IEA: Tracking Clean Energy Progress, 2015

Input document for the “Clean Energy Ministerial” prepared by the IEA.

Key Findings Market viability of some clean energy technologies is progressing, but the overall rate of deployment falls short of achieving the ETP 2°C Scenario (2DS).

  • The cost gap between electricity generated from renewables and that from fossil fuels is narrowing. Some renewables are already competitive with new-built fossil fuel plants in various locations. In addition, long-term contracts with record low prices were signed for both onshore wind and utility-scale solar photovoltaic (PV) projects over the last year showing the significant improvement on cost of energy for some renewables.
  • Solar PV may even exceed 2DS targets with its strong growth in deployment and increasing competitiveness. Improvement in the rate of onshore wind and hydropower deployment is needed to get back onto the 2DS trajectory. Meanwhile, progress has slowed in the development of bioenergy, offshore wind, geothermal power, solar thermal electricity (STE) and ocean energy. In addition to current policy frameworks further support is needed to overcome technology-specific barriers in order to meet 2DS targets.
  • Globally annual additions of renewable power capacity are expected to level off over the medium term. Policy uncertainty and retroactive policy signals are the main barriers to deploying renewables in member countries of the Organisation for Economic Co-operation and Development (OECD). However, persistent economic and non-economic barriers remain challenging to deployment in OECD non-member economies. In particular, issues concerning financing, grid connection and integration are contributing to the slow-down in renewable power deployment and generation.
  • Support for low-carbon heat is very limited compared with low-carbon electricity. Both co-generation and the use of modern renewable energy for heat have grown in absolute terms, but their rate of growth is too slow; co-generation has plateaued as a share of global electricity generation. The strong potential of these technologies, particularly when combined with district heating and cooling (DHC), to support greater integration of locally available, renewable or surplus energy sources is not being tapped.
  • Electricity markets and market mechanisms need to reflect the true environmental costs of generation while also adapting to the production of variable and distributed clean energy generation. Clear and strong market incentives that favour low-carbon technologies, either through the introduction of carbon prices or technology feed-in tariffs, are required to make clean energy technologies competitive in an era of continuing low coal prices. To secure investment and integration, market mechanisms need to be accompanied with clear policy goals that build certainty.

Limited data availability and poor data consistency on energy use constrain capacity to undertake the targeted analysis required to identify underlying trends and the most appropriate policy options.

  • High-quality, timely, comparable and detailed data and indicators are vital to establishing, monitoring and maintaining (or adapting) sound policies. Promoting the development of metrics for evaluating the penetration of clean energy technologies, costs and benefits, requires both national data collection and international data co-ordination. Filling existing data gaps, many of which are highlighted in this report, is vital to improving reporting of data and the quality of official statistics.

The deployment of clean fossil and nuclear technologies is constrained by complacency in exploiting existing opportunities.

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  • Low-priced coal was the fastest-growing fossil fuel in 2013, and coal-fired generation increased in all regions. Newer coal plants can perform to a relatively high standard. But where coal-fired capacity is expanding, in emerging economies for example, less efficient, subcritical units dominate, primarily due to the absence of minimum efficiency policies.
  • Natural gas-fired power, a cleaner and more flexible generation fuel than coal, slowed markedly on global markets in 2013-14, unable to compete against low coal prices. Weakened electricity demand and coal oversupply (leading to low coal prices) are undermining natural gas use for electricity generation. Technical developments to improve the flexibility of gas fired-power plants are continuing apace, establishing a long-term competitive advantage over the traditional base-load plants.
  • On the nuclear side, 2014 saw the highest number of reactors under construction in more than 25 years. But the increase in global capacity and the rate of grid connections are still too low to meet 2DS targets in 2025. Overall, there appears to be a plateauing of growth in OECD countries, though some newcomer countries (including Turkey and Poland) are preparing for new build. Much stronger growth is expected in OECD non-member economies, with China having particularly ambitious plans.

New clean energy technologies can transform energy markets providing new economic opportunities.

  • Smart grids can provide enhanced monitoring, control and directionality to grid operators. Deployment of some sub-categories of smart-grid technologies has grown quickly in early adopter markets, although not entirely smoothly, with cost overruns and regulatory uncertainty the main barriers to greater deployment. Significantly, in OECD non-member economies, the ability of smart grids to facilitate grid stabilisation and security of electricity supply is driving the technology deployment, rather than integration of renewables. This signals progress in the maturity of the concept and technology.
  • Energy storage can provide valuable services to energy systems while also facilitating flexible electricity systems and reducing waste thermal energy. Development in battery technology is currently driven by transport demand for electric vehicles (EVs). But significant numbers of large-scale batteries have been deployed for use in frequency regulation and to help integrate a rising share of variable renewables.
  • A significant milestone for carbon capture and storage (CCS) was reached with the opening of the first commercial-scale coal-fired power plant (CFPP) with CO2 capture in October 2014. Further projects are being built in the United States, Canada, Australia, Saudi Arabia and the United Arab Emirates. The number of projects in development, however, is lower than required to meet the 2DS targets. Given the importance of CCS in a low-carbon future, there will need to be a substantial increase in investment in research and development (R&D), storage resources, and projects now to ensure it is widely available in the coming decades.
  • Increased use of hydrogen is seeing renewed interest, given its ability to provide multiple energy services. Between 2008 and 2013, the global market of fuel cells (FCs) grew by almost 400%, with more than 80% of FCs used in stationary applications such as FC micro co-generation, backup and remote power systems. In terms of transport, some manufacturers have announced pre-commercial market introduction of fuel cell electric vehicles (FCEVs) at prices of around USD 60 000.
  • EVs are continuing to grow in the passenger light-duty vehicle (PLDV) market, with more EV models released by vehicle manufacturers. Relative slowdowns in deployment and in government spending make it unlikely, however, that ambitious 2DS targets will be achieved. EVs also have significant potential to contribute to cleaner and more fuel-diverse vehicles in both light-duty freight and collective transport modes, but progress in these modes is negligible.

Strong actions linked to stated targets need to be pushed forward to achieve the clean energy potential.

  • Cleaner use of coal can be achieved by strengthening bilateral or multilateral co-operation. The recent agreement between China and the United States to address their carbon emissions reflects positive actions by both countries and sets a strong precedent for other countries in the lead-up to COP 21. However, CFPP capacity is continuing to expand, and existing policies and best practices do not yet ensure strategic siting of CFPPs, deployment of the most efficient technologies, or CCSreadiness or CCS.
  • In energy-intensive industries, deployment of best available technologies (BATs) and energy- saving measures, and demonstration of innovative lowcarbon processes, have been relatively slow over the last decade and need to accelerate to match stated ambitions. This is partly due to inertia in capacity stock turnover, fluctuation of raw material availability, and demands for return on investment for refurbishment projects. Resource limitations also affect investments in research, development, demonstration and deployment (RDD&D), and process constraints that make innovative technology developments rare and timeframes for commercialisation of such technologies long. Finding new pathways for public-private collaboration and co-operation, as well as more effective support mechanisms, will be critical to meeting short-term milestones and climate targets through 2025.
  • Buildings energy demand continues to grow rapidly; in fact, the growth rate would need to be halved to achieve 2DS targets, meaning that each year the gap grows larger. While ambitious targets have been set for the buildings sector, few examples exist of successful large-scale measures. Given the relatively long life of buildings, overcoming the large inertia in the building stock is critical. Both the rate and the depth of energy efficiency renovations need to scale up from the current low level of activity.
  • Fuel efficiency standards have proven to be an effective method of improving vehicle fleet efficiency; expanding the application of these standards beyond PLDVs is now necessary. As the PLDV market in OECD non-member economies is now bigger than that in OECD member countries – and continuing to grow – policy measures to improve fuel economy of new PLDVs need to be introduced in OECD non-member regions. Even though over two-thirds of freight transport is by road, fuel efficiency standards for medium- and heavy-duty vehicles remain quite limited and must be expanded. An overarching strategy of Avoid, Shift and Improve is required to stabilise transport energy demand in the next decade, and for CO2 emissions to start showing a net decrease.
  • International transport, often excluded from analysis of the transport sector, needs significant co-operation to render policy measures effective. The energy efficiency targets of both the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO) are broadly consistent with 2DS objectives, but will need to be complemented with actions impacting activity levels and with fuel switching, especially towards biofuels. Market-based instruments such as emissions trading have direct effects on transport activity in the aviation and shipping sectors; they can serve to internalise the social costs these transport sectors generate through local pollutant and greenhouse gas (GHG) emissions.

Reframing climate goals through energy metrics can help highlight various drivers for low-carbon technology deployment and support ambitious, yet realistic, targets.

  • The near-term focus and monitoring of energy sector metrics can provide a greater insight into emissions reduction measures than GHG emissions inventories alone. International climate agreements have typically focused on GHG emissions and measures. Alternative metrics, which can be framed around energy efficiency, new investment in clean power generation, and even advances in RDD&D, can help to identify opportunities for actions with both short- and long-term impacts.
  • Energy sector decarbonisation needs to be tracked, with electricity decarbonisation of particular importance and interest. Tracking both technologyand sector-specific indicators is useful to get a clear picture of opportunities and bottlenecks in advancing decarbonising the energy system as a whole. The transition to low-carbon economies needs to be carefully managed, for the provision of secure, affordable energy is critical for economic growth and social development. A fuller understanding of the opportunities to promote synergies among energy, environmental and climate policies is also needed.

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About David Herron

David Herron is a writer and software engineer living in Silicon Valley. He primarily writes about electric vehicles, clean energy systems, climate change, peak oil and related issues. When not writing he indulges in software projects and is sometimes employed as a software engineer. David has written for sites like PlugInCars and TorqueNews, and worked for companies like Sun Microsystems and Yahoo.

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