Delivering on the clean energy agenda: prospects and the role for policy

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1 Delivering on the clean energy agenda: prospects and the role for policy 6th Asian Ministerial Energy Roundtable 9 November 2015 Keisuke Sadamori Director, Energy Markets and Security

2 Climate pledges shift the energy sector One-quarter of the world s energy supply is low carbon in 2030; energy intensity improves three-times faster than the last decade Renewables reach nearly 60% of new capacity additions in the power sector; two-thirds of additions are in China, EU, US & India Natural gas is the only fossil-fuel that increases its share of the global energy mix Total coal demand in the US, Europe & Japan contracts by 45%, while the growth in India s coal use slows by one-quarter Climate pledges for COP21 are the right first step towards meeting the climate goal

3 Demand and emissions growth decouple in the power sector Index (1990 = ) Growth in world electricity demand and related CO 2 emissions since 1990 (left) and related CO 2 emissions by region (right) Historical Projected Electricity demand Power sector CO 2 emissions Rest of World Southeast Asia Africa India China European Union United States Gt CO 2 Power sector emissions stay broadly flat as the share of low-carbon generation grows to almost 45% in 2030, while electricity demand rises by more than 40%

4 TWh Electricity demand triples, with shift towards coal set to continue GW Efficiency Electricity generation by fuel Installed coal-fired capacity & efficiency Geothermal Solar & wind Bioenergy Hydro Nuclear Oil 500 Gas Coal % 40% 30% 20% 10% Ultrasupercritical Supercritical Subcritical IGCC Efficiency (right axis) Power capacity expands by 400 GW, equal to current size of Japan and Korea power systems, with increasingly deployment of more efficient coal-fired plants

5 Growth shifting to emerging markets and developing countries Shares of net additional renewable capacity, India 9% Brazil 5% Rest non-oecd 13% EU 13% USA 9% Japan 5% Rest OECD 8% China 38% As the OECD slows, non-oecd countries account for two-thirds of renewable growth, driven by fast-growing power demand, diversification needs and local pollution concerns

6 Gt CO 2 -eq Peak in emissions: IEA strategy to raise climate ambition Global energy-related GHG emissions Savings by measure, INDC Scenario Bridge Scenario Upstream methane reductions Renewables investment Fossil-fuel subsidy reform 15% 17% 10% 9% 49% Energy efficiency Reducing inefficient coal Five measures shown in a Bridge Scenario achieve a peak in emissions around 2020, using only proven technologies & without harming economic growth

7 Efficiency is the most important tool for decoupling economic growth from CO 2 emissions Since 1990, energy efficiency improvements in IEA countries avoided 10.2 billion tonnes of CO 2 emissions 13.5 GtCO Emissions savings 11.5 Emissions These emissions savings equal almost one year s worth of energy-related emissions in IEA countries, helping to make 2 degrees achievable

8 GW Lock in the vision: What more does it take for 2 C? Dollars per kw Million Dollars per kwh Cost reductions & deployment of all solar PV Cost reductions & deployment of electric vehicles Capacity Solar PV additions Capital costs Solar PV (right axis) Vehicle sales Total Internal combustion Electric Battery costs Electric vehicles (right axis) An emissions goal would give greater clarity & certainty to the energy sector, strengthening the case for RD&D investment & technology transfer

9 Evidence of lower costs on the horizon Recent announced long-term contract prices for new renewable power Onshore wind Utility-scale solar PV Germany USD 67-/MWh Germany USD 96 /MWh United States USD 47/MWh United States USD 65-70/MWh Canada USD 66/MWh Turkey USD 73/MWh China USD 80 91/MWh India USD /MWh Brazil USD 81/MWh Brazil USD 49/MWh Jordan USD 61-77/MWh United Arab Emirates USD 58/MWh Chile USD 85-89/MWh Uruguay USD 90/MWh South Africa USD 51/MWh South Africa USD 65/MWh Egypt USD 41-50/MWh This map is without prejudice to the status or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area Australia USD 69/MWh A combination of price competition, long-term contracts, good resources and financial derisking measures is creating deployment opportunities in newer markets and at lower costs

10 GW Renewable growth can be accelerated back on track to meet climate goals World renewable power capacity growth, main versus accelerated case Historical Accelerated Forecast case United States Japan Japan EU-28 EU-28 Other Other OECD OECD India IndiaChina China Brazil Brazil Other non-oecd Other non-oecd Main case Renewable energy can be brought back rising annual installation growth, through enhanced domestic policies, e.g. grid integration of variable renewables

11 Conclusions Pledges are not yet enough to achieve our climate goal, but are a basis from which to build ambition Companies that do not anticipate stronger energy & climate policies risk being at a competitive disadvantage For COP21, the IEA proposes four key energy sector outcomes: 1. Target a near-term peak in emissions 2. Five-year revision, to test the scope for raising ambition 3. Lock in the vision by setting a long-term emissions goal 4. Track the transition in the energy sector Climate change will lead the agenda at the IEA s Ministerial meeting on November 2015