Green energy contributes over 50% power generation in around 30% countries: IEA

IEA

Renewable electricity is now more affordable than fossil fuel-based electricity in a growing number of nations and contributes to more than 50 percent of power generation in around 30 percent of the world’s countries, a report released by the International Energy Agency (IEA) on September 14 revealed.

Releasing the Breakthrough Agenda Report, 2023, Fatih Birol, Executive Director, IEA, said energy transition is moving quicker than many people think, but it needs to move even faster. He said IEA’s analysis shows that while some sectors are seeing stronger international collaboration, others are falling behind.

“No country can tackle the climate and energy challenges we face in isolation… Building on innovation, attracting investment and scaling up demand for new technologies are the fundamental building blocks for success. By delaying further, we are simply increasing the risks,” he cautioned.

The report calls on governments to strengthen collaboration in key areas such as standards and regulation, financial and technical assistance and market creation to turbocharge transition.

It covers carbon emission reduction activities across seven sectors—power, hydrogen, road transport, steel, cement, building and agriculture.

The report examines the advances made and actions needed to meet the goals of the Breakthrough Agenda, a commitment signed by 48 countries representing close to 80 percent of global economic output, since it was first launched at COP26 in Glasgow in 2021, and which announced a partnership with the UAE COP28 presidency in January 2023.

Power sector accounts for 23 percent of total emissions

The Breakthrough Agenda Report, 2023, stated that an important opportunity that remains unexploited is for countries to agree on higher minimum energy performance standards for electrical appliances to shift global markets towards more efficient products that reduce costs and cut emissions.

The IEA said the power sector is not yet on track for net zero by mid-century, although the deployment and manufacture of key technologies have accelerated considerably in recent years.

“If current rates of growth in wind and solar generation continue, they are set to achieve more than half of what is required by 2030 to get on track for a net zero scenario,” it said, which means that if solar and wind continue to expand at their current rate—doubling every 3.5 years—they will reach around 8 terawatt (TW) annual installed capacity by 2030. Net zero scenarios estimate that a total 11 TW renewable energy capacity is needed by 2030.

Talking about costs of renewable energy, the IEA report said the average levelised cost of electricity (the average cost it should be sold at for break-even over the lifetime of the power generator) for new projects has fallen by 89 percent for solar photovoltaic cell-generated power and 69 percent for onshore wind since 2010. At the same time, the costs of storage have fallen by nearly 80 percent since 2015, although there are significant differences between regions.

“Recent supply chain disruptions have temporarily impacted cost reductions, and further reductions will probably be more modest in the coming year,” it said.

Since demand for funding programmes has been considerably higher than available resources, the IEA recommended an increase in public funding, while building on existing programmes to strengthen the collective impact at the speed and scale required.

“In 2022, global investments in energy transition technologies—renewable energy, energy efficiency, electrified transport and heat, energy storage, hydrogen, and carbon capture and storage (CCS)—reached $1.3 trillion, an increase of 19 percent from the previous year. However, annual investments must triple until 2030 to meet the Paris Agreement goals,” the IEA said.

Global hydrogen use still below par

The IEA found that the deployment of renewable (green hydrogen) and low-carbon hydrogen is significantly below where it needs to be under a net zero scenario, despite continuing to receive significant interest. This is because renewable and low-carbon hydrogen remain more expensive than hydrogen from unabated fossil fuels.

“More than 1000 hydrogen plants are planned, although greater certainty of policy support and demand is required to move plans and announcements into real projects,” it said, adding that global hydrogen production was 95 million tonnes in 2022.

To reduce the cost of green or low-carbon hydrogen, cost and availability of renewable electricity is not the only factor. The capital cost of electrolysers is also an important part of the cost of renewable hydrogen. The report stated, “Electrolyser capital cost is expected to decrease through accelerated innovation, scale-up and improved manufacturing techniques, although recent increases in material costs risk slowing down these cost declines.”

The IEA recommended that governments and businesses should provide financial and human resources for the development and implementation of a comprehensive portfolio of national and international standards. It asked developing countries to anticipate building technical capacity of their national systems to verify compliance with international hydrogen standards.

It asked all countries to increase the strength of the demand signal by moving from commitments and pledges to contracts and policies.

G20 must act toward trade of near-zero emission industrial materials

The timing of the report assumes significance as the G20 Summit under India’s presidency concluded on September 10 with all member countries signing the New Delhi Leaders’ Declaration, which talked about trebling renewable energy capacity and doubling energy efficiency by 2030.

In the building sector, the IEA in its report commended the establishment of the Energy Efficiency Task Force Group (EEFTG) with 15 of the G20 countries as its members and stated that the EEFTG conducted useful work that countries could build upon, including investment principles, private sector convening and multilateral development bank coordination.

It also stated that the G20 is yet to attempt discussions or agreements on the trade of near-zero emission industrial materials. However, the IEA added that in 2023, the Indian G20 presidency took a small step in this direction by commissioning a report on circularity in the steel sector from the International Renewable Energy Agency. The analysis highlighted the importance of scrap in achieving a net zero steel sector, encouraging a freer flow of scrap steel around the world so that it can be used where it delivers the highest economic value and reduced emissions from the sector.

At the 2023 G7 meeting, member countries reaffirmed their commitment to a highly decarbonised road sector by 2030, and to collectively reducing road transport (aggregate fleet-level) emissions by at least 50 percent by 2035. The IEA recommended that future G7 and G20 summits can build upon this political momentum.