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Renewable Energy Competitiveness Of The G20 Nations

With the rapid expansion of industrialization and urbanization around the world, resource shortages (especially for fossil energy) have posed a major challenge for modern human society. For instance, over-exploitation of fossil fuels has led to climate change and environmental degradation, causing energy to be one of the most urgent and challenging public policy issues in the 21st century. The international community has made great efforts to make use of renewable energy as a strategic direction for energy transition.

This article focuses on the potential approaches to evaluating and promoting the international competitiveness of Group 20’s (the G20’s) renewable energy industry. By developing a revised Diamond Model in relation to Porter’s theory of industry competitive advantage, it provides an analytical framework for assessing the national renewable energy competitiveness of the G20 members, makes an in-depth investigation into the main driving factors for renewable energy industry, and presents a sound competitiveness assessment of the present and future of the G20’s renewable energy industries, such as solar, wind, hydropower, and biomass energy.

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As a whole, there are significant differences in the development and utilization of renewable energy among nations, even though every country investigated has paid much attention to the development of domestic renewable energy industry. The ranking of G20’s renewable energy industrial competitiveness shows that China is found to be highly competitive. Specifically, it ranks top in factors of resources, capital, labor, market scale, policy incentive, the attractiveness of investment in related industries, and firms’ competitiveness, whereas technology and substitution costs are the restricted factors for China. The USA ranks second among the G20 countries in terms of industrial competitiveness of renewable energy. Its sound competitiveness benefits from advanced energy technology, abundant resources, huge market scale, and environmental pressure.

There is a large gap between the top two nations and Germany — the third in rank. Germany shows excellent performance in terms of support from related industries, advanced technology, policy mechanism, and, particularly, mechanism design, which serves as a driving force for related industries and technological progress. Apart from Germany, the UK and Denmark are two EU countries with strong competitiveness. These are followed by Canada, which performs well in terms of land area and natural endowments. As an emerging economy, Brazil also displays relatively high competitiveness in renewable energy. Australia ranks tenth in renewable energy competitiveness among G20 countries, but it serves as a nice example of how policy could affect renewable energy, in which the fairly good performance benefits from abundant renewable energy resources, well-developed technology and related industries, and quite high substitute costs.

By contrast, Indonesia, Saudi Arabia, Russia, Argentina, and Turkey have a relatively weak performance, indicating their disadvantages in the renewable energy industry. Saudi Arabia is a typical country facing the problem of the resource curse among G20 countries. The country’s substantial fossil fuel subsidies weaken the competitiveness of the renewable energy industry. Despite its natural endowment of solar energy, Saudi Arabia has achieved nothing remarkable in renewable energy competitiveness.

To help countries improve the industrial competitiveness of renewable energy, we come up with the following recommendations that are supposed to assist policymakers in the evaluation and choice of strategies for enhancing national renewable energy competitiveness: (1) Establishing strategic priority for renewable energy development; (2) Maintaining the stability and consistency of renewable energy policies; and (3) Improving electricity grid stability to accommodate ever-growing renewable energy.

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These findings suggest that a country’s sustainable development of renewable energy depends largely on the formulation and implementation of a set of well-designed renewable energy policies by the government. Moreover, international experience and collaboration make sense. For example, if one country’s power grid has connections with neighboring countries, its renewable energy industry is likely to be competitive. Our research could better serve both policymakers and industrial end-users as a useful reference for international efforts to approach the sustainability of global energy use.

These findings are described in the article entitled Assessing national renewable energy competitiveness of the G20: A revised Porter’s Diamond Model, recently published in the journal Renewable and Sustainable Energy Reviews. This work was conducted by Kai Fang from Zhejiang University and Leiden University, Yunheng Zhou and Sujian Guo from Zhejiang University, Shuang Wang from Hang Zhou Dianzi University, and Ruike Ye from the Zhejiang University of Technology.

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