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Renewables must be key ingredient in future energy supply, says IEA

Investment in renewable energy technologies could decline by 20% this year, but renewables are expected to make large contributions in the latest forecast from the International Energy Agency.

“The past 12 months have seen enormous upheavals in energy markets around the world, yet the challenges of transforming the global energy system remain urgent and daunting,” the IEA notes in its World Energy Outlook 2009. Demand for energy has already plunged with the economic contraction, and countries have responded with fiscal and monetary stimuli on an unprecedented scale which, in many cases, have included measures to promote clean energy in an effort to avoid the “even bigger, and just as real, longterm threat of disastrous climate change.”

Energy is the leading source of greenhouse gas emissions and the recession has made the task of “transforming the energy sector easier by giving us an unprecedented, yet relatively narrow, window of opportunity to take action to concentrate investment on low-carbon technology,” it says. The annual outlook examines low-carbon options through a reference scenario (no changes to existing policies and measures) and a 450 scenario (collective policy action to limit the long-term concentration of GHG in the atmosphere to 450 parts per million of CO2-equivalent).

Global energy use will fall in 2009 for the first time since 1981 but current policies will allow it to increase once the economy recovers by 1.5% per year until 2030, or 40% over the period, the report forecasts. Fossil fuels would remain the dominant sources of primary energy around the world, accounting for three-quarters of overall increase in energy use, with coal receiving the largest increase in demand, followed by gas and oil.

The use of non-hydro emerging renewable energy (wind, solar, geothermal, tidal, wave, bio-energy) sees the fastest rate of increase in the reference scenario, with most of the increase in power generation. The share of non-hydro renewables in total power output rises from 2.5% in 2007 to 8.6% in 2030, with wind power grabbing the largest absolute increase.

Falling energy investment has had and will continue to have far-reaching consequences and, in late 2008 and early 2009, investment in renewables fell proportionately more than in other types of generating capacity. In 2009, as a whole, investment could drop by close to one-fifth and, without the stimulus provided by government fiscal packages, investment in renewable energies would have fallen by 30%.

Under the 450 scenario, energy efficiency is the largest contributor to abatement of GHG emissions by 2030, accounting for half of total savings compared with the reference scenario. Decarbonisation of the power sector also plays a central role in reducing emissions, with a big shift in the mix of fuels and technologies such as a 50% reduction in coal-based generation while renewables and nuclear make much bigger contributions.

“The upcoming UN Climate Change Conference in Copenhagen will provide important pointers to the kind of energy future that awaits us,” concludes the WEO. “The IEA has already called on all countries to take action on a large scale - a Clean Energy New Deal - to exploit the opportunity the financial and economic crisis presents to effect the permanent shift in investment to low-carbon technologies that will be required to curb the growth of energy-related GHG emissions.”

“Saving the planet cannot wait,” it states. Every year, the costs of transforming the energy sector add US$500 billion to the global incremental investment cost of US$10.5 trillion for the period 2010 to 2030, and the IEA says “the time has come to make the hard choices needed to turn promises into action.”

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