Strong focus on market and policy analysis

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2 Founded in 1974 OECD agency 29 member countries 1 new applicant - Mexico 3 associate countries: China, Indonesia, Thailand 240 staff in Paris secretariat The European Commission also participates in the work of the IEA. Australia Austria Belgium Canada Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Japan Korea Luxembourg Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States OECD/IEA

3 Strong focus on market and policy analysis OECD/IEA

4 Sweden is among the leading IEA member countries in terms of low-carbon intensity and high share of renewable energy in total energy supply IEA in-depth country review 2013 Challenges 2030/2050 emission reductions: Substantial increase in energy efficiency in buildings and industry needed Replacement of old nuclear capacity Transport decarbonisation OECD/IEA

5 Some international lessons 1. Renewable electricity

6 TWh Strong growth for renewable electricity globally, thanks to a range of enabling policies Global renewable electricity production, historical and projected Historical data and estimates Forecast % 25% 20% 15% 10% 5% 0% Hydropower Bioenergy Onshore wind Offshore wind Solar PV Geothermal STE/CSP Ocean % total generation (right axis) 144 countries have renewable electricity targets 138 countries have renewable energy support policies

7 Policies have stimulated deployment at falling costs in some circumstances Development of Levelized Cost of Electricity (LCOE), remuneration levels and installed capacity for utility scale PV, Germany LCOE Revenues - Capacity OECD/IEA

8 All incentive schemes can work well or badly no one size fits all, the overall policy framework matters FITs/FIPs Feed-in-Tariffs/Premiums TGC tradeable green certificates

9 Key aspects of successful renewable electricity policies Clear and credible targets short, medium, long-term Adequate remuneration and revenue certainty Financial de-risking/concessional financing Main challenges to further scaling-up: Policy uncertainty Effective grid integration (e.g. role of storage, demand response, role of EVs and heat pumps) needs new electricity market design Removal of non-economic barriers OECD/IEA

10 Deployment barriers beyond policy and economics Non-economic barriers remain an important barrier to deployment globally particularly important also for heat and energy efficiency

11 Some international lessons 2. Renewable heat and energy efficiency

12 EJ Success in energy efficiency improvements too mix of policy, technology & pricing Avoided consumption from energy efficiency increased by 10% in Avoided TFC in IEA countries from energy efficiency investments made since %

13 But renewable heat is lagging behind Source: IEA, countries now have renewable heat support policies + targets in EU countries Challenge of current low heating oil price OECD/IEA

14 Policy lessons Energy efficiency many examples of successful regulation (appliance standards, building regulations) Challenge of buildings retrofit, incl. quality control & enforcement Renewable heat regulation more difficult, need for local approaches, heat mapping & planning Sectoral approaches covering both heat and energy efficiency (e.g. buildings, industry) Lessons from renewable electricity? Clear, long-term targets & policies focused on achieving ambitious targets may be needed OECD/IEA

15 Conclusions Renewable electricity Policy risk is main barrier to investment need stability & long-term targets Policies should focus on creating right market and regulatory frameworks Electricity market designs sub-optimal for low-carbon generation Renewable heat & energy efficiency Not sufficient policy attention on heat Need integrated approach for heat & energy efficiency Low-carbon transport More policy support for advanced biofuels needed Support for electric vehicles to counter low oil price We need a policy arsenal Naomi Klein, Nov 2015