Growth in renewable energy has been strong … but needs to expand and accelerate

The International Energy Agency, which monitors global energy markets and trends on behalf of the industrial countries, issued its first Clean Energy Progress Report Wednesday.

Clean energy technologies came into their own during the last decade. Implementation of energy ]efficiency (EE) measures is improving. Renewable energy has seen 30% to 40% growth rates in recent years, due to market]creating policies and cost reductions. Carmakers are releasing the first set of a new wave of electric vehicles (EVs) and are attracting customers.

Clean energy technologies are making clear progress globally, but fossil fuels continue to outpace them. More aggressive clean energy policies are required, including the removal of fossil fuel subsidies and implementation of transparent, predictable and adaptive incentives for cleaner, more efficient energy options.

Thanks to favourable policy support, solar power photovoltaic and wind power are achieving strong growth. However, achieving sustainable energy goals will require a doubling of all renewable energy use by 2020. There are also signs that policy support is weakening due to government austerity plans. Instead of eliminating successful policies, governments need to put in place dynamic schemes that respond to technology markets.

Progress has been made to transform the market for some key energy]efficient products, including compact fluorescent light bulbs. However, in the buildings and industry sectors, significant under]investment remains, resulting from an array of market financial, information, institutional and technical barriers. Much more policy effort is needed to capture the nearterm profitable and low cost energy savings opportunities.

Electric cars and lithium ion batteries are poised to take off. Major economies have announced targets that together would reach about 7 million electric car sales per year by 2020. If achieved, this will result in over 20 million electric vehicles on the road by that year, taking into account all sales over the next 9 years. However, this will only account for about 2% of light]duty vehicle stocks worldwide; continued strong growth after 2020 will be important to ensure market transformation. Fuel economy of conventional light]duty vehicles has also been improving recently, but will need to improve faster to achieve a global target of 50% improvement by 2030 compared to 2005 levels.

Energy efficiency is often referred to as an important fuel of the future. By reducing energy demand, improvements in energy intensity are estimated to deliver 30% of primary energy consumption. Public policy has successfully transformed markets for an array of energy]efficient products, including compact fluorescent light bulbs (CFLs), refrigerators, motors and key building components. These successes have been delivered by a set of well]designed and implemented energy]efficiency policies, including building codes, standards and labelling (S&L), energy certification schemes and utility programmes.

Nevertheless, significant under]investment in energy efficiency globally results from an array of market, financial, information, institutional and technical barriers. More effort is needed to advance integrated building design and performance, strengthen appliance standards globally in all markets, improve monitoring and verification of labelling and certification schemes, incentivise utilities to invest more in energy efficiency, and provide a competitive framework for industry to invest in the best available technology (BAT).

Renewable energy

Renewable energy market success has been driven by policy support, which has grown considerably in the last decade. Policies continue to evolve to address market developments and reduce costs. In the case of solar energy, at least ten countries now have sizeable domestic markets. Both utility]scale and rooftop solar energy photovoltaic (PV) generation have seen a major scale]up in the past few years, resulting from market]creating policies that led to an extraordinary decline in the cost of PV modules.

Wind energy also experienced dramatic growth over the last decade; global installed capacity at the end of 2010 was around 197 GW, up from 20 GW at the end of the year 2000.

Despite this good news, worldwide renewable electricity generation since 1990 grew an average of 2.7% per year, which is less than the 3% growth seen for total electricity generation. While 19.5% of global electricity in 1990 was produced from renewable sources, this share fell to 18.5% in 2008. This decrease is mainly the result of slow growth of the main renewable source, hydroelectric power, in OECD countries. Achieving the goal of halving global energy]related CO2 emissions by 2050 will require a doubling (from today’s levels) of renewable generation by 2020. Non]hydro renewables will have to increase at double]digit rates; wind power must see an annual average growth rate of 17% and solar power 22%. While these levels have been exceeded in the past few years, this level of high growth must be sustained for the long term.

Electric vehicles and vehicle efficiency

Major economies have announced targets that together would reach about 7 million vehicle sales per year by 2020. If achieved, this will result in over 20 million electric vehicles on the road by that year, taking into account all sales over the next 9 years. There has been a strong growth in the number of new car models announced, and more importantly, models being sold.

Most of the large markets now offer incentives and support schemes to accelerate consumer adoption. However, vehicle sales are only beginning, and even if targets are met in 2020, this will still only represents 2% of vehicles. It will take even longer sustained efforts to achieve substantial impacts on light]duty vehicle (LDV) energy use and CO2 emissions.

To ensure successful ramp]up of electric cars, governments must accelerate grid integration through standards development and pilot programmes that invest in recharging infrastructure. Vehicle efficiency continues to improve, with average global new LDV fuel economy reaching about 8 litres per 100 km (L/100km). Planned tightening of fuel economy standards in most major economies should accelerate this trend. In order to lock in the long]term improvements, and reach the Global Fuel Economy Initiative (GFEI) target of halving new LDV fuel use by 2030, these standards must be extended beyond 2020 and other countries must adopt strong fuel
economy policies.