IEA warns that policy uncertainty is global threat to advance of renewables

September 1, 2014 |

From Brussels, the International Energy Agency has released its in its 3rd annual Medium-Term Renewable Energy Market Report — and the agency is becoming bearish on the expansion prospects for renewables unless policy constraints are addresses.

According to the report, power generation from renewable sources such as wind, solar and hydro grew strongly in 2013, reaching almost 22% of global generation, and was on par with electricity from gas, whose generation remained relatively stable. Yet annual growth in new renewable power is seen slowing and stabilizing after 2014, putting renewables at risk of falling short of the absolute generation levels needed to meet global climate change objectives.

In terms of markets, IEA sees non-OECD countries as the main spark for growth, noting that “renewables account for 80% of new power generation in the OECD, but with more limited upside due to sluggish demand and growing policy risks in key markets.”

The IEA also warns specifically on biofuels: “The roles of biofuels for transport and renewable heat are also increasing, though at slower rates than renewable electricity. Uncertainty over policy support for biofuels is rising in the EU and the United States, slowing expectations for production growth and threatening the development of the advanced biofuels industry at a time when the first commercial plants are just coming online.

One of the reasons for government sector troubles, the IEA notes, is a change in the sector’s needs. “Many renewables no longer need high incentive levels,” says IEA Executive Director Maria van der Hoeven. “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. 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. This stems from concerns about the costs of deploying renewables,”

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Category: Policy

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