Global and regional development of

Fangzhu Zhang & Philip Cooke, Centre for Advanced Studies, Cardiff University, UK, email: [email protected].

1. Introduction

Renewable energy offers us effective technologies to tackle global energy challenges: climate change, the rising demand for energy and the security of energy supplies. Now, almost every country around the world has set its own renewable energy target and is enacting a set of policies to meet the goals. The countries around the world view it as potential industry to stimulate economic development and also improve their energy independence. Renewable energy (sources) derived from natural processes that are replenished constantly; include solar, wind, flowing water, biological processes, and geothermal heat flows. Neither fossil fuels nor are renewable forms of energy (IEA, 2002). In 2006, renewable energy was estimated to supply about 18% of the world final energy consumption, counting traditional , large and ―new‖ renewables. New renewable energy includes small hydropower (less than 10 megawatts as a common threshold), modern biomass, wind, solar, geothermal and biofuels, providing 2.4 percent and are growing very rapidly in the developed countries and in some developing countries (Figure 1) (REN21, 2008). Climate change and energy security drive nations to increase government support for the development of new renewable energy technologies. Renewable energy has a large future potential and many experts think it will ultimately increase the national competitiveness in the globalising, re-regulating economy.

Figure 1. Renewable energy share of global final energy consumption in 2006. (Resource: REN21, 2008).

Policies to promote renewables accelerate the development of renewable technologies. In 2007, over $148 billion was invested in renewable energy capacity, up from $33 billion in 2004 (Figure 2) (UNEP, 2008). The financial resources include investments from major commercial and investment banks, venture capital and private

1 equity investors; public markets; the investments in research and development by governments and corporations, asset backed finance and some small scale project investments by local investors. Some well-known big companies like BP, General Electric (GE) and Goldman-Sachs make large investments in renewable energy, leading to the coming age of renewable energy (REN21, 2008). With the advanced development of renewable technologies, the industry of renewable energy is predicted to continue growing in the future.

Figure 2. Global investment in renewable energy during 2004-2007. (Source: UNEP, 2008).

This report aims to review the overall level and location in development of renewable energy technologies by 2008. In the second section, different policies or approaches to promote renewable energy are discussed at the national or regional level. Then good practices for regional economic development are presented and how the green innovation system is established. This occurs through technology research and development, networking, market promotion, financing, policy advice and other technical assistant to support the growth of renewable energy industry.

2. Renewable energy technologies

Among all renewable technologies, 43% of global investments were invested in technology, followed by (24%), biofuel (17%) and biomass (9%) technologies in 2007 (Figure 3). Global renewable energy capacity grew at annual rates of 15%-30% for many technologies during 2002-2006 (Figure 4) (REN21, 2008). Among these technologies, grid-connected solar photovoltaic (PV) is the fastest growing energy with a 60% annual growth rate. Off-grid solar PV and solar hot water/heating are other technology applications of solar sources with a growth rate between 15% and 20%. Wind power with an annual growth rate of 25% is considered as an economically viable renewable source. Biofuel as a potential renewable energy for transport also grew rapidly with a 40% growth rate for biodiesel and 15% for bioethanol. The development of renewable energy technologies varied among the countries around the world, depending on the history and new policy focus.

2 Renewable energy replaces conventional fuels in three distinct sectors: power generation, heating and transport fuels.

Figure 3 Global investments by technology in 2007. (Source: UNEP, 2008)

Figure 4 Annual growth rates of renewable energy capacity during 2002-2006. (Source: REN21, 2008).

3 2.1 Wind power

Wind power is the conversion of wind energy into a useful form, such as using wind turbines. By the end of 2008, worldwide capacity of wind- powered generators was over 120 gigawatts and is predicted to be around 190 gigawatts by 2010. Although only about 1.5% of world-wide electricity use is produced by wind power, it produces approximately 19% of electricity use in Denmark, 9% in and Portugal, 6% in Germany and the Republic of Ireland (WWEA, 2009). Globally, wind power generation increased more than tenfold between 1998 and 2008 (Figure 5). Over the last decade, wind power has made impressive progress and has been growing globally at an annual rate of 25%- 30% (Figure 6 & 7). Wind power has become one of the broadest-based renewable technologies with 27 GW added in 2008 (Figure 6) (REN21, 2008). The increase of global wind power capacity in 2008 was concentrated in the top five countries: the US (2.6 GW), Germany (2.4GW), Spain (1.9GW) China (1.2GW) and India (0.9GW). Many other countries have been also very active, such as the UK and Italy.

Figure 5 Global wind energy capacity and prediction 1997-2010. (Source: World Wind Energy Association, WWEA)

The top wind companies globally are (Denmark), Gamesa (Spain), GE (USA), Enercon and Siemens (Germany), and Suzlon (India). Europe dominates the market both as consumers and producers of wind energy. This positive development is above all the outcome of highly dynamic policies in Denmark, Spain and Germany (Figure 7). Germany is the world's largest user of wind power with an installed capacity of 20 GW in 2006 and leading nation in terms of wind power technology. Over 64, 000 people are employed in this industry (WWEA, 2009). Denmark is another leading wind power nation in the world and today supplies almost half of the wind turbines sold around the world. The development of wind power in Denmark has been characterised by public-private financing collaboration in research and development in key areas. They also exported wind energy systems to the global market, including to the emerging market in China.

4

Figure 6 Wind power capacities of the top 10 countries added in 2007 & 2008. (Source: WWEA, 2009).

Figure 7. Wind power installed in the EU by 2007. (Source: http://en.wikipedia.org)

5 Spain aimed to develop wind power technology as one of the technologies of the future. They established a stable regulatory framework, utilized the resource and improved technology to develop this industry. Iberdrola, the leading Spanish energy company, is the world‘s largest wind power producer. Its capacity outside Spain grew sevenfold in 2007. It entered the US wind market in 2005 and is now one of the largest and most active overseas players in the US. Iberdrola Renewables was spun off from the parent company, Iberdrola, in 2007. This raised the largest-ever clean energy IPO in Europe with a total of €4.07 billion public offering. With North American headquarters in Radnor, Penn., Iberdrola Renewables has obtained about 22,000 MW of US wind power, which is more than half its planned wind capacity worldwide. It pulled in about €950 million in revenue and turned a € 117 million profit in 2007 (Makower et. al., 2008).

The UK has the best and most geographically diverse wind resources in Europe, Wind power in the UK reached the capacity of 2GW in 2007, ranked as 7th in the world. Currently, approximately 1.5% of UK electricity is generated by wind power. It is targeted as one of the main technologies by the UK government to meet the target that 20% of final energy is generated from renewable energy by 2020. Wind power is expected to rise dramatically in coming years in the UK with lots of new projects, including , are undergoing in onshore and offshore wind farms around the UK (Figure 8).

Figure 8 Wind energy farm projects in the UK. (Source: BWEA).

6 The lists of wind farms which have been installed, under contract and proposed around the EU are shown in Table 1 & 2. More expensive and much larger wind farms with over 100MW capacities are planned to be built offshore in the UK by 2020. These mega-projects in the UK include , and offshore wind farms. Meanwhile, Sweden planned to build one of Europe's largest interconnected onshore projects with a capacity of between 3 and 3.5 gigawatts (GW). This project is expected to be completed by 2020, the wind farm is planned to cover an area of 450 square-kilometers in Tavelsjo, in the municipality of Pitea in north Sweden.

Table 1. List of wind farms installed or under construction with over 100 MW capacities in the EU. (Source: IEA)

Farm Capacity (MW) Country Alto Minho Wind Farm 240 Portugal Arada-Montemuro Wind Farm 112 Portugal 124 UK CEZ Fântânele Wind Farm 600 Romania Crystal Rig Wind Farm 180 UK EDP Dobrogea Wind Farm 266 Romania El Marquesado Wind Farm 198 Spain Gardunha Wind Farm 106 Portugal Higueruela Wind Farm 161 Spain Wind Farm (offshore) 160 Denmark (offshore) 110 Sweden Lynn/ Inner Dowsing Wind Farm 194 UK Maranchon Wind Farm 208 Spain Nysted Wind Farm (offshore) 166 Denmark Pinhal Interior Wind Farm 144 Portugal Princess Amalia Wind Farm (offshore) 120 The Netherlands (offshore) 180 UK Sisante Wind Farm 198 Spain Smøla Wind Farm 150 Norway Thanet Offshore Wind Project 300 UK Tomis Team Dobrogea Wind Farm 600 Romania Thorntonbank Wind Farm 300 Belgium 322 UK Windpark Egmond aan Zee (offshore) 108 The Netherlands

7 Table 2 List of the proposed wind farms in the EU. (Source: IEA)

Farm Capacity (MW) Country

Atlantic Array (offshore) 1,500 UK

Belwind 330 Belgium

Borkum-West II wind farm (offshore) 400 Germany

Clyde Wind Farm 548 UK

Dobrich Wind Farm 200 Bulgaria

Docking Shoal Wind Farm (offshore) 500 UK

Enel Agichiol Wind Farm 210 Romania

Eolica Baia Wind Farm 126 Romania

Eolica Beidaud Wind Farm 128 Romania

Eolica Casimcea Wind Farm 244 Romania

Eolica Cogealac Wind Farm 448 Romania

Eolica Sǎcele Wind Farm 252 Romania

Greater Gabbard (offshore) 504 UK

Griffin Wind Farm 204 UK

Gwynt y Môr (offshore) 750 UK

Kavarna Wind Farm 250 Bulgaria

Lincoln Gap Wind Farm 124 Australia

Lincs Wind Farm (offshore) 250 UK

London Array (offshore) 1,000 UK

Mărişelu Wind Farm 300 Romania

Markbygden Wind Farm 3,000-3,500 Sweden

Ormonde Wind Farm (offshore) 108 UK

Plambeck Bulgarian Wind Farm 250 Bulgaria

Race Bank Wind Farm (offshore) 500 UK

Scarweather Sands Wind Farm (offshore) 108 UK

Shell Flat (offshore) 180 UK

Sheringham Shoal Offshore Wind Farm (offshore) 315 UK

Sinus Holding Wind Farm 700 Romania

Triton Knoll Wind Farm (offshore) 1,200 UK

Walney Wind Farm (offshore) 450 UK

West Duddon Wind Farm (offshore) 500 UK

8 In recent years, the US has added more wind energy to its grid, reaching 16.8 GW in 2007. The U.S. has a significant industry, such as GE Energy which provided over 2.3 GW of new wind capacity in North America. Clipper is another prominent US provider. By mid 2008, U.S. has become the first leading country in wind power capacity, surpassing Spain (WWEA, 2009). Global electricity by renewable wind power in 2005 is shown in Figure 9. India is among the top group of countries in wind power in the world. It produced 3% of all electricity in India. With the increase in size of new wind power projects, major wind turbine suppliers increased production capacity in the past few years, while local suppliers are focusing on key components like gearboxes, blades and towers etc. Generally, the industry continues to experience supply-chain difficulties due to increasingly fast growing demand. Thus it results in higher turbine price and an increase in turbine lead-times.

In China, wind power has been growing faster than the government had planned in recent years, having more than doubled each year since 2005. In late 2005, the Chinese government increased the official wind energy target for the year 2020 from 20 GW to 30 GW (Lema et al., 2007). The industry reached the original goal of 5 GW for 2010, three years ahead of schedule. Policymakers doubled their wind power prediction for 2010. China announced to build a 1000-megawatt wind farm in Hebei in China, for completion in 2020. Goldwind has emerged as the leading Chinese wind turbine manufacturer and has begun to export Chinese turbines and components globally. It currently holds about 3 percent of market share in global wind turbine sales and captured some 30 percent of sales within China in 2006. By 2007, over 40 Chinese firms were aspired to manufacture wind turbines commercially; many of them were encaged in prototype development and testing (REN21, 2008). It was predicted that China would become the world wind power leader by 2010 (Watts, 2008).

Figure 9 Global wind productions as renewable energy in 2005. (Source: OECD/IEA, 2007).

9 2 Solar power

Solar energy technologies use the sun‘s energy to supply electricity, heat hot water, and even cool air for home building and industry. Sunlight can be converted into electricity using (PV), concentrating solar power (CSP), and various experimental technologies, like thin-film polymers in liquid form such as paint. PV has mainly been used to power small and medium-sized applications via photovoltaic arrays.

2.2.1 Concentrating solar power (CSP)

For large-scale generation, CSP plants like the Generation System (SEGS) form the operational plants to accomplish the task. The SEGS facilities, located in California‘s Mojave Desert, are the largest CSP plants in the world with 354 MW capacities. FPL Energy Company used state-of-the-art technology to collect solar power and convert it into electricity. The facilities cover more than 1,500 acres of the desert and have a more than 900,000 mirrors. These solar plants could power 232,500 homes and reduce 3,800 tons of pollutants per year that would have been produced if the electricity had been provided by fossil fuels. Unfortunately, the power plant was forced to close in 1999 due to an explosion at a storage tank (FPL Energy, 2008). The global focus of concentrated solar powers is shown in Figure 10. Over 5,800 MW of solar CSP projects were in planning stages worldwide by 2007 and expected to come online by 2012 (Emerging Energy Research). CSP developers are forming different strategies to facilitate their growth. For example, Solar Millennium Company employs the models of developing and selling technology. Companies such as Solel and apply vertical integration from technology to ownership. Meanwhile, some major companies like FPL and Acciona have build up their ownerships of the portfolios of major renewable independent power producers (IPP) and utilities.

Figure 10 Global focus of industry in 2007. (Source: Emerging Energy Research).

10 2.2.2 Photovoltaic (PV)

Photovoltaic installations grew rapidly between 1970 and1983, but falling oil prices in the early 1980s slowed the growth of PV from 1984 to 2000. Until recently, PV development has been accelerated due to supply issues with oil and natural gas, global warming concerns and improving economic position of PV relative to other energy technologies. Multi-megawatt PV plants are becoming common. Photovoltaic production growth has averaged 40% per year since 2000 and installed capacity reached up to 10 GW at the end of 2007 (Figure11) (PVresources, 2008). Solar PV continues to be the fastest-growing power generation technology in the world, and is predicted to be the main renewable energy in the future by the German Advisory Council on Global Change (Figure 12).

Figure 11. Large-scale photovoltaic power plants installation during 1995-2007. (Source: pvresources.com)

Figure 12. Projected share by source of annual global energy production in exajoules per year. (Source: German Advisory Council on Global Change)

11 In terms of photovoltatic power capacity, Germany is a leader within Europe, as shown in Figure 14. In 2006, Germany had an installed capacity with over 3000 MW photovoltaic in total, occupying almost 90% of total European capacity. The added PV capacity in Year 2006 along was 1153 MW in Germany. Spain ranked as the second in Europe with total of 118 MW PV capacities, over half added in 2006 (EC, 2007a). Among the PV manufacturing companies, Q-Cells AG is a leading example of Germany‘s preeminence in the PV market. It is based in the Solar Valley town of Thalhein, 30 kilometers away from Halle, Saxony-Anhalt. It has seen explosive growth since it was established in 1999. In 2007, with sales of €860 million and production volume of 390 MW, it surpassed previous world-leader Sharp Solar of Japan and became the world‘s largest producer (EC, 2007a).

Figure14. PV capacity in Europe in 2006. (Source: European Commission, 2007a)

12 The growth of solar PV installation with large-scale, up to hundreds of kilowatts and megawatts has been accelerated during recent years. Up to the end of 2007, 80% of all large-scale PV plants were installed in Europe. There is about 14% in the US and about 4% in Asia (Pvresources, 2008). Germany has become the leading PV market worldwide since revising its feed-in tariff system as part of the Renewable Energy Sources Act. With almost one half of all PV power installations in Germany, PV capacity has risen from 100 MW in 2000 to approximately 4,150 MW at the end of 2007, occupying 47% of global market (Figure 14).

Figure 14 Global market leaders of large-scale photovoltaic power plants. (Source: pvresrouces.com)

A new research center, the Fraunhofer Centre for Silicon Photovoltaics was established in the heart of Germany‘s ‗Solar Valley‘- at Halle. It enables more cooperation between research and industry. The Freiburg Institute for Solar Energy Systems, one of the top solar research centres in the world, is based in the southwestern Germany city of Freiburg, Baden-Württemberg. Its specialties are silicon PVs and new generation technology. However, 80% of Germany‘s solar cell production occurs in the former East German States of Saxony, Saxony-Anhalt and Thuringia. The new Centre for Silicon Photovoltaic will inherit much of its silicon expertise and bridge closer and stronger cooperation between photovoltaic research and manufacturing.

Fast growth in Spain has taken place over the last few years with extreme growth in 2007 and 2008. After adopting a similar feed-in tariff structure in 2004, Spain has become the second largest PV market with the highest number of large power stations in the world Several large photovoltaic power plants were completed in Spain in 2008 (Table 3). Emerging strong growth in other European countries, such as Italy and Greece is also visible. Italy looked set to install 20 MW in 2007 and France was revising their fee-in policy in order to accelerate the growth of this

13 technology. The US has about 15% of the global market. California remains the clear leader, capturing 70% of the US market in 2006. Nellis Air Force Base plant in Nevada with 14MW capacity is the biggest solar PV plant in the US. S. Korea has recently completed a larger scale PV power installation with 23 MV capacities, showing the promise of this future market. More larger-scale PV plants are under construction or planned worldwide (Table 4).

Table 3. List of the largest PV power stations in the world. (Source: pvresources.com)

Power Plant Country Company Completion date 60 MW Parque Fotovoltaico Spain Nobesol September 2008 Olmedilla de Alarcon 46 MW Moura photovoltaic Portugal ACCIONA Energia December 2008 power plant 35 MW Solarpark Germany T-Solar October 2008 "Waldpolenz" 34 MW Planta Solar Arnedo Spain 30 MW Planta Solar Osa de la Spain Gestamp Asetym 2008 Vega Solar 30 MW Planta Solar La Spain Elecnor 2008 Magascona & La Magasquila 30 MW Parque Solar "SPEX" Spain Deutsche Bank AG September 2008 Merida/Don Alvaro ecoEnergías del Guadiana Solarparc AG SolarWorld AG 26 MW Planta solar Fuente Spain August 2008 Álamo 24 MW SinAn power plant Korea Ltd. October 2008 23 MW Planta photovoltaic Spain New Energy Invest August 2008 GmbH

In Israel, local entrepreneurs are planning to turn Israel‘s southern Arava Valley with high intensity of sunlight into Israel‘s first hub for solar power. Arava Power Inc., whose majority shareholders, taken collectively are the 135 members of the Valley‘s Kibbutz Ketura, is planning to develop in the distributed grid-connected solar energy field. The scale is up to 500 MW and cost as much as US$2.5 billion to build and put into operation (Burger, 2008). The region is at the border of the Negev desert plateau in Israel‘s far south and is a relatively sparsely populated region. It has already evolved as an agricultural centre with major underground aquifers, desalination, and innovative water resource management. Now the company has taken a leading role in Israel‘s emergent renewable energy and distributed power movement. It is lobbying government at all levels for solar and other renewable power to play a greater role in Israel‘s energy and national security. The region is home to 53 Kibbuz communities. Kibbuz residents tend to be well-educated and ecologically conscious. Local community stakeholders are working together to advocate to government increases in Israel‘s feed-in-tariff rate to stimulate solar power development. It is evidence of a fruitful mix of environmentalism, entrepreneurship and politics in green innovation.

14

Table 4. List of large systems of PV power stations in planning or under construction. (Source: pvresources.com) (* Under construction; ** Proposed)

Power Name Country Description (MW) USA 550 Thin Film Silicon from OptiSolar ** Monocrystaline Silicon from High Plains Ranch USA 250 SunPower with tracking ** Solar in Heliostat concentrator using GaAs Australia 154 Victoria cells from Spectrolab** KCRD Solar Farm USA 80 Scheduled to be completed in 2012 ** Moura photovoltaic Portugal 62 376,000 solar modules* power station 550,000 thin-film CdTe Waldpolenz Solar Park Germany 40 modules* To be constructed by SunPower for DeSoto County Florida USA 25 FPL Energy, completion date 2009.* Davidson County solar USA 21.5 36 individual structures** farm Cádiz solar power plant Spain 20.1 * Kennedy Space Center, To be constructed by SunPower for USA 10 Florida FPL Energy, completion date 2010.**

Solar installations in recent years have also largely begun to expand into residential areas. Build-integrated PV has attracted attention recently. For example, Google installed a 1.6 MW array at it head office in California. Over 9,000 Sharp photovoltaic modules now cover the rooftops of the Googleplex to generate 30 percent of Google's peak demand power, or enough to light about 1,000 California homes. Google expects to save more than $393,000 annually in energy costs—or close to $15 million over the 30-year lifespan of its solar system. It is estimated the system will pay for itself in approximately 7.5 years (Baker, 2006). A 9 kW 'building-integrated photovoltaics' panel was installed on the roof of a grounds maintenance building at the White House for the National Parks Service. It demonstrated the promotion of renewable energy in an application in government or public building.

The photovoltaic industry is a growing and profitable sector in the economy and continues playing an important role in the global pursuit of clean and renewable energy technology solution. Its potential is enormous and it is a highly popular source of power, but remains costly compared to other forms of electricity production. Table 5 shows the average estimated capital costs per 1,000MW to build a range of power plants. Solar costs significantly more than conventional, fossil fuel-based power generation, while geothermal and wind are able to provide similar cost effective power as plant. In order to compete with conventional sources, solar technologies need to reduce costs and increase energy efficiency from the sun (Makower et. al., 2008). Although there are some government subsidies and supports, the price of solar energy has remained high mainly due to increasing price of silicon.

15 Table 5. Typical construction cost per 1000 MW ($ billions) of different resources. (Source: Clean Edge, Inc., 2008).

Resource Coal Plant Geothermal Wind Nuclear Solar Cost ($billions) 0.75-1.4 1.6 1.4-1.8 2-6 5-10

Table 6. Top 10 solar power clean technology companies in Europe. (Source: Library house, http://www.libraryhouse.net/.) Company Business Product status Based Funded Employees Advanced solar G24i cells that mimic Development UK, Cardiff 2006 60 photosynthesis Concentrators Concentrix Germany, for photovoltaic Development 2005 Undisclosed Solar Freiburg cells Würth Solar Copper-indium- Germany, GmbH & diselenide solar Shipping 1999 183 Marbach Co KG cells Flexible thin Germany, Solarion film solar Shipping 2000 20 Leipzig technology Nano-scale UK, QuantaSol solar cell Development 2006 5 London technology Organic solar Germany, Heliatek Development 2006 13 cells Dresden Solar Whitfield UK, concentration Development 2004 5 Solar Reading systems 4d- Solar-thermal Germany, Technologie Shipping 2005 Undisclosed collector system Leipzig GmbH Thin crystalline Norway, Norsun Development 2005 Undisclosed silicone wafers Oslo Thin-film solar Germany, CSG Solar Shipping 2004 55 technology Thalheim Trough-shaped solar collectors Germany, Solitem Shipping 1999 50 for heating and Aachen cooling

Thin-films solar cells consist of plastic or other substrates as a silicon-coated material. These technologies are being developed as a means of substantially reducing the cost of photovoltaic systems. But they face major technical hurdles in terms of their efficiencies in natural environments. Thin-film gained acceptance as a ―mainstream‖ technology during 2006/2007. It only requires one-hundredth as much silicon as conventional cells. Many private investments are tackling this area. Table 6 lists the top 10 solar power clean technology companies in Europe, based on data selected from the company data in Library House, UK. The selected group of private cleantech

16 companies represents the strongest prospects for the future. Beyond the US and Europe, there are a few manufacturers in China and Japan expanding the thin-film production. For example, Sharp of Japan announced its plan to complete a new 1 GW thin-film production plant by 2010 (REN21, 2008). A sharp increase in this field has been shown recently.

G24 Innovations, based in Cardiff, U.K since 2007, specialises in portable solar technology on jackets and lightweight panels for applications such as mobile phone chargers and laptop computers. It is pioneering dye-sensitised solar cells that can be used in these devices. The company is currently researching the options for onsite power generation as it strives to be the first manufacturing facility in the world to make renewable products solely through the use of renewable energy. G24i‘s dye sensitised thin film manufactures a uniquely thin, extremely flexible and versatile nano-enabled photovoltaic (solar) material that converts light energy into electrical energy, even under low-light, indoor conditions. The technology has created a new range of possibilities for solar energy to replace expensive and environmentally unfriendly batteries. The company recently appointed John Hartnett as CEO from Californian portable cell technology firm, Palm Inc. This brings a deep understanding of global markets and a wealth of Silicon Valley experience. For future perspective, G24i was described as the future of the region economy by Welsh Assembly minister.

2.3 Bioenergy

Biomass is organic material, either raw or processed, with intrinsic chemical energy content. Biomass can further be divided into more specific terminology, with different terms for different end uses: heating/cooling, power (electricity) generation or transportation. The term 'bioenergy' is commonly used for biomass energy systems that produce heating or cooling and/or electricity and 'biofuels' for liquid fuels for transportation. Given that the sector could make a major contribution to the security of supplies, biomass has become a major factor in energy, environmental and agricultural policies. Bioenergy still requires continuing public support due to higher costs and other market barriers. Although much progress has been made, this has not been enough given the potential of biomass and the available technologies. Future cost competitiveness relates to uncertain future fossil fuel prices and environment- related policies.

Biomass resources are composed of a wide variety of forestry and agricultural resources, industrial processing residues, and municipal solid and urban wood residues. Biomass includes any biological material, derived from plant or animal matter, which can be used for producing heat and/or power, fuels including transport fuels, or as a substitute for fossil fuel-based material and products (DEFRA, 2007). For example, it includes material from forest (round wood), dedicated crop-derived biomass (willow and poplar), agricultural residues (straw and animal manures) and wastes from food and industry. The typical biomass resources and key elements are identified in biomass supply chain, as shown in Figure 15. Varied processes are used to convert biomass into fuel or other renewable raw material, depending on the type of biomass involved and the nature of the end use. There is scope to convert the energy potential of biomass more efficiently through more sophisticated processes. Biomass energy can also be converted from wastes such as food and wood together. Greater use of recycling waste resources will reduce dependence on landfill and associated

17 greenhouse gas emissions. Development of biomass use with environment treatment will be an important element in the move towards a bioeconomy.

Figure 15. Biomass supply chain (Source: DEFRA, 2007)

According to the report by the Biomass Task Force in UK (DEFRA, 2005), 1 million hectares for bioenergy crops could provide 8 million tonnes of energy crops in the future. About 350,000 hectares of dedicated energy crops are planned to be planted across the UK according to the UK‘s Department of Environment, Food and Rural Affairs (2007). Fast-growing grasses such as miscanthus (called elephant grass) and coppiced trees-willow and poplar are identified as bioenergy crops. These crops are perennial and may achieve phenomenal yields in ideal conditions, but they are not at commercial-scale operation yet (Taylor, 2008). More research and development is being invested across the world on the technologies to convert biomass into bioenergy and improve the efficiency of the processes involved. Brazil is the world leader in producing ethanol from sugarcane, while corn is the main crop for ethanol production in the US. The US and Brazil are the leaders of biofuel production in the world, with over 8,900 Mtoe of biofuel production in 2005 (Figure 16). The global market for biodiesel, derived from oil crops or animal fat, is expected to increase in the next ten years. Europe currently represents 80% of global consumption and production, Germany is the leading country in diesel development. The US is now catching up with a faster rate in production than Europe and Brazil is expected to surpass US and European biodiesel production by 2015 (Emerging Markets Online, 2008). There is also strong interest in other countries, for example, France, Italy and the developing countries such as China and India. Future prospects and perspectives on biofuels were reviewed in previous report (Zhang & Cooke, 2008). Here we only focus on biomass energy for heating and electricity in this report.

18 Figure 16. Global biofuel production in 2005 (Source: OECD/IEA, 2007).

Stoves and boilers have a long tradition in many European countries. Chips, wood pellets and wood logs have been used for domestic heating in rural areas in the developing countries such as china, India and Africa. However, the efficiency of the traditional fire wood boiler was poor and indoor air pollution has significant impacts on human health. The revival of biomass use was actively support by R&D efforts to improve wood combustion technology. Improved biomass boilers/stoves save from 10-50 percentage of biomass consumption compared to conventional ones and can dramatically improve indoor air quality, and also reduce greenhouse gases. Small- scale thermal gasification is a growing commercial technology in some developing countries. In China, household-scale biogas has been applied for rural home lighting and cooking. Biogas digesters can be supplied by local small companies or built by farmers themselves. Gas from a gasifier can be burned directly for heat or for electricity. In a few Chinese provinces, biogas from thermal gasifiers also provides cooking fuel through piped distribution networks. By 2006, India had achieved 70 MW of small-scale biomass gasification systems for rural power generation (REN21, 2008). Rural areas present a significant market development potential for the application of these systems. There is a growing interest in the district heating plants. Larger scale biomass systems have been explored in the industrial sites and local communities in recent years with respect to efficiency and emissions.

Combined heat and power is a carbon-efficient process which puts to use the heat produced as by-product of electricity generation. CHP increases the overall efficiency of fuel utilisation compared to conventional forms of generation and results in reduction of CO2 emission. The more consistent the demand for heat, the more economic CHP can be. Thus, the best sites for CHP are energy intensive industrial site in continual operation. Community-scale projects are most effective where a range of different heat and cooling demands are aggregated within system with constant demand (DEFRA, 2007). The costs of generating electricity using CHP are often higher than standard generation, even though there is a financial return from the by- product heat. In order to meet the carbon emission target, many governments supply financial supports to encourage the growth of CHP capacity. The technology for medium scale CHP ranged between 400 KW to 4 MW is commercially available now.

19 The use of biomass for power generation has increased in the past years with a favourable European and national political framework. In the EU-25 electricity generation from biomass grew by 23% in 2005 (EREC, 2008) In Denmark, the CHP plants supplied about 70% of the yearly electricity production and one fourth of this is generated by small-scale CHP plants, which are located outsides the centrally supplied areas. The Danish government support the increase of CHP plants with an investment subsidy. The subsidy was around €13/MWhe for the electricity sold to the grid. An additional subsidy of €23/Mhe for the CHP plants using biomass material (Alakangas & Flyktman, 2001).This has led to the emergence of a regional innovation system in flexi-build biomass and biogas district heating schemes, which is centred on the North Jutland region of Denmark where 100-120 firms are ‗branded‘ ‗Innovative Region; Flexible District Heating‘.

The use of biomass has steadily increased in Sweden over the past 25 years, while biomass accounts for 53% of the fuel mix in district heating in Sweden (Ericsson et al., 2004). In Austria, the biomass plant in Simmering, Vienna, uses only wood as fuel with 66 MW capacities. It provides a good model for the up-and-coming forest-based bioenergy industry. This biomass plant uses about 190,000 tonnes of wood harvested in a sustainable way from forests within a 100-kilometer radius to supply Vienna‘s district heat. More than a 1000 large-scale biomass plants are already operating in Austria with an installed capacity of over 1000 MW in 2005, and the number grew further in recent years. It was reported that heating with biomass pellets remains two- thirds cheaper than heating oil. A household could save about €1800 per year on average (Biopact, 2008). Not only Austria, but also Germany as well as eastern European countries such as Bulgaria and Romania all have huge forest resources to develop a bioenergy industry.

In the UK, bioenergy for heat and electricity contributed 82% of the electricity generated from renewable resources in 2007 (Figure 17) (BERR, 2008). The technologies include combustion, co-firing, thermal and different biological conversion technologies. The contribution of renewable resources to total UK electricity was approximately 4.9% in 2007 (Figure 18). However, it is only half way to achieve the target of 10% of electricity generated from renewable resources by 2010. Over the past decades, the UK government has supported the development of biomass energy through several biomass projects across the UK (Figure 19). Some biomass plants have been generating power supply for years, while some large-scale plants are under construction and more projects are under planning permission approval from local governments (Table 7).

The largest biomass power plant in the world with £400 M investment and 350 MW capacities is under construction in Port Talbot, Wales and is expected to be completed in 2011. The plant will burn wood from sustainable resources in North America and will generate enough clean electricity to power half of the homes in Wales, representing 70% of the Welsh Assembly‘s total renewable energy target for 2010. At the end of 2008, Welsh renewable energy company Eco2 won planning permission to build the UK‘s largest straw-fired power plant in Sleaford, Lincolnshire. This plant will create 80 jobs and bring £6 million to local formers in fuel supply contracts and £20 million for local construction firms. Eco2 Company plans to develop up to 10 biomass facilities across Europe with total of £1 billion investment. Community

20 bioenergy projects offer the opportunity of using local resources to support the local economy and benefit job creation in local business.

Figure 17. The contribution of bioenergy to the generation of electricity from renewable resources in the UK in 2007. (Source: BERR, 2008).

Figure 18. Growth in electricity generation from renewable resource in the UK during 1990-2007. (Source: BERR, 2008)

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Figure 19. Distribution of biofuel and solid biomass installations in the UK. (Source: DEFRA, 2007)

22 Table 7 List of major biomass projects in the UK. (Source: http://www.renewables- map.co.uk/)

Status Site Name Capacity Region Commissioned Projects currently Generating 1 Llanwyddyn 0 Wales 1 Newtown 0 Wales 2008 1 Elean business park 0 1 Bluestone holiday village 0 Wales 1 Caddsdown - Biomass 0.05 England 1 Aberaeron 0.55 Wales 1 Westfield 9.8 January 2001 1 Eye Airfield 12.7 England July 1992 1 Glanford 13.5 England November 1993 1 Sembcorp biomass power station 30 England September 2007 1 Ely power station 38 England December 2000 1 Thetford 38.5 England June 1999 1 Stevens Croft 44 Scotland March 2008 Projects planning approved and / or under construction 2 Old quarrington 0.5 England 2 Sleaford 40 England 2 Brigg renewable energy plant 40 England 2 Port Talbot renewable energy plant 350 Wales 2011 Projects which are proposed and / or going through planning process 3 Penpont biomass project 0.25 Wales 3 Oakland farm 0.3 England 3 Mod Poole 0.5 England July 2008 3 North Wiltshire biomass power 5.528 England 3 Victory mill biomass project 6 England 3 Byreshield Grains Woodgen 6.085 England 3 Arbre 8 England 1998 3 Eggborough power station 8 England 3 Nunn Mills road 8.825 England 3 power station 10 England 3 Hexham biofuel power station 10 England 3 Phoenix parkway 14.25 England 3 Newbridge power 15 Wales 3 Kingmoor marshalling yard plant 20 England

The biomass system for heating and electricity applied so far generally use forestry and wood processing residue. The application of the agro-residue or recycled waste is attracting more interest in many regions. Biogas is produced from organic material under anaerobic conditions in landfill or in anaerobic digestion facilities (fermenters). Various types of organic material include liquid manure, silage, left over food and other waste. Biogas can be either used in a power generator to produce electricity and heat, or be used as transportation fuel. A recent publication by the European Union projected the potential of waste derived bioenergy to contribute to prevention of

23 global warming. It concluded that 19 million tons of oil equivalents are available from biomass by 2020, 46% of which would be derived from bio-wastes: agricultural residues, farm wastes and other biodegradable waste streams (Marshall, 2007).Global bioenergy production from waste was shown in Figure 20. The US is a leading nation in this area, producing over 3,600 Mtoe bioenergy from organic waste in 2005. The European countries such as France, German and UK, and Japan are also exploring various technologies producing power from waste resources.

Figure 20. Global renewable energy production from waste (organic) in 2005. (Source: OECD/IEA, 2007).

2.4 Geothermal

Geothermal energy is the energy stored in the form of heat below the earth‘s surface. It has been used for heating since ancient times and for electricity generation since geothermal-generated electricity was first produced at Larderello, Italy in 1904. Geothermal energy has some advantage characteristic to be used for electricity generation and direct heat use: extensive global distribution; environmentally friendly; independent of season; effective for distributed application and can provide sustainable development. Geothermal provides about 10 GW of power capacity in 2006 at 2-3% growth rate per year. Philippines and the US are the leading countries with over 8,700 Mtoe productions (OECD/IEA, 2007). As shown in Figure 21, Italy, Mexico, Indonesia, Japan, New Zealand, Iceland and Turkey all have produced significant geothermal energy. Iceland gets one-quarter of all its power from geothermal (REN21, 2008). Sweden, Switzerland, Germany and Austria are the leading countries in terms of market for geothermal heat pumps in Europe (EREC, 2008). The Enhanced Geothermal System (EGS) has demonstrated that electric power can be produced from geothermal energy throughout Europe at economically and ecological acceptable conditions, and not only in high ground temperature regions (EREC, 2008). The costs to set up and drill the hot water from under the surface of the earth are extremely high, but the costs are falling. In some regions, it is almost competitive with conventional fuels. It is reported that German has passed favourable law making geothermal projects financially viable to stimulate geothermal energy industry. There are 150 plants projects are in the pipe line to generate electricity in Germany. Bavaria has the most potential in Germany (Nambudripad, 2008).

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Figure 21. Global renewable energy production from geothermal in 2005. (Source: OECD/IEA, 2007).

2.5 Hydropower

The technology is mature and most potential sites in Europe have been fully developed and represent 84% of installed renewable electricity in OECD. The large hydroelectric dams are in general competitive and don‘t need any particular assistance, but the building of small hydroelectric power stations should be developed further (REN21, 2008). Small hydropower is the main contributor to renewable power capacity in developing countries, for example in China (Figure 22).

Tidal power and wave power are two additional forms of tapping into the energy of the ocean, they are not very common at the moment but pilot plants are being installed in Europe.

In total, existing renewable electricity capacity (excluding large hydro) worldwide reached to over 200 GW in 2006, increasing 14% from 2005 (Figure 22). Small hydro and wind contribute three quarters of the total capacity (REN21, 2008). The top six countries were China (52GW), Germany (27 GW), the US (26 GW), Spain (14 GW), India (10 GW) and Japan (7 GW). It was expected to reach 240 GW in 2007, adding large hydropower together to represent about 5% of global power generation (REN 21, 2008). The top five countries of renewable energies in 2006, ranked in terms of existing capacity and added capacity in 2006 were listed in Table 8.

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Figure 22. Global renewable power capacity in 2006 (Source: REN21, 2008)

Table 8. List of top five countries in renewable power capacity in 2006. (Source: REN21, 2008).

3. Renewable energy policy and governance

Policy targets for renewable energy exist in at least 66 countries worldwide, including all 27 European Union countries, US, Japan and developing countries such as China and India. Central and regional governments have set up incentives to promote the development of renewable energy. Many such incentives go directly to developers of renewable energy projects such as capital investment subsidies, tax incentives and low-interest loans. Recently, some governments such as UK and Belgium have applied renewable obligation to encourage the increase use of renewable energy. EU- wide target is 20 percentage of final energy is from renewable energy resources by 2020 (Figure 23), while China is targeting 15% of primary energy is from renewable energy by 2020 (European Commission, 2007b).

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Figure 23. Policy target of renewable energy in the EU. (Source: European Commission, 2007b).

27 3.1 Direct subsidies and tax incentives

Over many years, renewable energy resources have been explored all over the world in order to overcome energy crisis and combat climate change. But the price of renewable energy is typically more expensive than traditional energy resource (for example, Table 5). A variety of the incentives from national and regional governments promote the generation of the electricity from renewable resources. Many such incentives go directly to developers of renewable energy projects, including direct subsidies, tax benefits, low-interest loans, public-private co- investment, and simplified interconnection procedures. Taxation has been an important means to promote biomass more competitive with fossil fuels. In some countries, biofuels have been exempt from taxes and except value-added tax (VAT). Biomass became less expensive than coal in 1991 in Sweden and in 1997 in Finland as a result of carbon-based taxes. High level of taxation on fossil fuels has also clearly made biomass at least costly fuel for district heating system in Sweden (Ericsson et al., 2004).

Production subsidies have become important biofuels policies with fuel tax exemption. The largest production subsidies are in US. A number of US states offer production incentives and sales tax reductions or exemptions for biofuels (see the review, Zhang & Cooke, 2008). For example, Iowa State pays up to 50% or $30,000 of costs of installing E85 tanks and fuel lines; and pay up to 50% or $50,000 for biodiesel infrastructure (Waltz, 2007). In the US, the federal government provides a 51 cents/gallon tax credit for ethanol blending through 2010, and a 43 cents/gallon tax credit for biodiesel through 2008. Ireland announced over $ 370 million in extra subsidies to encourage biofuel production through 2010. Fuel-tax exemptions often coincide with other types of tax benefits for biofuel investment and trade. The maximum available investment subsidy in Finland since 1999 is 30%, depending on the type of project. In addition, the electricity from renewable resources receives a subsidy per kWh produced, equivalent to the Finish electricity tax (Ericsson et al., 2004). Increasingly, nations have been encouraging retail electric utilities to increase their use of renewable energy generation through government legislations. The schemes are different versions of Feed-in tariff or renewable portfolio standard (―RPS‖) by imposing renewable energy quotas.

3.2 Feed-in Tariff

Feed-in tariff or Feed-in Law is an incentive structure to encourage using renewable energy through legislations. A FiT is a revenue-neutral way of making the installation of renewable energy more appealing. The electricity generated from renewable resources is bought by the utility at above market price, and then the difference cost between retail price and renewable energy is spread over all customers of the utility. This results in large incentive for people to install . It is a mechanism to instigate a change in the way power is generated, gradually shifting from present polluting way to renewable resources. This type of program was first implemented in the US in 1978. It was introduced in Germany in 1990, and was refined in year 2000. The German FiT model has proven to be the world‘s most effective practice for boosting development of renewable energy technologies. In 2005, 10% of electricity in Germany came from renewable sources and 70% of this

28 was supported with FiT (Stern, 2007). The model is associated with a large growth in solar power in Spain, solar and wind power in Germany and wind power in Denmark.

The system involves fixed and long-term payments, usually 10-20 years. The guaranteed incentive did effectively encourage the long-term investment in renewable energy developments. By 2007, at least 37 nations have adopted such policy with some modification to account for technology differences, environment impacts and inflation (REN21, 2008). Spain modified feed-in tariff premiums to de-couple premiums from electricity prices and avoid windfall profits when electricity price rose significantly. Many new FiTs directed at specific energy technology such as solar or biomass. For example, Italy‘s new FiT provides an increasing provision for solar PV, aiming to produce 3,000 MW of solar PV by 2016. France increased tariffs to 25-30 eurocents/kWh for solar PV installation. Strong momentum for FiT continues around the world. The policies have effects not only wind power, but also have impacts on the development of other renewable energy such as solar PV, biomass and small hydropower.

In Canada, the government is offering incentive programmes to make "green" energy a more economically viable option. For example, In Ontario, the power authority offers Renewable Energy Standard Offer Program (RESOP) to allow residential homeowners with installations to sell the energy they produce back to the grid (i.e., the government) at 41¢/kWh, while drawing power from the grid at an average rate of 20¢/kWh. The program is designed to help promote the government's green agenda and lower the strain often placed on the energy grid at peak hours. The average payback period for a residential solar installation (sized between 1.3 kW and 5 kW) is estimated between 18 and 23 years, including the cost such as parts, installation and maintenance (Ontario Power Authority, 2007). The program has been successfully to promote the renewable energy. The authority has received applications for over 1,000 MW of renewable energy since it was launched 2 years ago.

3.3 Renewable Portfolio Standards (RPS) or Renewable obligations (RO)

Renewable portfolio standards policies, also called renewable obligations or quota policies exist in several countries: Australia, China, Italy, Japan, Poland, Sweden, the UK, and some states in the US, Canada and India. The RPS policies required power suppliers to generate a portion of the power from renewable sources. The required renewable power shares ranges between 5-20% by 2010-2012, recent extending to 2020. By 2008, there are 25 states with RPS policies; some more states are planning to adopt this policy in the US (REN21, 2008). In China, RPS is part of its exiting policy framework for supporting renewable . The share of non- hydro renewable is targeted to reach 1% of total power generation by 2010 and 3% by 2020.

Under RPS, the supply of renewable energy is achieved by obliging supplier to deliver to consumer a portion of their electricity from renewable energy sources. In order to do this, they collect green electricity certificates. If the power supplier can not produce required portion of green electricity, they have to purchase green electricity certificates from renewable energy developers by paying higher price. This is based on the liberation market with perfect competition where there is a multiplicity of buyers and sellers in a market where no single buyer or seller has a big impact on the

29 market price of green electricity certificates. In theory, the competitive market will stimulate a more efficient use of resources compare to FiT system where prices are set by government. To achieve the quotas, each country chooses different way. Most RPS targets are transformed into large expected future investments. Most of these investments were either made by public companies or secured by public credit guarantees (Jäger-Waldau, 2007). The fundamental problem with RPS is that there is no long-term guarantee and the ―market-based‖ system would favours large, vertically integrated generators and multinational electric utilities. This system disadvantage local ownership, but local entrepreneurs can be employed by government, electric generators, municipalities and other users.

The renewable obligation is the main mechanism for promoting renewable energy in the UK. Under this system, suppliers can meet their obligation either by direct sourcing, by buying an equivalent level of green energy certificates, or pay a ‗buy- out‘ price of 3p/kWh. The extra incentive results from the payment of the ‗buy-out‘ price would encourage the investment in renewable sources. This system is to maximise the level of competition within public support system which try to guarantee a minimum level of renewable capacity. The RO is intended by the current Labour administration to be the central support mechanism for renewable for 25 years. However, there is potential for such mechanism to be altered because of future political consideration, and thus no contract binding long-term security. This make more difficult to secure financing for renewable energy projects under the RO system. R&D funding in renewable energy have long records in the UK. But there are gaps in moving technologies along the innovation chain (Foxon et al., 2005). The failure to attract private capital is the barrier for the renewable energy development in the UK. Up to date, this policy results in only 0.3% increase rate of annual renewable energy as a contribution to total final energy consumption in the UK (BERR, 2008). Comparing efforts in an international context, the UK has performed poorly with respect to most of its policy goals when contrasted with nations such as Denmark, Germany and Spain (Connor, 2003). It may suggest that this market mechanism or near-market mechanism alone will not achieve the increase in the use of renewable energy to meet the UK‘s commitments.

Recently, offshore wind energy and bioenergy have been promoted to develop in order the UK meeting its targets for increase renewable energy use. The UK government has announced a major programme of building offshore wind farms (see Table1), expecting to produce around 20GWe offshore wind power by 2020. It was suggested that landfill gas, energy from biodegradable waste and from biomass could constitute almost half of UK renewable energy by 2010 if target are meet (BERR, 2008). By now, if we assume that these offshore wind projects were all to go ahead despite planning permission issues, the renewables could provide about 30% of electricity by 2020, and assume that 60% of biofuel target is achieved (although the UK has limited forest resources compared to countries such as Sweden and Austria), then the UK would be generating about 6.5% of its final energy from renewable sources in 2020. The UK would still have an 8.5% shortfall in its EU Renewable Directive target of 15% from renewable sources by 2020 (Toke, 2008). Thus, UK may have to pay high price for green energy certificates in order to meet the target by 2020.

30 4 Regional renewable energy developments

4.1 Regional governance

In order to achieve the target of renewable energy, every country has designed different strategies to accomplish the general goal. The regional government tries to effectively develop renewable energy industry according to its own region advantages and build the new energy sector based on traditional local economy. Finland and Sweden have successfully exploited their vast biomass resources to develop bioenergy for electricity production (Ericsson et al., 2004). The region governments are not looking to expanding their domestic use of renewable energy, but also to develop renewable technology manufacturing industry to accompanying the global renewable energy market. Lewis & Wiser (2007) found that policies that support wind power manufacturing company with a sizable, stable domestic market are most likely result in the establishment of an international competitive wind industry, such as Denmark‘s Vestas and Spain‘s Gamesa.

The development of renewable energy has an outstanding effect on regional economy and environment, and offer opportunities for local employment and export market. In Germany, the employment of renewable energy industry was about 250,000 people in 2007, increasing from 160,000 jobs in 2004. The total turnover in renewable energy is over €21 billion (Lund, 2009). According to recent estimation, as many as 400,000 people could be employed in this industry in Germany by 2020. This sector boosts the country‘s economy and exports as a result of massive investment and effective policy (Burgermeister, 2008). In ―Clean Energy 2030‖, a proposal by energy research team at Google, it is estimated that clean energy will create about 1.4 billion new jobs by 2030, including energy efficiency, wind power, solar power and geothermal energy (Figure 24) (Google energy team, 2008). Not only large countries demonstrate success in renewable energy sector, Denmark with over 20,000 people working in wind power show that smaller countries can gain success through innovative policies and optimal managing of the commercialisation process (Lund, 2009). The case of the development of solar and wind energy in region , Spain has demonstrated the significant effect of renewable energy on employment (Moreno & López, 2008). But local government also need to face the challenge and adapt its traditional energy sector to the new framework to satisfy the requirement of new energy sector, including skill training to improve regional competitiveness.

Due to climate protection, improving air quality and sustainable local development, several major cities have made commitment to reduce greenhouse gas emission and promote renewable energy. For example, London proposed a target to reduce carbon dioxide emissions by 20% by 2010 and by 60% by 2050. Tokyo announced an ambitious target of 20% of total energy consumption by 2020 from current 3%. Vancouver proposed that all new buildings in the city should be carbon neutral by 2030.Oxford in the UK set a target of 10% homes with solar hot water by 2010. To bring down costs of renewable energy, it is suggested that the municipal government building and public services to use green power. California government purchases 100% of their power needs as green power. Woking in the UK aims for 100% by 2011. Stockholm requires biofuels in public transport and with vision to become fully fossil-fuel free by 2050 (REN21, 2008).

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Figure 24. Job creation by renewable energy (Source: Clean Energy 2030 Proposal)

Planning permission used to be one of major barriers for renewable energy development in the UK. It was reported that 27% of the biomass plants with a Non- Fossil Obligations (NFFO) contract could not obtain planning permission in the first round, and only 1 project won planning permission on appeal (Upreti & van der Horst, 2004). The development of a biomass electricity plant in Cricklade, UK was failed to gain planning permission due to local resident opposition. In general, biomass energy plants have few environment impacts than plants using fossil fuel. Ambient Energy Ltd., proposed to develop a 5 MWe wood gasification plant near the town of Cricklade. However, local community is anxiety about the perceived adverse impacts or risks of biomass projects and mistrust that industry puts profits over their welfare. Recently, the largest wind power farm in the UK was proposed to build in North Wales through top-down strategy, but it is reported that local resident would appeal the proposal due to the concern that this large-scale offshore wind farm will damage the local tourist business. There is conflict between national needs and local interest for the renewable power plants. The UK government needs to create a greater level of public awareness of the environmental benefits of renewable energy. The systematic expansion of renewable energy is not only good from the environmental and climate policy point of view but also for economy growth and employment in the region.

Instead, the barrier now is the difficulty of financing investment projects. For example, one of the largest projects, the 4 billion cubic meters Esmond Gordon offshore facility has been called into doubt. According to estimation by Ernst & young, the industry will need to invest £165 billion in new wind farms, nuclear power stations and grid connections during 2008 – 2020 in order to meet the target of 15% energy from renewable sources by 2020. In the meantime, the installation cost of wind power and PV solar power station is rising up due to limited suppliers. In the midst of

32 a financial crisis and global recession, raising finance will be particularly difficult. Private investors now lost their confidence that future returns on new investment cover financing costs in the UK. In that case, without effective support from government, the UK‘s energy investment needs will not met. There is risk the investment capital will be redeployed to other sectors of the economy and possibly other countries (Crooks, 2009).

4.2 Eco-industrial parks

Every country in the world is now facing the great challenges in the balance between economy growth and environmental improvement, and so as to explore green innovation to promote smart economy growth. Many countries including the developed countries like USA, Germany and Sweden etc. and the developing countries like China, India and Thailand etc. have built many different kinds of eco- industrial parks in the past decades (Figure 25). Recently, eco-industrial parks (EIPs), regional eco-industrial clusters and national circular economy strategies have again appeared in most regional and national economy initiatives (Fang et al., 2007; Tudor et al., 2007; Gibbs, 2008).

Figure 25. World-wide Eco-Industrial Parks. (Source: Koenig, 2008; Wahl, 2008)

Eco-industrial Park (EIP) is ―an industrial area where businesses cooperate with each other and with the local community in an attempt to use material and energy efficiently and reduce waste‖. The concept of an EIP is a new type of industrial organisation designed according to the principle of industrial ecology, which draws analogies from natural ecosystems to human industrial systems (Frosch & Gallopoulos, 1989). EIPs establish a network of material and energy flows among enterprises, in order to utilise the resources and energy effectively and reduce the discharge of waste by stimulating the natural ecosystem, so as to increase economic gains and improve environmental quality (Lowe, 1997). In a successful industrial ecosystem, the material flows within a closed loops of recycle and reuse and the waste

33 from one process serve as the input material for other process or are recycled for further production. Thus industrial symbiosis is formed among the enterprises within EIP, where they connect with each other like a food chain. The waste from one enterprise is the raw material for another enterprise. This relationship can efficiently decrease the pollution and increase the material utilization. Partially, EIP projects focus on the integration with local community, resulting in less transportation for material because the enterprises are in the proximity region. This benefits the companies clustering in EIPs.

4.2.1 Kalundborg Eco-Industrial Park in Denmark

The eco-industrial park of Kalundborg in Denmark is the most successful example. This provides an evidence of what could be achieved through implementing industrial symbiosis concept. At Kalundborg, the connection of waste and energy exchanges was developed within the system, including the local city administration, a power plant (Energy E2 Asnaes Power Station), a refinery, fish farms, a pharmaceuticals plant and a wallboard manufacturer (Figure 26) (Gibbs, 2008). The power plant is the heart of the park, providing process steam to Statoil Refinery and pharmaceutical plant, Novo Nordisk and also providing residual heat to the municipality and fish farms. Residual steam is also sent to the refinery by the power company, in exchange to receive refinery gas previously flared as waste. Farms use sludge from the fish farm and the pharmaceutical processes as fertilisers. Sulfur, which is removed after the treatment of excess gas from Statoil refinery, is sold as a raw material for the manufacture of sulphuric acid. The treated clean gas is then used as raw material in the manufacture of plasterboard at Gyproc. The basis of the industrial symbiosis cooperation in Kalundborg is openness, communication and mutual trust between the partners. It is estimated that there are about 2.9 million tons of material be re-used or recycled at Kalundborg through waste exchange. 3 million m3 of water are saved among the companies, for example, the power station has reduced water use by 60% through recycling (Gibbs, 2008).

4.2.2 Styrian recycling network, Austria

Schwarz & Steininge (1997) reported a much larger industrial recycling network in the province of Styria, Austria. The exchanged materials in this network include paper, power plant gypsum, iron scrap, used oil and tires. The firms were motivated purely by the revenues from by-products they could exchange and the saving in landfill disposal costs. The ‗former waste‘ from a company was re-used by another inter-company in the region recycling network through matching of production processes. It helps to reduce material and energy throughput in the economic system to sustainable levels.The exchange of by products has both economical and environmental benefits. The company managers in Styris were not aware of industrial symbiosis concept and the exchange was purely driven by cost saving. The pattern of industrial symbiosis of Styria regional trading network was self-organisation model, without initial planning. The industrial recycling network is shown to play a significant role to foster the regional economy

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Figure 26. Eco-Industrial Park at Kalundborg, Demark. (Resource: Industrial Symbiosis Institute, website: http://www.symbiosis.dk)

4.2.3 Rantasalmi Eco-Industrial Park, Finland

Sustainable development has also been paid a vast attention in Finnish forest industry business. The first eco-industrial park are planned and organised in the commune of Rantasalmi, where there is a concentration of mechanical word processing companies (Figure 27). The main core companies are Rantasalmi Oy, the forth biggest log-house company in Finland, and Sil-Kas Oy, a wood-processing company which manufactures blanks for window and door from pine. Rantasalmi Oy has a strong network with carpentry companies in material supplying. The wood materials are exchange among the companies, for example, Korpihonka uses solely by-products of Sil-Kas Oy. Wood wastes are combusted in the heating plant of Suur-Savon Sähkö Oy, which supplies heat for the companies in the parks and neighbouring residence. The companies in the park co-operate with each other, sharing the energy, material, logistics, storage etc. Rantasalmi Eco-industrial Park serves as an example of creating business opportunities for small and medium-sized enterprises through cooperation, and of developing an ecological, socially and sustainable economy in rural area like Rantasalmi (Saikku & Lehtonen, 2006).

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Figure 27. Eco-Industrial Park at Rantasalmi, Finland. (Source: Saikku & Lehtonen, 2006)

4.2.4 Dyfi Eco-Industrial Park, UK

Dyfi Eco-Industrial Park is located in Dyfi Valley, near Machynlleth, Mid Wales, UK. The local valley is a community of some 12,500 people with 74,000 ha of family hill farms. The economy used to be dominated by tourist and other services during 1990‘s, but has been a serious decline in farm incomes. In 1998, the community renewable energy project was created with the initial funding support from the European Regional Development Fund (http://www.wda.co.uk/ ). Several organisations were involved in this project, including local county council, Dulas Ltd (a leading specialist renewable energy company based in local valley), the Centre for Alternative Technology, the Welsh Development Agency and Snowdonia National Park. This project was successful to enable local people to carry out small-scale schemes using various renewable energy technologies. The total installed capacity of renewable energy included over 200kW electrical capacity (hydro, wind and solar) and 150 kW heat capacity (solar, wood, heat pump). The renewable energy installation was supplied by local SMEs. The reduction of the expenditure on energy supplied from

36 outside the community keeps more money circulated within local economy community. This project improved local community to understand green local economy and support for renewable energy.

4.2.5 Eco-Industrial Parks in the USA

In the USA, the Clinton administration‘s President‘s Council on Sustainable Development (PCSD) suggested to establish a few Eco-Industrial Parks on some demonstration sites (Table 9). EIPs aim to increase business competitiveness, reduce waste and pollution, create jobs and improve working conditions, leading to the benefits of the regional economy, environment and society (Gibbs & Deutz, 2005). The developments of EIPs in the USA are at early stage and the initiatives with strong government interaction attempt to create a EIP from scratch, locate enterprises with specific industry that have potential symbiotic relationship. The physical settings vary among these demonstration sites. Some EIPs retrofit from old industrial or military sites; others are new development from green-field. Most of EIPs are based on manufacturing and developing new enterprise for by-product exchange or waste recycling; while a few parks focus on agriculture products, for example, Riverside EIP. Raymond Green EIP involves sustainable harvesting in coastal forest area. Several EIPs have goals to become a zero-emissions or closed-loop industrial system. Recently, it has witnessed that more enterprises in EIPs produce sustainable products with a sustainable manufacturing practice, eventually becoming energy independent of fossil fuels or outside electricity. The following are some examples of different types of EIPs in the USA.

Brownsville, Texas/Matamoros, Mexico The Brownsville site is located on the border of Texas and Mexico in the Rio Grande Valley. The cross-border region has some severe environmental problems due to rapid industrialization. The virtual eco-industrial park was introduced through region approach to develop and diffuse innovative, cost-effective technologies and practices that could promote sustainable industrial development along the U.S.-Mexico border. City of Brownsville has worked with Matamoros, Mexico on the Environmental Defence Fund's eco-industrial park project (PCSD, 1996). The first phase of the project is a quantitative analysis of the economic and environmental benefits from cross-border multi-firm resource-sharing strategy. The second phase involves testing the model at the site. The affiliated companies in EIP participating in waste exchange will pay lower prices for secondary raw materials and realize savings in hazardous waste disposal charges. For example, Mobil sells styrene/ethylbenzene to local recycler in EIP system at half price as it used to deposit it. By-product exchanges depend on virtual linkage rather than co-location. Triangle region of North Carolina is another success example of regional economy community to organise firms virtually across a broader region.

Londonderry Eco-Industrial Park, New Hampshire, USA Londonderry is a sub-urbanising community of 27,000 people in an area of active economic development, 40 miles to Boston. The gas power station (AES) uses 4 million gallons of treated waste water daily from the city (Deutz & Gibbs, 2004). Originally, a recycling company approached Stonyfield Farms Yoghurt to establish a plastic recycling operation next to the dairy to use its grey water to rinse plastics (Lowitt, 2003). Town of Londonderry has the inspiration for the sustainable nature of

37 development to set up this EIP, but it was developed by a commercial company. The management company require all tenants to develop an environmental management system, track their resource use, set environmental performance goal and perform third party ecological audits. The businesses in the EIP include power plant, recycling company, medical supply distribution firm, software firms and rental car operators, all extensive users of the nearby airport (Lowitt, 2003). These businesses co-located in a defined EIP can exchange energy, water, materials and share information, transportation, marketing service.

Table 9. List of Eco-Industrial Parks in the USA. (Source: PCSD, 1996)

Park Location Characteristics Berks Country EIP Berjs County, PA, State/private project converting landfill into energy system for manufacturing Brownsville EIP Brownsville, Texas Cross-border multi-firm resource- sharing strategy Cabazon Resource Indio, California Biomass electricity generation plants Recovery Park and a recycling-manufacturing Civano Industrial Eco Park Tucson, Arizona Business centre for the development of sustainable technology East Shore EIP Oakland, California Alternative waste processing companies Fairfield EIP Baltimore, Maryland Boasts resource recovery enterprises in city-created ―empowerment zone‖, with collaboration with university and park management. Franklin County EIP Youngsville, North Clean-tech companies in a Eco-design Carolina solar-powered building Londonderry EIP Londonderry, New Firms co-locate in a defined EIP and Hampshire exchange by-product and energy. Plattsburgh EIP Plattsburgh, New York Research, recreational, industrial, and commercial facilities on abandoned air force base. Port of Cape Charles Eastville, Virginia Development zones with specific Sustainable Technology incentives for photovoltaic producers, Industrial Park clean fuel vehicle manufacture, and recycled material producers Raymond Green EIP Raymond, Washington Located within a sustainable harvested forest, works with local resources and process waste streams on site Riverside Eco-Park Burlington, Vermont Agro-industrial park with biomass and reprocessing technology Shady Side EIP Shady Side, Maryland Marine-based park with local community participation Trenton Eco-Industrial Trenton, New Jersey Urban network, not geographically Complex contiguous

38

4.2.6 Guigang Eco-Industrial Park, China

China has experienced a rapid economic growth in the past thirty years, but the fast economy growth is now facing big challenges of resource and environment issues. To promote the EIP concept, the State Environmental Protection Administration of China initiated the pilot of eco-industrial parks in 1999. Guigang Eco-industrial Park is one of the earliest demonstration sites in China. The park was managed by the Guitang Group, a state-owned enterprise with a history of over 50 years. The economy of the town of Guigang is mainly dependent upon sugar related industries. But the sugar industry has declined rapidly during 1990s. This EIP initiative is to transfer the declining Guitang Group from a conventional sugar industrial system to an eco- industrial system. The Guitang Group set up the eco-industrial complex based on sugar industry and now it becomes the largest sugar refinery in China. The complex includes sugarcane farms, sugar-making plant (it produces 120,000 tonnes of sugar annually), an alcohol (10,000 tonnes) plant, a pulp mill, a paper (85,000 tonnes) plant, a calcium carbonate (8000 tonnes) plant, a cement (330,000 tonnes) plant, and a fertilizer (30,000 tonnes) plant. The paper-making plant uses the sugar slag generated from the sugar-making plants; while cement mill uses by-product, the sludge, as raw material for the production of cement (Fang et al., 2007).

The whole Eco-industrial Park is managed under one big umbrella, Guitang Group. The material and by-product exchange occur primarily within the same complex, improving significantly the efficiency of its many processing plants (Fang & Lifset, 2008). Recently, the group was privatised and extend its exchange network into a community-level to receive by-products from other sugar producers for increased production. The Guitang Group‘s example has inspired the town of Guigang to adopt a five year plan to become an Eco-industrial City. By 2007, there were 24 national EIPs established in China. Most of them are organised and managed by the administrative commissions of the development zones and the governments at city and county level, while others are under enterprise management. Now, the concept of eco-industrial development expands from park, community-level, city-level, to provincial level like Liaoning Province, as demonstration province for circular economy (Fang et al., 2007).

4.3 Eco-Industrial Clusters

In earlier stage of EIP development, most EIPs focus on waste recycling and by- product exchange on the level of the industrial park. However, recent emerging green innovation demonstrates that larger regional area may be more suitable for closing material loops and developing sustainable industrial ecosystems (Anbumozhi, 2008). The concept of eco-industrial development is for companies to find the innovative solution via working together. Rather than just co-location, these companies could achieve economic, environmental and social success via networking, collaboration and sharing the resources. Renewable energy technologies are innovative instruments for regional eco-industrial development. Cluster approach has been widely promoted to increase regional innovation and competitiveness (Porter, 2002). Eco-Industrial Clusters are defined here as ―…A dynamic geographical concentration of competing and collaborating companies, their customers and suppliers, supported by organizations that facilitate knowledge, investment and other private or collective

39 support services. This community of business co-operate with each other and with local/regional community to efficiently share resource (material, energy, information, infrastructure and finance etc., leading to economic gains, improved environmental quality and social success…‖ (Anbumozhi, 2008). Gibbs & Deutz (2005) also suggested that the incremental adoption of industrial ecology principles and regional cluster approach may be more viable than a purely park-based approach.

4.3.1 Processum Technology Park, Örnskjöldvik, Sweden Örnskjöldvik is often referred to as the cradle of the Swedish chemical industry. Processing industry has developed in Örnskjöldvik during the twentieth century. There are strong business and research and development in process chemistry, process engineering and process control. Recently, biorefinery has been developed to produce biofuel from renewable raw material through specialized processing technology, extracting the maximum possible refinement values from the renewable raw material. Today, more than 2000 different products are refined from crude oil and intermediate feed stocks can be routed to various units to produce different products, as shown in Figure 28. Sweden is rich in forestry resource, the world‘s fourth largest exports of paper and pulp. Processum Company is set up to organise collaboration between companies within the processing industry cluster. Its task is to develop new business opportunities and product development, to carry research and development work, and to involve marketing activities within the process industry in Örnskjöldvik. Processum with its member companies (Table 10) are working together to develop a biorefinery cluster, based on forest resource and traditional root of processing technology. Up to date, Processum refinery initiative has successfully generated three new companies, created 85 new qualified jobs and two patent applications since it was established in 2004 (http://www.processum.se).

Figure 28. Integrated forest biorefinery products. (Source: http://www.processum.se)

40 Table 10. List of member companies in Processium Technology Park, Sweden. (Source: http://www.processum.se) Company Business field Akzo Nobel Surface Chemistry Production of thickeners for water based paints and the construction industry Domsjö Fabriker Production and global sales of dissolving pulp and paper pulp Övik Energi Energy production and distribution Sekab Production of ethanol, ethanol derivatives and ethanol as fuel Etek Etanolteknik Technology company with ethanol production process based on lignocelluloses Eurocon Technological independent process consultant company EcoDevelopment Consultancy for project management in the area of sustainable development Kvaerner Power Design and manufactures systems for chemical recycling and energy production MoRe Research Independent cooperative R&D within pulp technology and paper analysis M-real Technology Center R&D organisation on process and product development Holmen Skog Timber trading Örnskjöldvik Municipality Public sector The foundation for Technology Transfer in Finances for research commercialisation Umeå Umeå University, Mid Sweden University Public education sector NPI, Network for Process Intelligence ICT sector

4.3.2 Bavarian Energy Technology Cluster, German Bavaria was as a rural state dependent on agriculture in the early twentieth century. By the twenty-first century, it had emerged as one of Germany's industrial powerhouses, consistently setting national standards for productivity and innovation. Due to its targeted support and promotion of biotech, Bavaria is Germany‘s leading biotech state and is among Europe‘s top biotech clusters. There are some leading R&D centers such as Max-Planck-Institute, the GSF National Research Centre for Environment and Health, and the Gene Center. Under recent Bavarian Cluster Initiative, energy technology is the targeted field to develop in Bavaria. Conventional power generation technology, nuclear energy and photovoltaic technology are all

41 important thematic fields to develop in order to develop Bavarian Energy Technology Cluster. The Bavarian government has long-term innovation policy to support high- tech industry built on its strong science base, providing support funding to encourage technology –driven start-ups, facilitating technology transfer, supporting cluster network and collaboration. Bayern Innovative Company manages the cluster network and promotes endogenous technology development in the region. There are about 450 companies in energy technology sector in Bavaria, with over 100,000 employments in the region (see http://www.invest-in-bavaria.com). The companies‘ main activities are manufacturing of electricity generation and distribution facilities. Some world-class power plants such as Siemens Power Generation and Alston Power Energy are based in Bavaria. A large number of local small and medium-size enterprises provide sub-contract works and suppliers with these large power companies. Renewable energy technologies have been used in the generation of electricity in Bavaria, including Hydrogen power, biomass, photovoltaic, wind and geothermal ones. Bavaria now accounts for half of all the photovoltaic-generated facilities in Germany. The entire manufacturing chain of photovoltaic energy facility is based on the region, from the Crystal pulling, manufacturing of wafers, cells, modules, and to entire facilities. The manufacturers of solar-use silicon and photovoltaic cells based in Bavaria, such as Applied Materials GmbH & Co. KG, Alzenau and AVANCIS GmbH & Co. KG, Munich, are among the world‘s leaders in the field.

4.3.3 Peterborough cluster of environment sector, UK

Greater Peterborough cluster of environment sector, located in the , consists of over 380 companies working in the environmental goods and services sector. It was estimated to employ 5,000 people and total collective annual turnover is over £340 million in the cluster. It has become as the largest cluster of environmental- focussed businesses and organisations in the UK (http://www.envirocluster.net/ ). EnviroCluster, set up in 2002, aims to identify and exploit business opportunities, to encourage start-ups and to attract inward investment in Greater Peterborough area. It has helped to attract over £1 million inward investment to this sector. Greater Peterborough has built up strong base on environment business sector. Business cluster increases the number and value of business opportunities through revealing synergies between local players. Developing clusters of renewable energy technology is considered as potential target for the region development (UK CEED, 2001). Potential wind energy cluster was proposed, base on strong environmental industry in this region (Figure 29). Some components of the value chains are already present in Greater Peterborough, but not generators due to lack of the root of manufacturing industry. There are some bio-energy companies such as Biogas Technology and John Bradshaw Ltd. located in the area. Also research centre of British Sugar is based in the same region. So there is potential to develop multi-fuel power plant in the cluster. The potential for efficiency and innovation is illustrated through collaborations between the companies in the value chains, as we discussed above.

42

Figure 29. Potential wind cluster in Greater Peterborough, UK. (Source: UKCEED, 2001).

4.3.4 Ghent Bio-Energy Valley, Belgium

The port of Ghent, Belgium has traditional been strong in the transport of agricultural commodities. Ghent Bio-Energy Valley is a public-private partnership for the promotion of sustainable bio-energy activities and economic development in the region of Ghent. It is a joint initiative of Ghent University, the city of Ghent, the Port of Ghent (Rodenhuize), the Development Agency East-Flanders and a number of industrial companies that are active in the fields of bio-energy generation, distribution, storage and use. Five biorefinery companies co-locate at Rodenhuize docks (Oiltanking, Eurosilo, Bioro, Alco Bio Fuel and Cargill). It is estimated that Bioro will produce 200,000 tonnes of biodiesel and Alco Bioro will produce 150,000 m3 bioethanol. The cluster was created with strong integration, where Electrical power plant (Electrabel) and biorefinery plants are in the same site, forming a complete production chain from raw material to biofuel. There is strategic eco-industrial symbiosis relationship between the companies in the cluster. For example of bioethanol production, the cereals are transformed by yeast fermentation to bioethanol with the production of CO2 as a by-product. On the other hand, cellulose of cereals is converted into glucose. The glucose is transformed to succinate by bacterial fermentation, using by-product, CO2. The succinate is the raw material for bioplastic and chemicals (biofuel process in detail, see Zhang & Cooke, 2008). Meanwhile, the electricity power plant of Electrabel is located nearby and is integrated with these biorefinery companies. The power plant is already partially running on imported biomass and plan to run it completely on biomass. This program of Ghent Bio-Energy Valley creates about 250 jobs in the region.

43 4.4.4. Kawasaki Eco-Industrial Town, Japan

In recent decades, Japan industry and society have applied an eco-industrial approach in regional economy development, transferring from unsustainable economic activities in the past. The highly developed transportation infrastructure makes regional and inter-regional by-product exchange physically feasible and economically attractive. The term ―Eco-Industrial Park‖ is not commonly used, while there are some successful Eco-town projects for the promotion of eco-industrial development in Japan. The central government provides both technical and financial support to local governments to establish eco-towns where zero-emission is promoted regionally through various recycling and industrial symbiosis efforts.

Kawasaki City is one of Japan‘s oldest and largest industrial parks, consisting of oil refineries, steel manufacturers, power generators, and chemical manufacturer. There were several environmental problems and local economy was stagnating during 1970s and 1980s. To resolve these problems, the city government and local businesses have worked together to create a competitive resource-recycling system. The symbioses connect steel, cement, chemical, and paper firms and their spin-off recycling businesses. The technologies includes: waste oil is used for energy to heat the kilns for production; electronic appliance recycling provides input for steel manufacturing; municipal plastic waste as a reducing agent is utilised in blast furnace. The tenants of the eco-industrial park collectively integrated their energy use to improve overall energy efficiency. It was estimated that over 565,000 tons of waste from incineration or landfill is recycled and worth over $130 million economy benefit (van Berkel et al., 2009). This is a successful model of joint efforts between government and local business (Morikawa, 2000).

4.4 Challenges in eco-industrial development

4.4.1 “Planned model” vs. “self-organised model”

The systematic use of the industrial symbiosis concept started in Kalunborg a few decades ago. More EIPs were set up by many nations around the world, copying the success practice of Kalunborg; especially more than a dozen of EIPs were initiated by USA government, but not all with success. Comparing with ―self-organised‖ model of Kalunborg or Styria, most of EIPs in the USA are planned or designed by national or regional governments. Self-organising model seems more sustainable for regional development (Heeres et al., 2004; Chertow, 2007). Chertow (2007) found that pre- exiting self-organising systems in EIPs are more successful in generating symbiotic exchanges although they may not be aware their relationship as ―symbiosis‖ in ecological term. He suggested to ―uncover‖ these pre-existing industrial ecosystems and to build on them through public policy support, which would be more efficient than design a new EIP.

Public and private partnership is an effective model to develop eco-industrial projects, such as Kawasaki Eco-town project. The National Industrial Symbiosis Programme in the UK was based on this regional approach to develop industrial symbioses (NISP, 2009). For example, the NISP participant Agent Energy is now collecting used cooking oil from producers around the UK to convert into biodiesel, which NISP helps the linkage contacts between used cooling oil suppliers and biodiesel producer.

44 Argent Energy started production at the UK‘s first large scale biodiesel in Motherwell, Scotland in 2005, now becomes as the most sustainable diesel producer in the world in 2009. NISP, hybrid public-private organisation, could facilitate the growth of renewable energy industrial networks by bridging the information and cost barriers that face many projects.

Anbumozhi (2008) demonstrated another success case of self-organising model. The wood industrial cluster consists of over 75 wood based small businesses in Maniwa, Japan. The production process generates wood trimmings and shavings, which is explored as material for biofuel production. The technology was introduced by the University of Tokyo and Okayama University. Maniwa city promoted a ―biomass town‖ initiative to encourage businesses via several kinds of funds and subsidiaries. In this case, enterprises are the driving force and they seek constantly inter-firm networks, not only waste reduction, but also exploration of renewable energies.

4.4.2 Networking and collaboration

Organisation networking and collaboration were usually neglected in eco-industrial development. Previous studies showed little or no networking and firm interchanges occurred in some EIPs in the USA (Gibbs & Deutz, 2005; 2007). Local or regional community network play an important role on the development of EIPs. Networking activity will help to build up potential material interchange in a long term. Collaboration between firms is central to eco-industrial development, as original concept of industrial symbiosis: ―finding solution via working together‖. Moreover, collaboration is efficient path for innovation, which is critical to increase the regional competitiveness. As pointed by Gibbs (2008), trust and co-operation is difficult to develop from scratch through policy intervention. It was suggested that EIP initiatives should emphasis on networking and collaboration, not just co-located businesses. Now, networking in EIP is not only resource exchange, but also knowledge and technology exchange. New products, new markets and a green image of region result from improved relationship (Mirata & Emtairah, 2005). The role of networking in EIP is potential linked to regional innovation system, which needs further research.

Local collaboration and partnership were found to be of key importance in eco- industrial development. A good example of this is case of Eco-Dyfi project in Wales. There is strong relationship between individuals and local community. The community-controlled development agency set up the Centre for Alternative Technology to promote renewable energies, leading some successful projects in regional development. Local government or park management organisation serve as network brokers to initiate inter-firm network, explore new business opportunity, provide information and supply political and managerial support. Local governments have the benefits of eco-industrial park development, not only environmental improvement, but also job creation and economic regeneration.

In order to increase the collaboration between companies, some cluster initiatives create virtual platforms to promote vertical and horizontal networks and share resources and knowledge in the technological, industrial or commercial fields. They are proof as successful strategy for sustainable regional development. For example, Walloon regional government (Belgium) set up sustainable energy cluster in 2008, called TWEED. It is an association of renewable energy sector companies, playing an

45 important role to help companies to build up inter-partnership or establish relevant linkages to other public or private operator. This cluster aims to turn the region into competitive, innovative and sustainable economy development. Successful EIPs are made of companies that constantly seek inter-firm network, not only minimise waste and reduce pollution, but also search for all kinds of innovation to improve zero emission process, to create new eco-products and to develop new eco-market (Anbumozhi, 2008).

4.4.3 Financing

Many EIP developers have difficult experience to obtain enough capital for EIP projects. It is a long term investment and also financing for EIP doesn‘t normally fit in the guideline area of bank investment regulation. The financial community is often unfamiliar with EIPs and doesn‘t see the investment opportunity in brown-fields. So at initial stage, government is essential to demonstrate the financial safety of these types of investments in sustainable communities. Usually, governments support strong infrastructure of EIP and design the EIP‘s industrial ecosystem. However, sometimes the costs involved may not be sufficient for enterprise to adopt the new eco-industrial concept. There is a lack of financial incentives to encourage businesses to reconstruct their existing facilities. In theory, both the economy and environment will benefit from eco-industrial development; however the capital turnover is usually a long term. Thus, eco-industrial development is difficult to implement without strong government financial support and effective environmental regulation policy.

5. Conclusions

Renewable energy helps global climate stabilisation, offers national energy security, and stimulates regional economic development. Wind, solar, biofuels, geothermal and other renewable energy technologies and markets are continuing growing with revenue value of $77 billion in 2007 (Makower et al., 2008). Renewable energy capacity growth is associated with substantial public supports. Denmark. Germany and Spain have shown as leading capacity in wind power, Austria has an advantage export in solar heating and Asia shows a strong presence in PV. This demonstrated the renewable energy industrial opportunities could be gained by large countries with large public investment, and also by smaller countries with innovative commercialisation process (Lund, 2009). Recently, the new US government has dramatically increased investments in green energy industry in its new billions stimulus package in order to compete the future economy.

Renewable energy is conceived as basic science, created in labs and universities, commercialised by developers, and then manufactured as component parts assembled into final products. This process chain indicates renewable energy is manufactured energy industry and is driven by technology innovation. Renewable energy industry can be considered to be used to revitalise the manufacturing sector and create the workforce. The critical role of government is to mobilise private resource, from universities to energy developers, to develop the new energy industry that will reindustrialise the manufacturing industry (Sterzinger, 2008). This is the solution for regional economy growth.

46 The main challenge of renewable energy is to reduce the cost to a competitive level with the conventional energy. The high price of renewable energy needs to be compensated by government support policies. A stable feed-in tariff has clearly proven to be one of most successful mechanism to promote renewable energy development. FiT system leads to large capacity growth of wind, solar PV and biomass in Germany. A similar FiT for wind power has been introduced in France and installation of wind power rose to 1200 MW by 2007. Spain has made rapid progress in developing wind power, bioenergy and solar PV under FiT system. Several other policies, including RPS, or government-run projects tendering, may be effectively if implemented carefully. Whether the region is able to develop the new energy industry successfully will depend on international and domestic market, effective support policies and innovative financing models to offer long-term stability necessary to attract private investments.

The example of Kalundborg has been referenced to set up more EIP projects across the world. The success of Kalundborg example also results from organic development over a long-term period and voluntary co-operation between the companies in EIP (Gibbs & Deutz, 2005). Industrial symbiotic relationships cover material exchange (waste recycling, renewable energy production, by-product exchange), as well as the exchange of knowledge, human or technical resources. Resources and knowledge sharing create business innovation, leading to the increase in regional competitiveness. Renewable energy technologies provide the advanced technologies to accelerate eco-industrial developments. With the increasing concern about environmental issues, eco-industrial cluster development has been oriented to zero- emission goal. Recently, renewable energies have been widely applied in eco- industrial clusters, emerging a new green industry. They are considered as promising tools for regional economy regeneration. In order to be used as power technologies for sustainable regional development, they require strategic regional policies to support, which include industrial policy that stimulate innovation and technology development; environmental policy that regulate environment protection and emission reduction; and regional development policy to provide necessary infrastructure investment support. Sustainable industrial development requires the effective use of renewable material and energy, access to knowledge and technology, then result in complementary eco-product development and employment generation. In a long term, eco-industrial development will eventually have environmental, economic and social benefits at regional, national and global level.

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