Renewables account for half of all new power plants: IEA

Ilario D'Amato
Reading time: 5 minutes
11 November 2015

LONDON: Renewable energy accounted for about half of all new power plants last year, but the extended period of low fossil fuel prices raises questions about the future of energy security, a new report by the International Energy Agency (IEA) states.

IEA’s World Energy Outlook 2015 also underlines how months of oil price decline helped fossil-fuel dependent countries – particularly India – to move toward phasing out fossil subsides.

China, the biggest carbon emitter to date, is another economic giant moving away from fossil fuels according to the report, which forecasts that China will deploy more renewable power generation capacity than any other country by 2030. But while President Xi's ‘ecological civilization’ plan clearly illustrates China’s desire for an energy system change, in her latest blog, Changhua Wu, Greater China Director, The Climate Group, says “the current policy and plan design falls short” in this area.

With the COP21 international climate talks fast approaching, there are many signs the low carbon economy is mature enough for an effective global climate deal. IEA states that one of the biggest turning points was the decoupling of emissions from economic growth: last year, global CO2 emissions did not rise in 2014, while the global economy grew 3%.

Another fundamental point raised by the report is that renewables accounted for almost 50% of all new power plants in 2014, catalyzing 60% of all new investment in the energy sector. “Renewable energy is no longer a niche,” says IEA executive director, Fatih Birol, speaking to The Guardian. “It has become a mainstream fuel, as of now.”

However, fossil fuel subsidies are slowing this clean revolution, underlines the report. In a recent Climate TV interview for The Climate Group, Ángel Gurría, Secretary-General of the Organisation for Economic Co-operation and Development, prompted governments to stop such practice, calling it “the greatest misallocation of resources.”

On COP21 that takes place in Paris at the end of this month, IEA says while the national climate pledges submitted “do not alter the picture of rising global needs for energy” – energy use worldwide is set to grow by a third by 2040 – developed countries will reduce consumption, with the European Union consuming 15% less energy.

Another recent report from UNEP hailed the national climate plans as sufficient in limiting emissions by 2030 – but a new universal agreement that includes a mechanism for raising ambition will enhance the probability of limiting global temperature to 2°C in 2100.

Focusing on India’s energy future, the report forecasts the country will account for about a quarter of global energy demand by 2030.

But to date, about 400 million people in India still lack access to energy at all, particularly in rural areas. To tackle this issue, which affects the health, economic and social aspects of so many people’s lives, The Climate Group’s program Bijli – Clean Energy for All has connected more than 60,000 people to clean, affordable off-grid energy.

Jim Rogers, former Chief Executive Officer of Duke Energy Progress, in The Climate Group’s latest ClimateTV interview addresses the dramatic issue of the 1.2 billion people in the world (almost a fifth of the global population) that still do not have access to electricity. Connecting these communities to renewables can have a huge impact on development: “We start on the road of lifting these people from poverty,” he says, “and allow them to play a meaningful role in society.”

The IEA report also forecasts that by 2030, the number of people without access to electricity will halve to about 800 million, also thanks to the UN Sustainable Development Goals’ target of achieving universal access to energy by 2030.

While it is inevitable connecting so many people to electricity will partly depend on fossil fuels, coal – which accounts for 29% of today’s energy mix – is expected to grow in total just 10% to 2040. Despite India tripling its demand compared to the last decade and the whole of Asia projected to consume four out of five tons of global coal by 2040, thanks to a greater focus on energy efficiency globally, the share of coal in the world’s electricity mix will drop from 41% to 30% by 2040 (15% outside Asia). Renewables will also reach a share of 50% in the European Union, around 30% in China and Japan, and above 25% in the United States and India according to the IEA.

Furthermore, in the countries belonging to the Organisation for Economic Co-operation and Development (OECD), coal is projected to drop by 40%. In an exclusive Climate TV interview OECD’s Secretary-General, Ángel Gurría, calls for a stop to subside fossil fuels, which he defines as a “brutal example of policy contradictions.”

But even if there are many positive signs of a global shift toward a prosperous, low carbon economy, this is still not enough to avoid the worst effects of climate disruption, concludes the report. Cumulative investments in renewable energy are forecasted to reach US$7.4 trillion, which only represents around 15% of total investment in global energy supply.

For this reason, COP21 must spur individual countries’ climate action to attract investment through a clear and ambitious policy framework. The Paris climate negotiations can be “the great business opportunity of this century,” says Mark Kenber, CEO, The Climate Group, in a recent blog. National climate pledges “shouldn’t just be seen by countries as a tick box exercise,” he adds. “They should be seen as a significant investment prospect for forward-looking businesses. What must be taken away from Paris is that the momentum to a low carbon future is now unstoppable  and that change makes environmental, business and moral sense.”

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by Ilario D'Amato

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