Over the past few weeks, all eyes have been on the European crises. Yet, as 2011 approaches, Europe will be able to tout at least one success: Portugal’s plan to produce 45% of its electricity from renewables by the end of 2010 will soon be a reality, proving to the world that rapid clean energy advancement is possible.
The country's decision to modernize and transition its energy production and distribution sectors will not only help mitigate the effects of increasing carbon emissions, but also help revive Portugal's national economy in the midst of a severe international economic contraction. Indeed, Portugal’s renewable energy economy may be its last line of defense in an imploding European economy.
Five years ago, Portugal’s leaders decided to reduce the country’s reliance on imported and domestically produced fossil fuels. José Sócrates, Portugal’s Prime Minister, made a concerted effort to push this renewable energy agenda. He, among other country leaders, realized that in order to improve the country’s long term economic and social prospects, they would need to diversify its power generation portfolio. By privatizing former state owned energy utilities and providing them with 15-year government contracts, Sócrates created a foundation for market-based growth and innovation.
Although there are criticisms of Portugal’s commitment to a renewable energy economy, the reality is that the country’s new diversified portfolio will provide the opportunity for significant economic growth. Prior to Portugal’s decision, energy imports – mainly oil and gas – were consuming 50 percent of the country’s trade deficit, as well as undermining business certainty due to volatile energy prices. Even though Portuguese households are now, in some areas, paying 15% more for electricity, the country’s investment in renewable energy will soon materialize into more concrete savings due to gains in technological and operating efficiency. That said, there are already direct benefits, including: the country’s transformation to a net energy exporter, an increase in the quality of domestic human capital (which has attracted significant foreign direct investment), and the provision of additional employment opportunities for Portuguese citizens.
While this news provides renewed optimism, it doesn’t mean Portugal is out of the water yet – challenges still exist, especially with maintaining economic stability. However, at least now Portugal has an opportunity to revive some of its economic base through a renewed commitment to efficiency, technological advancement, and international competitiveness.
To view a full report on Portugal’s renewable energy agenda, by the Portuguese Ministry of Economy, Innovation, and Development, click here.
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