The world’s collective capacity to generate renewable power grew at its fastest annual pace ever last year, the Guardian reported on Thursday. But underneath that finding, there’s also an uncertain future for green power and the world’s chances of containing global warming.
The numbers, drawn from a new analysis by the International Energy Agency (IEA) — a Paris-based agency that pursues the goal of reliable, affordable and clean energy for its 29 member countries — show that renewables like wind and solar now produce 22 percent of the world’s electricity, and will likely rise to 26 percent by 2020.
Among countries that are part of the Organization for Economic Co-operation and Development (OECD), which includes the United States, much of Europe and most other developed western nations, clean energy sources made up 80 percent of new power capacity installed in 2013. And renewables have made impressive strides in the U.S. specifically.
Amongst non-OECD countries, renewables were 70 percent of the growth in new capacity in 2013, “spurred by diversification needs in many countries and increasing air quality concerns in China, in particular” the report said. Africa is anticipated to add more renewable power in 2014 than it’s installed in the last 14 years combined, and a recent market outlook released by Bloomberg New Energy Finance said renewable energy could take up two-thirds of the $7.7 trillion the world will likely invest in new power plants between now and 2030.
The bad news is that, beyond 2020, the IEA doesn’t think this pace will be sufficient to hit the greenhouse gas reduction targets the international community is currently haggling over. That pessimism is unfortunately backed up by another recent analysis, which found the most likely deals currently on the table won’t be able to keep the world under 2°C of temperature rise — the threshold beyond which scientists suspect climate change becomes truly dangerous.
So far, the European Parliament, the legislative body of the European Union, is considering a target of 27 percent renewables for its energy supply for 2030. Justin Wilkes, the deputy chief executive of the European Wind Energy Association, told the Guardian that the IEA report shows that goal is inadequate.
“Not only is a 27 percent target too low but it doesn’t oblige member states to follow through,” Wilkes said. “Europe’s heads of state need to agree in October on a binding 30 percent renewables target if real progress is going to be made to improve Europe’s energy security, competitiveness and climate objectives.”
According to the report, much of the problem is that the rate of global investments in renewables, while large, will likely plateau at an average of $230 billion annually through 2020. That’s down from a recent peak of $280 billion in 2011.
The IEA chalked up much of that coming slowdown to the uncertainty investors face when it comes to different countries’ renewable policies, as the various rules and subsidies affect when and how much they invest. “Unanticipated changes to incentive schemes represent a risk that investors cannot manage, and can lead to elevated financing costs and boom-and-bust development patterns,” the report said.
Examples include a lack of spending by China on its electricity networks, the haziness of E.U. renewable plans beyond 2020, and the fate of a planned pan-European grid. Here in the United States, another example is the habit the legislature has fallen into of neglecting subsidies like the production tax credit for wind power, then renewing it at the last minute, leading to a jagged cycle of spikes and collapses in investment.
“Renewables are a necessary part of energy security. However, just when they are becoming a cost-competitive option in an increasing number of cases, policy and regulatory uncertainty is rising in some key markets,” said IEA Executive Director Maria van der Hoeven. “Many renewables no longer need high incentive levels. Rather, given their capital-intensive nature, renewables require a market context that assures a reasonable and predictable return for investors. This calls for a serious reflection on market design needed to achieve a more sustainable world energy mix.”
Finalizing long-term agreements on E.U. renewable targets, or hashing out a longer term plan for U.S. tax credits would certainly help with this. Though a more holistic solution would be something like a national carbon tax that would follow a set path over several decades, driving investment and innovation throughout the economy away from fossil fuels according to the same overall price signal.