International Energy Agency Urges Countries to Drop $312B Fossil Fuel Subsidies

The International Energy Agency last week released its first Clean Energy Progress Report and urged governments around the world to do away with $312 billion in subsidies for fossil fuels.

The report assesses global deployment of clean energy technologies and provides recommendations to countries on future action and spending.

It finds that while impressive progress has been made in developing clean energy technologies in recent years, the success stories are being overshadowed by surging demand for fossil fuels, which are outstripping deployment of clean energy technologies.

Coal has met 47% of the global new electricity demand over the past decade, eclipsing clean energy efforts made over the same period of time, which include improved implementation of energy efficiency measures and rapid growth in the use of renewable energy sources.

In order to change this status quo, the IEA argues that more aggressive clean energy policies are required, including the removal of fossil fuel subsidies and the implementation of transparent, predictable and adaptive incentives for cleaner energy options.

Ambassador Richard Jones, Deputy Executive Director of the International Energy Agency, presented the report to energy ministers gathered in Abu Dhabi. Jones said the world’s dependence on fossil fuels is posing short-term risks to political stability and economic activity and is threatening environmental sustainability.

"Despite countries’ best efforts, the world is coming ever closer to missing targets that we believe are essential for meeting the goal agreed in Cancun to limit the growth in global average temperatures to less than 2 degrees Celsius," Jones said.

"A number of countries have shown that achieving rapid transition to cleaner technologies is possible, and can be done from the bottom up. We must see more ambitious, effective policies that respond to market signals while providing long-term, predictable support," Jones said.

Success Stories

The report provides an overview of key policy developments, public spending on research, development, demonstration and deployment of clean energy technologies–including renewable energy, energy efficiency, electric vehicles, nuclear power, biofuels and CO2 capture and storage (CCS)–and their global deployment status.

Despite the persistent use of coal, the report notes that policy support over the last decade has led to a positive rise in renewable energy.

The report cites solar and wind power as two areas where remarkable developments have been made.

"In the case of solar energy, at least ten countries now have sizeable domestic markets, up from just three in 2000," the authors observe. "Wind power also experienced dramatic growth over the last decade; global installed capacity at the end of 2010 was around 194 Gigawatts, more than ten times the 17 Gigawatts that was in place at the end of the year in 2000."

Despite this, and other progress with renewable sources of energy, the report states that worldwide renewable electricity generation since 1990 grew an average of 2.7% per year, which is less than the 3% growth seen for total electricity generation.

Consequently, "achieving the goal of halving global energy-related CO2 emissions by 2050 will require a doubling of all renewable generation use by 2020 from today’s level."

Tackling Fossil Fuels

In order to address the world’s heavy reliance on fossil fuels, particularly coal, the report stresses the importance of raising the efficiency of existing and new coal-fired plants.

"Switching to less carbon-intensive fuels (e.g. from coal to natural gas) and improving the efficiency of coal plants will achieve significant reductions in CO2 and should be a top priority," the authors write.

However, for deep cuts in carbon emissions this is not enough, they emphasise, adding: "Extensive deployment of CCS is critical to achieve climate change goals."

In order to achieve a 50% reduction in energy-related CO2 emissions by 2050, IEA research shows that around 100 large-scale CCS projects will be needed by 2020, and over 3,000 by 2050. "This represents a significant scale-up from the five large-scale CCS projects that are in operation today."

While there are over 70 CCS projects currently planned, the report says it is uncertain how many will be realized because of recent delays in allocating public funding.

Advancing Electric Vehicles

The report also urges governments to do more to assist the introduction of electric and plug-in hybrid vehicles, which are emerging as an area of intensive activity.

During 2011, thousands of such vehicles will hit the streets in most major economies, and rapid growth is expected: national plans target a combined EV sales of 7 million sales in 2020, which would mean over 20 million such vehicles on the road by that year.

The report says that in order for electric vehicles to succeed, governments must commit to building sustained markets that last for at least the next 10 years.

This commitment should include price incentives for consumers (and adequate and stable funding to pay for these incentives over at least the next five years, followed by a phase-out period); support for construction of adequate recharging infrastructure; cooperation with cities to ensure cohesive urban, regional and national systems; funding for RD&D; and consumer education campaigns. The new Electric Vehicles Initiative (formed at the CEM in July 2010) will help countries coordinate these types of activities.

Read the report: