Business models for sustainable energy

Abstract

The energy sector is one of the largest sectors of the economy, accounting for annual sales of about $2,000 billion worldwide (SAM 2002). Total investment required for energy-supply infrastructure worldwide over the period 2001-2030 is estimated at $16 trillion by the International Energy Agency (IEA), which is a substantial increase compared with the prior 30-year period (IEA 2003). A set of environmental and security concerns, in conjunction with technological innovation, is currently leading to fundamental changes in the energy industry. For example, more than 80% of electricity worldwide is generated based either on fossil fuels, one of the main reasons for global warming, or on nuclear energy, which involves security concerns and issues regarding hazardous waste. If we look at all energy (including fuels for transportation and heating), the lack of sustainability becomes even more evident, with the combined share of oil, coal and gas in 2001 achieving 86% of global energy consumption, and nuclear power adding another 6.5% (www.eia.doe.gov). With increasing concentration of oil reserves in a few countries of the Middle East, as well as new, strong, demand coming from emerging countries such as China, concerns over the security of supply add to environmental drivers for change. Also, more than two-thirds of primary energy gets lost as a result of inefficiencies in the energy sector and on the demand side (UNDP/WEC/UNDESA 2000).