It is “realistic and economically sensible to pursue a clean energy agenda”, states the International Energy Agency (IEA) in a new edition of its annual Energy Technology Perspectives. But, it adds”: “clean energy progress is failling well short of the levels needed to limit the global increase to no more than 2 degrees Celsius”. Governments must do much more to stimulate the uptake of clean energy and energy efficiency technologies.
“In 2013, there were two energy technologies on track to meet the 2-degree target. In 2014, there was one. This year, there is none.”
Didier Houssin, Director of Sustainable Energy Policy and Technology at the IEA, and editor of Energy Technology Perspectives 2015, started off the presentation of this important IEA report on a sombre note. The world’s energy system is gradually being decarbonised, he said, but not fast enough. As the report puts it: “It is troubling that advances in areas that were showing strong promise”, such as electric vehicles and most renewable power technologies, “are no longer on track to meet 2DS targets”.
“Innovation is now needed at the system level”
The “2DS targets” mentioned here are part of the “2-degrees scenario” that the IEA has developed in its Energy Technology Perspectives (ETP) series. This scenario shows in very concrete terms what contributions need to be made by various technologies to limit greenhouse gas concentrations to 450 ppm (which according to climate scientists, would limit global warming to 2 degrees). The figure below shows the main findings of this scenario.
This graph presents a very interesting picture. It shows, for example, that renewables play an important role in decarbonising the power sector, but a very limited role in other sectors, such as industry, transport and buildings, where energy efficiency technologies can deliver the most reductions.
Houssin had some good news as well. “Technology innovation is making renewable energy viable”, he said. “Who would have thought ten years ago that solar and onshore wind power would be competitive in many places in the world today?” And solar and onshore wind are not the only success stories: the performance of solar thermal and offshore wind is also rapidly improving. Solar thermal will be competitive by 2020, said Houssin.
The energy intensity of GDP and the carbon intensity of primary energy both have to be reduced by around 60% by 2050 compared with today
According to the ETP report, “wind and solar PV have the potential to provide 22% of annual electricity sector emissions reduction in 2050 under the 2DS”. However, “to fully exploit the performance improvements achieved through technology innovation over the past two decades, innovation is now needed at the system level.” Specifically, innovation is needed in areas such as demand-side integration, energy storage and smart grid infrastructure, says the report.
Energy efficiency technologies remain vitally important, stressed the IEA: “On the global level, the energy intensity of GDP and the carbon intensity of primary energy both have to be reduced by around 60% by 2050 compared with today. This implies that the annual rate of reduction in global energy intensity needs to more than double – from 1.1% per year today to 2.6% by 2050.”
Such efficiency rates are possible, said Houssin, as shown by the success of fuel economy standards in the transport sector in the OECD countries. Unfortunately, most non-OECD countries do not have similar fuel economy standards, he added.
In heating and cooling, the potential for decarbonisation still goes “largely untapped”, notes the IEA – not for the first time: “Today, heating and cooling in buildings and industry accounts for approximately 40% of final energy consumption – a larger share than transportation (27%). With 70% of heating and cooling demand relying on fossil energy sources, these end uses are estimated to have been responsible for 30% of global carbon dioxide (CO2) emissions in 2012. Broad application of energy efficiency and switching to low-carbon final energy carriers (including decarbonised electricity) can push the fossil share to below 50% by 2050 with renewables (including renewable electricity) covering more than 40% of heating and cooling needs. Direct and indirect CO2 emissions linked to heating and cooling would fall by more than one-third by 2050.”
To the rescue
Since the transport and heating and cooling sectors have limited options to decarbonise, the heaviest burden falls on the electricity production sector, which has to reduce its “carbon intensity” by 90% in 2050, notes the report. This does not seem to be happening at the moment: “While the cost gap between electricity from renewables and that from fossil fuels is narrowing, fossil plants still dominate recent capacity additions”, states the IEA. “Together with a slowdown in deployment rates of PV and wind, this undermines the trajectory needed to decarbonise energy supply and meet the 2DS renewable power targets.”
China has now passed the EU in R&D spending (as percentage of GDP) and it is expected to overtake the US in 2019
Carbon capture and storage (CCS) could come to the rescue – the question is, how to stimulate private investment in it? “Measures that raise the costs and risks of using fossil fuels without CCS, such as carbon pricing or emissions standards, will play important roles”, says the IEA. But, it adds that “more targeted, market-based instruments are also needed to manage the investment risks and market failures in early stages of technology scale-up.”
ETP stresses that “government support across all phases of RDD&D” is vital to make the energy transition possible. In addition, governments must ensure that low-carbon technologies are able to enter the market: “Experience shows that even when low-carbon technologies prove cost-effective under prevailing market conditions, other (non-cost) barriers can stall their uptake and limit private sector engagement. Instruments such as minimum efficiency standards and information campaigns (designed to address risk aversion to new technologies or promote behavioural change) can help to create the favourable market environment needed to make the leap to large-scale deployment.”
Interestingly, China has now passed the EU in R&D spending (as percentage of GDP) and it is expected to overtake the US in 2019.
ETP also indicates for each region how its energy system may develop in the 2DS-scenario, as shown in the figure below.
Clearly oil and coal use will have to be substantially reduced if the world is to keep within the 2-degree limit. Gas less so – except in Russia, where renewables have some way to go.