RECENT TRENDS IN RENEWABLE ENERGY AND CARBON MARKETS

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1 RECENT TRENDS IN RENEWABLE ENERGY AND CARBON MARKETS Aryanie Amellina Institute for Global Environmental Strategies (IGES) Seminar on Renewable Energy Development in Mongolia, October 2018

2 The future is powered by renewable energies Electricity generation in 1.5 C pathways Oil 0% Coal with CCS 1% Gas with CCS 7% Nuclear 9% Renewables 83% Source: UNEP Emissions Gap Report 2017 Source: data from IPCC Special Report 1.5 (2018)

3 The good news Energy transformation is underway Wind energy has grown approx. 20x within 15 years. Solar energy has grown approx. 300x within 15 years. Contribution from wind and solar energies to global electricity generation has increased 17x Wind and solar capacity growth for global electricity generation 0% 4% Share of solar and wind power Wind power (MW) Solar power (MW) 5% 4% 3% 2% 1% 0% but it needs to be faster and diversified

4 Because economic barriers are disappearing Electricity from renewables will soon be consistently cheaper than from fossil fuels Global levelised cost of electricity from utility-scale renewable power generation technologies

5 Technology R&D continue (1/2) Solar power with storage Colored solar PV glass on walls Battery costs are declining solar and wind power will benefit As well as energy systems innovation

6 Technology R&D continue (2/2) Distributed power generation Smart micro grids with innovative technology, on- and off- national grid Reduces burden of central grid and helps scheduling of entire grid Solar power prosumers and energy storage will play a key part: generation from residential buildings, commercial buildings, etc. Brooklyn Microgrid project Photo: FernandoAH/Getty

7 Decarbonising heating system Efficiency improvement New technologies Electric heating Compared with for electricity, technologies are less disseminated Clean electricity will only be efficient if combined with optimal energy conservation R&D and finance need incentives for new technology and pilot application. Policy incentives and international cooperation can help.

8 Integrated development of electricity and heating increases cost-efficiency Gas power plants equipped with Carbon Capture and Storage Electricity Clean electricity efficient combined with energy conservation Building insulation, grid efficiency, efficiency standard for equipment Gas Heating Diversification of renewable electricity Power with battery storage, distributed grid Efficiency

9 Policy incentives: certainty and long-term strategies are important for RE development Number of countries adopting renewable energy policies, by policy type, 2004, 2010 and 2016 Source: IRENA and CPI, Global Landscape of Renewable Energy Finance, 2018

10 International support from carbon markets will continue Example: The Joint Crediting Mechanism UNFCCC- and country-operated market mechanisms (such as the JCM) will co-exist in Paris era. International negotiations prioritize avoiding double counting of issued units between participating countries. Clarity in domestic policy on carbon markets is important. Countries will benefit from formulation of policies on carbon markets usage and technology priority.

11 International support from carbon markets will continue: support from the JCM Type of activity under selected JCM Model Project % Number of projects % 34% 58% 20% 44% FY2013 FY2014 FY2015 FY2016 FY % 80% 70% 60% 50% 40% 30% 20% 10% 0% % of renewable energies project Energy efficiency Renewable energies Co-generation Transportation Waste gas/heat utilization Biomass energy Others Linear (% Renewable energies) Selected JCM Model Projects receives support of up to 50% of initial investment cost. Source: IGES JCM Database (October 2018) Renewable energies are attractive for carbon markets, and innovation is important for funders.

12 Projects supported by JCM are being implemented Centralized Control System of High-efficiency Heat Only Boiler, Ulaanbaatar Upgrading and Installation of High-efficiency Heat Only Boiler, Bornuur soum 10MW Solar Power Plant in Darkhan City 20MW Solar Power Plant in Darkhan City 21MW Solar Power Plant in Bayanchandmani, Tuv Province 15 MW Solar Power Plant in Khushigt High efficiency and low loss power transmission and distribution system 10 MW Solar Power Plant in Ulaanbaatar New project selected under ADB JF JCM scheme: Solar power generation system with advanced storage battery and energy management system (EMS)

13 Integrated energy system development Public Transportation Climate policy with increasing ambition Industry Residential Clean industries Sustainable energy system development and policy Incentives for investments: infrastructur e & new technologie s Commercial use Optimal and stable of heating Optimal and stable supply of clean electricity Private Transportation

14 Towards a decarbonised future