17 January 2007 by Neil Hirst, Director, Energy Technology and R&D, IEA
In the face of dramatically increasing energy demand and emissions, new renewable energy players in the global energy field need strong policy support if they are to complete their journey to mature markets. The challenges of energy policy are so great that a wide range of technologies will be needed, and renewable energy has a crucial role to play as a part of this wider portfolio. The IEA has recently developed scenarios that, taken together, demonstrate where the global energy sector is heading at present, and where it could be in the future if policies are sufficiently strengthened.
Alternative Policy Scenarios
The World Energy Outlook 2006 considers two more ambitious scenarios for renewable energy alongside the Reference Scenario towards 2030. The ‘Alternative Policy Scenario’ (APS) demonstrates how the global energy market could evolve if a range of countries were to implement policies under discussion by governments now. Under this scenario, renewable energy will play a major role in 2030, supplying a quarter of the world’s electricity. This implies investment in renewable energy-based electricity plant of $2.3 trillion - half the total investment in new generating plant. However, fossil fuels will still account for 77% of primary energy supply and global CO2 emissions will be 8 gigatonnes higher than they are today.
By contrast, the ‘Beyond the Alternatives Policy Scenario’ (BAPS) illustrates the potential for achieving more ambitious emissions reductions through stronger policy and faster technology development. The Scenario’s target is stabilising CO2 emission levels at 2004 levels.
Seven different measures are identified within the BAPS for avoiding the eight gigatonne difference in emissions under APS. Under BAPS, renewable energy is responsible for saving a further one gigatonne and represents a 32% share of electricity generation. Further policy developments envisioned in BAPS include R&D (for cost reductions), renewable portfolio standards and feed-in tariffs, loan guarantees to reduce the cost of capital, and minimum requirements for biofuels in conventional fuel blends. Accelerated technology development under the BAPS includes the large-scale introduction of ligno-cellulosic feedstocks for producing biofuels.
Accelerated Technology Scenarios
In mid-2006, the IEA published Energy Technology Perspectives with five ‘Accelerated Technology (ACT) Scenarios’ that investigate how advanced energy technologies and enhanced energy efficiency could together mitigate soaring energy demand up to 2050.
The scenarios consider action in the power generation, building, industry, and transport sectors. They are based on the assumption that by 2030, policies are in place that would lead to an adoption of technologies with a cost of up to US$ 25 per tonne of CO2 emissions saved.
The ‘Baseline Scenario’ shows an approximate doubling of today’s emissions of CO2 by 2050; an outcome that can only be described as unacceptable. Under the five ACT Scenarios, this increase is brought down to a level between 6 and 27%. In addition, a ‘Tech Plus Scenario’ has been developed where CO2 emissions are reduced 16% below 2003 levels. The Scenario is based on more optimistic assumptions about the rate at which certain technological barriers are overcome.
Strong Policy Support for Renewables
The common thread linking renewable energy strategy in the IEA scenarios is the need for the development of stronger policy support. This is essential to reduce the cost of renewable energy and to support market growth until this support is no longer needed.
Government policy should also address the integration of electricity from renewable energy sources in transmission systems, and the interconnection of national and regional systems. Interconnection of transmission grids has the potential to enlarge the renewable energy market, and further reduce costs through economies of scale.
Greater interconnection will enable higher penetrations of renewable energy, meaning less imported fuel, and less harmful emissions. Simultaneously, it would drive other IEA objectives of energy security and environmental protection. With these issues in mind, the IEA has been tasked by G8 governments to report on the integration of renewable energy into electricity networks.
The IEA’s Renewable Energy Working Party, and its nine Implementing Agreements on key renewable technologies, play an important role to coordinate international technology development.
An International Drive with a Shared Objective
As governments think more holistically about internal energy issues, national governments need to work more closely to share ideas and best practice with their colleagues in other countries, particularly in less developed countries, the private sector, and civil society,
Climate change is affecting us all, and initiatives like the Johannesburg Renewable Energy Coalition of governments (JREC), and the REN21 Network, are vital opportunities for working together and reducing unnecessary duplication of effort. JREC and REN21 will push for greater uptake of renewable energy when the Commission for Sustainable Development meets in April/May of this year.
Much progress has been made in recent years, but if renewable energy is to reach its potential, governments need to better understand the rewards renewable energy offers and the risks of ‘business-as-usual’. In that sense, climate change is among the greatest challenges mankind will ever face and may yet drive some of the greatest technological achievements.
