies with other sectors are high, “lose-lose” – where the renewable energy potential is low and the negative impacts are high, and mixed situations – where there are intersectoral trade-offs that need to be well-understood and addressed.

Renewable energy policies can be vetted to effectively tackle intersectoral synergies and trade-offs, as proposed through the Sustainability Assessment Matrix. To ensure sustainability, policy-makers need to make sure that intersectoral linkages are adequately reflected in renewable energy policy, as well as water, agriculture and environment-related policies. Synergies should be supported and encouraged, and trade-offs should be systematically assessed, transparently discussed, mitigated and, as appropriate, compensated. The report proposes a step-by-step process to map cross-sectoral policy interlinkages, identify potential gaps and barriers, and clarify what needs to be done to address them. This process can be used for evaluating existing renewable energy policies as well as for designing new ones.

Policy-makers should actively engage with private actors and ensure that they are committed to developing sustainable projects. The priorities of all private actors involved in project development should be aligned with those of policy-makers. Such actors will likely include project owners, developers, equipment manufacturers, and engineering, procurement and construction (EPC) contractors, as well as bankers and financiers. To help achieve this alignment, policy-makers should create an enabling environment that facilitates compliance with the relevant standards, including through incentives. They should also ensure that the energy projects have value beyond energy generation and that they are in line with the government’s social, economic and environmental priorities, and the state’s rules and regulations.

Published

April 2020

By

United Nations Economic Commission for Europe (UNECE)

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Tina Schmiers

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