Ladies and gentlemen, It is my great pleasure to welcome you to today’s web conference on the International Energy Agency’s 2013 Tracking Clean Energy Progress report. I’m Dr MarkusWrake, and I am a unit head in the Energy Technology Policy Division of the Agency’s Directorate of Sustainable Energy Policy and Technology. We launched the Tracking Clean Energy Progress report at the 4th Clean Energy Ministerial in New Delhi, India on 17 April. In a few short years, the Ministerial has become a key forum to advance clean energy goals at some of the highest levels of government. But our analysis is a stark reminder the world is not on track to realise the benefits of a low-carbon energy system – i.e. to limit long term temperature rises to 2 degrees centigrade. The report provides a snapshot of current progress, and we give specific policy recommendations, technology by technology. It does not paint a rosy picture. Progress remains alarmingly slow for a majority of technologies that could save energy and reduce CO2 emissions. And yet, positive examples exist and we can learn from them.To introduce today’s web conference, I will speak briefly to the aims and methodology behind the report. I will then hand over to my colleagues Davide D’Ambrosio and Justine Garrett, the lead authors of the report alongside me; they will take us through its key, technology-specific findings.
Why Tracking Clean Energy Progress? The key aim of the report is to give a snapshot of progress in clean energy deployment, to inform energy ministers about latest developments, and where they should focus attention and prioritise efforts. As we can see here, all key sectors of the economy must contribute to reduce emissions in line with a 2 degree scenario: power generation, industry, transport and buildings. The report tracks progress across these sectors using available quantitative and qualitative data, against three key measures:Technology penetration: looking at current rates of technology deployment;Market creation: looking at mechanisms in place to enable and encourage technology deployment, including government policies and regulations;Technology developments: looking at whether technology reliability, efficiency and cost is evolving at required rates.These are assessed against interim 2020 benchmarks, based on the IEA’s 2DS, or 2 degree stabilisation scenario.Critically, the report highlights actionable policy and technology measures that energy ministers and governments can take in each technology/ sector to scale up deployment. Global recommendations pull together the outcomes of the report across sectors.
Let us start with the good news: renewable power technologies continue to beat expectations, and are broadly on track to reach our “2 Degree Scenario” or 2DS targets. They are not enough to do the job. But their success shows that with sustained and strong policy frameworks, new energy technologies can be developed and penetrate the market.Growth in renewable power technologies continued in 2012. For example, from 2011 to 2012, electricity generation from solar PV grew by an estimated 42%, and wind by 19%. This builds on strong performance in 2011, with total renewable power generation up 6% on 2010 levels.These figures are particularly impressive considering they follow a decade of similar growth, and given ongoing economic and industry turbulence in 2012. The renewable energy industry entered a deeper phase of consolidation in 2012, especially for smaller and high-cost manufacturers. Markets are also expanding globally, as emerging economies step up clean energy efforts. Brazil, China and Indonesia are among governments to have increased incentives for renewables over the past year. China, for example, introduced measures to facilitate grid connection of distributed solar PV systems in 2012, and a target of 10GW of new solar PV for 2013. And yet globally, investment in non-hydro renewables decreased by 11% in 2012. Policy uncertainty and “stop-and-go” decision making played an important role in this. At USD 240 billion investment in new renewable power plants in 2012 (excluding large hydro), investment is still in line with 2DS targets. But 2012 developments show the direct link between effective policy design and private sector investment. Uncertainty in the US regarding potential expiration of a wind generation tax credit slowed wind capacity investment, for example.Transparent and predictable renewable energy policies that take into account changing market conditions and technology cost development are essential to keeping renewables on track.
So on the whole, and despite the investment slowdown, renewables are progressing well. And yet the global energy supply is not getting any cleaner. Together with the tracking report, we launched the IEA Energy Sector Carbon Intensity Index, or “ESCII”, at CEM 4. The ESCII shows how much CO2 each unit of energy that we produce emits. The benefit of the ESCII is that it shows the aggregate impact of all changes in total energy supply – is overall energy supply getting cleaner, or are positive developments in low-carbon technologies being offset by increased coal use? As you see, the net impact of changes in supply technologies has been minimal since 1990. In short, the drive to clean up the world’s energy system has stalled. Despite much talk by world leaders and a boom in renewable energy over the last decade, the average unit of energy produced today is basically as dirty as it was 23 years ago. At the same time, global energy demand and related emissions are increasing at a rapid rate, as we see here.The key reason the ESCII has remained static is that coal continues to dominate growth in power generation.
Growth in coal-fired generation has far outpaced growth in generation from non-fossil energy sources for more than a decade – +45% between 2000 and 2010, compared to +25% for non fossil energy sources. Global coal-fired generation increased by an estimated 6% just in the last two years, and is projected to increase to 17% above 2DS levels by 2017. Dependence on coal for economic growth is particularly strong in emerging economies. China and, to a lesser extent India, continue to play a key role in driving demand growth. China’s coal consumption represented 46% of global coal demand in 2011; India’s share was 11%. In 2012, demand for coal also rose in OECD Europe, as excess coal on the market saw prices fall. These trends represent a fundamental threat to a low-carbon future. In addition, around half of coal-fired power plants built in 2011 useinefficient technologies. This tendency is offsetting measures to close older, inefficient plants. For example China closed 85 GW in 2011; the United States closed 9 GW in 2012.Strong government policy action is required to counter growth in emissions from coal-fired generation, including stronger CO2 emissions reduction policies, pollution control measures and policies to reduce generation from less efficient units. The strong upwards trend in coal deployment shows that despite some progress, current policies are largely insufficient.
What about the revolution in unconventional gas?Indeed, switching from coal to gas is a key measure to reduce emissions in the short term. But it is not a panacea – gas becomes high-carbon in a low-carbon scenario from around 2025. And we have to look at the global picture. Regional market dynamics – in particular fuel prices – play a big role. These vary considerably, as we can see here, and are currently driving divergent trends.So far coal-to-gas switching is largely a US phenomenon, as the boom in unconventional gas extraction has kept gas prices low. From 2011 to 2012, gas-fired generation increased 24%, while coal-fired generation decreased by 14%.But in Europe over the same period - partly as a result of cheap US coal exports, but also thanks to relatively dear European gas - we saw the opposite trend. From January to June 2012, gas-fired power generation dropped by 15% in Germany, 12% in Spain and 33% in the UK, while coal-generation grew by 8%, 65% and 35%. Carbon policy can influence competition between coal and gas. In regions where gas prices are high, high carbon prices are needed to stimulate coal-to-gas switching. Current prices are not high enough to drive the switch: for example, an estimated CO2 price of 50 EUR would be required to drive a short-term coal to gas generation switch in Europe, compared to a carbon price of EUR 4 in early February 2013.
Nuclear also plays a substantial role in decarbonisation of the electricity sector in the 2DS, reaching around 16% of global generation by 2025. The nuclear policy landscape is stabilising after the Fukushina accident in Japan; construction began on seven nuclear power plants in 2012, an increase on the 4 construction starts in 2011. This compares to the 16 new projects that commenced construction in 2010. Safety evaluations conducted after the Fukushima accident found that existing reactors can continue to operate if safety upgrades are implemented. Public opinion seems to be improving in many regions.And most countries deployment targets for nuclear remain unchanged - although debate on nuclear energy policy continues in some key countries, including France and Japan. Several countries have active or planned nuclear expansion programmes. Major additional construction is needed to meet 2DS targets, however. An average 2.4 GW global capacity has been added each year since the middle of the last decade; this compares to 16GW annual capacity additions required out to 2020 in the 2DS. Increasing deployment will require greater public acceptance of nuclear energy, and more favourable electricity market mechanisms and investment conditions.
In a world that continues to rely heavily on fossil fuels, CCS deployment is ever more critical. In total, 9 projects are now under construction. But in 2012, 8 projects were cancelled. Projected capture rates remain well below 2DS goals, with maximum projected capacity at around 25% of the required capture rate in 2020 for a 2 degree stabilisation scenario.This is despite CCS technologies being mature in many applications, and signs of commercial interest. For example, construction began on 2 integrated CCS demonstration projects in Canada in 2012. These projects raised spending on CCS demonstration by one-third on 2011 levels, or USD 2.6 billion. This brings cumulative spending on CCS demonstration projects over the past 5 years to almost USD 10.2 billion, including government grants of around 2.4 billion. This represents a significant increase on 2009 levels. Around an additional 12.1 billion of public funds has been awarded to other demonstration projects and R&D that are not in construction or operation. But governments must make a real long term commitment to CCS, including in energy intensive industries such as cement and steel. This means support for demonstration, including increased financial and policy support for deployment, including strong emissions reduction policies. Government policy action is particularly crucial for CCS, given that it is motivated solely by climate change.
Turning now to the transport sector, we see a window of opportunity opening up in this sector. Fuel economy improvement holds the greatest potential to reduce fuel consumption and emissions in the road transport sector to 2020This map shows where the potential is to bring fuel-saving technologies to the market. Average fuel economy improved by 1.8% per year between 2008 and 2011 – still below the 2DS goal of 2.7% annual improvement.And the pattern is uneven, with fuel economy of new cars varying by up to 55% across countries. This demonstrates the enormous scope for improving efficiency through policy.Fuel saving technologies are generally already commercially available – the challenge is to bring these technologies onto the market through policy. And this is not only about cars. There are still only few countries with fuel economy standards for heavy duty vehicles.
Fuel economy will also rely on more fundamental engine advancements. Therefore it is encouraging to see signs of a breakthrough in the markets for hybrid vehicles, which can form a bridge to electric vehicles. Sales of hybrid-electric vehicles virtually exploded in 2012, growing by over 40% to more than one millionunits. Hybrids are now among the top five selling models globally. Sales of electric vehicles grew even more quickly, more than doubling from 2011 to 2012, albeit fromverylow levels. These trends are broadly on track to deliver the 2DS targets by 2020, and government targets are in line with our 2DS scenario. This is good news. However, our auto industry partners’ production forecasts for 2020 are only 20% of government targets. Targets are simply not translatinginto real action.We project that advanced vehicles will need subsidies for the next decade, as costs continue to fall for elements like batteries – which have already been cut in half since 2009 thanks to publicly funded research. Somewhere around 2020 these cars will be competitive without targeted incentives.But until then, whether for electric or natural gas vehicles, we must incentivize the optimum rate of infrastructure deployment to both prepare for and support the growth of those new engine technologies.
Global biofuels production was less encouraging in 2012. In the 2DS, biofuels meet over 6% of global transport fuel demand in 2020, with electricity and hydrogen.Growth in production stalled in 2012 due to high feedstock prices, reflecting extreme weather conditions in key producing countries (e.g., the 2012 drought that compromised the US corn harvest). This highlights the vulnerability of conventional biofuels production to feedstock price volatility. Feedstock accounts for 50-80% of total production costs.It is thus encouraging that the advanced biofuels sector added about 30% capacity in 2012.But biofuels production must more than double by 2020 to reach 2DS targets. This will require governments to implement dedicated policy support for advanced biofuels, and additional R&D and production funding to enable large-scale deployment. While a number of countries have implemented biofuel blending mandates and targets, few countries have put in place targeted policy support for advanced biofuels.
Moving now to industry.As in the transport sector, energy efficiency remains a largely untapped resource in industry – we call it the hidden fuel. Just using existing technologies would give impressive savings – in the order of around 20% of industrial energy consumption, and even more in sectors such as cement and chemicals. Several regions scaled up policy support for industrial energy efficiency in 2012, including Europe, South Africa and Australia, but more effort is needed. The IEA is a strong proponent of market solutions, but we also see many non-economic barriers to energy efficiency. This builds a strong case for regulation to tap into the potential we know is there. In industry, governments must implement policies to ensure that new capacity is developed with best available technology and promote refurbishment projects.
in the buildings sector building codes can have a strong positive impact if designed correctly. Improvements in the thermal envelope of buildings and other building envelope enhancements account for 17% of reduction in energy consumption compared with the 6DS in 2020.Today only Denmark, France and Tunisiahave best-practice building codes in place. To achieve deep CO2 emissions reductions in the buildings sector, governments must enforce stringent, performance-based codes, promote renovation of existing buildings, and set minimum energy performance standards based on BAT. There was some movement in this regard in 2012 – for example, the EU’s Energy Efficiency Directive and the UK’s Green Deal. But globally far more action is required to reach required energy and emissions savings.
This year, we also included a section looking at progress in systems integration, including smart grids, co-generation and district heating and cooling. This reflects the importance of improved systems integration and flexibility in the clean energy transition.Demonstration and deployment of smart grid technologies is intensifying, driven by forces such as accelerating integration of large-scale variablerenewable energy sources. This is starting to generate experience that can be replicated and built on for future projects, through initiatives such as the Global Smart Grid Federation. Tracking progress in smart grid deployment remains a challenge, however. There are many individual smart grid technologies, as shown here, so determining quantitative indicators and metrics to assess progress and identify gaps remains a key priority. Improved data collection is essential.Reaching 2DS targets will require accelerated investment, and new regulatory and business models that enable sharing of smart grid costs and benefits. This reflects that cost reductions enabled by smart grids do not necessarily accrue in the same sector in which investments are made.
In this year’s tracking report we had a special feature on research and innovation – in line with the focus of the 2013 CEM.Total public RDD investment has increased by 75% since 1990, bringing it back almost to the levels in the early 1980s. However, energy’s share of total public RDD has fallen from 11% to 4% since 1980. But what does go to energy is going more to renewables, and less to fossil fuels. Last year almost 20% of energy RDD was in renewables, up from just over 5% in 1990.
If governments are serious about transforming the energy system, it is clear that energy research must get a higher priority than it does today. OECD countries’ spending on energy RD&D has been generally decreasing as a share of total research budgets over the past 30 years, as governments have preferred other areas of research, such as health, space programmes and general university research. Our analysis shows that public investment in energy needs to at least triple – and in advanced vehicles and CCS much more.Public R&D is necessary and it works: I mentioned batteries, but the same goes for solar in the US and wind in the Nordic countries.
Taking developments across the energy system together, it is difficult to paint a positive picture. You see it summed up here.At the same time, the positive progress in renewable energy demonstrates the very real power governments have to create markets and policies that accelerate development and uptake of clean energy technologies. The potential of clean energy technologies remains largely untapped, but governments can unlock that potential through effective government policy, and by pricing energy appropriately. Several of the most promising trends in clean energy are also coming from emerging economies – precisely where demand growth has been buoying carbon emissions. That is great news. Our report makes a number of broad, global recommendations, that pull together the key outcomes of the report. First: that is it only by working together - among countries but also with stakeholders in the private sector and non-profit worlds - that we can make progress at the scale and pace required. This means deepening international collaboration on clean energy deployment – through joint, actionable and monitored commitments – and setting clear and ambitious clean energy technology goals.Second: for too long have we supported, directly or indirectly, wasteful use of energy. Largely this is because prices do not reflect the true cost of energy. Altering this means creating a meaningful carbon price and phasing out fossil fuel subsidies. It also means implementing long-term, predictable policies that encourage investors to switch from traditional energy sources to low-carbon technologies. While that may not happen overnight, let’s not fool ourselves: if we do not get prices and policies right, the transition to a clean energy system simply will not happen. That is my second key message.Third message:we need to take a systems-perspective and a long-term view. Governments must think beyond individual technologies and electoral cycles and consider the larger picture. Smart infrastructure investments that enable system-wide gains make sense, and clean energy solutions such as electric vehicles and solar PV depend on them. But infrastructure takes time to build, so action is needed now.Fourth, let’s seize on energy’s easy win, energy efficiency. We have seen that much energy efficiency potential remains untapped, due to barriers such as high upfront capital costs, customer indifference, and lack of awareness or capacity. Stronger economic incentives and more ambitious regulation – including building energy codes, fuel economy standards, energy management in industry and other energy efficiency measures - are required to tap into that potential.Our final recommendation relates to the report’s special feature: energy technology RD&D and innovation. Early deployment is vital for learning and cost reduction for more mature technologies, but strategic RD&D is also critical to bring promising clean energy technologies to the market. The private sector will not act on its own. Governments must accelerate RD&D support for clean energy, and double its share in public budgets, to enable cost and performance gains that make clean energy competitive.[Open discussion].
Please register here https://cleanenergysolutions.org/training/transition-to-sustainable-buildingsTransition to Sustainable Buildings presents detailed scenarios and strategies to 2050, and demonstrates how to reach deep energy and emissions reduction through a combination of best available technologies and intelligent public policy. This IEA study is an indispensable guide for decision makers, providing informative insights into the buildings sector. It is the largest energy-consuming sector in the world, and account for over one-third of total final energy consumption and an equally important source of carbon dioxide (CO2) emissions. Speakers at the webinar will be Didier Houssin (Director od Sustainable Technology and policy) and Marc LaFrance (lead author).
1. © OECD/IEA 2013Webinar20 June 2013Markus WrakeJustine GarrettDavide D‘AmbrosioContact: email@example.com
2. © OECD/IEA 2013Tracking progress: why, how and against what?Global CO2 emissions under ETP 2012 scenariosAll sectors must contribute to reduce emissions in line with a 2 C scenario.293031323334353637382009 2015 2020GtCO2Other transf. 1%Buildings 18%Transport22%Industry 23%Power gen. 36%6DS emissions 38 Gt2DS emissions 32 Gt
3. © OECD/IEA 2013Renewable power a light in the darkRenewable power generation42%Solar PV capacitygrowth 201219%Wind capacitygrowth 2012-11%Slowdown in renewablecapacity investment 2012
4. © OECD/IEA 2013The IEA Energy Sector Carbon Intensity IndexA gloomy global picture: the ESCIIGlobal energy supply is as carbon intensive today as it was in 1990.46%Increase in global energydemand 1990-201044%Increase in energy-relatedCO2 emissions 1990-2010
5. © OECD/IEA 2013Coal continues to outpace non-fossil energy sourcesCoal and non-fossil power generation2010 generation from coal was 28% higher than all non-fossil sources combined.0%10%20%30%40%05 00010 00015 00020 0001990 1995 2000 2005 2010 2015 2020TWhHydro Other renewables NuclearCoal Shareof Coal Shareof non-fossil electricity2DS targets
6. © OECD/IEA 2013Coal-to-gas switching: a regional phenomenonNatural gas spot pricesNatural gas is displacing coal-fired generation in some countries, butregional market dynamics are driving divergent trends.0246810121416182003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013USD/MBtuJapan LNGEurope (NBP)United States(Henry Hub)
7. © OECD/IEA 2013Wanted: major new construction in nuclearNuclear capacity additions and reactors under construction16 GW of capacity additions are required out to 2020,versus a 30 GW historic high in the mid-1980s.03060901201501800510152025301979 1987 2006 2012 2015 2025ReactorsunderconstructionGWNet GW connected to the grid Reactorsunder construction2DS targets
8. © OECD/IEA 2013CCS: still waiting its cue from governmentsCumulative spending on CCS projectsThere are signs of commercial interest in CCS technologies,but government policy remains inadequate to drive progress.
9. © OECD/IEA 2013Improvement in fuel economy, but still a long road aheadFuel economy readiness index status, 2012Fuel economy is improving, but significant potential remains globally.
10. © OECD/IEA 2013Hybrid vehicles are taking offHEV sales reached 1.2 million in 2012 and need togrow 50% every year until 2020.HEV global annual sales
11. © OECD/IEA 2013High feedstock prices see biofuels production stalledGlobal biofuels productionGlobal production remained static in 2012, highlightingvulnerability of conventional biofuels to extreme weather events.0501001502002502000 2005 2010 2015 2020BillionlitersOtherBiodieselEthanolBiodieselEthanolAdvancedConventionalProjections 2DS target
12. © OECD/IEA 2013Energy efficiency remains a largely untapped resource31%19%Iron and steelBAT energysavings potential25%Cement BATenergy savingspotential28%Chemicals andpetrochemicals BATenergy savingspotentialIncrease in industrial energyconsumption 2000-2010
13. © OECD/IEA 2013Stringent building energy codes should be enforced50% of all existing buildings will still be standing in 2050BECs must target new and existing buildingsBuilding code implementation and stringency
14. © OECD/IEA 2013The power is in the data: tracking systems integrationSmart grid technologiesSmart grid demonstration and deployment is intensifying, but betterdeployment indicators and data are required to accurately track progress.2010 2020Variablerenewablecapacity234 GW(4.5%)942 GW( 13.4%)2010 2020Electricity demand intransport278 TWh(1.6%)404 TWh(1.4%)2010 2020Globalelectricitydemand17 860 TWh 22 680 TWh0 24hVariableandpeak demand
15. © OECD/IEA 2013Energy RD&D: declining share but more wisely spentIEA government RD&D expenditureEnergy RD&D has slipped in priority in IEA member countries.0%3%6%9%12%051015201974 1980 1985 1990 1995 2000 2005 2011ShareofenergyRD&DintotalR&DUSDbillionRenewableenergy Nuclear Fossil fuels Other Shareof energy RD&D in total R&D
16. © OECD/IEA 2013Energy gets a small slice of the research pie2010 OECD government RD&D expenditure – 281 USD billion87 bn USDDefence46 bn USDHealthandenvironment43 bn USDGeneral university funds43 bn USDOther36 bn USDNon-orientedresearch15 bn USDSpaceprogrammes11 bn USDEnergy
17. © OECD/IEA 2013Summing up the partsRenewable powerElectric and hybrid-electric vehiclesSmart gridsFuel economyGas-fired powerNuclear powerCoal-fired powerCarbon capture and storageIndustryBiofuelsBuildings
18. © OECD/IEA 2013Upcoming publicationsTransition to Sustainable BuildingsJoin us on June 27 for the launch webinarRegister here:https://cleanenergysolutions.org/training/transition-to-sustainable-buildingsMedium-Term Renewable EnergyMarket Report 2013Released June 26