IEA Renewables Market Strategy

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PRACTICAL STRATEGIES FOR CLIMATE CHANGE
POLICY AND GLOBAL ECONOMIC DEVELOPMENT Corrado
Clini director general Italian Ministry for the
Environment and Territory Buenos Aires, 14
december, 2004
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WORLD ENERGY CONSUMPTION IN 2030

• According to the Business as Usual Scenario in
  the World Energy Outlook 2004, world energy
  consumption will increase about 1,9/year between
  2000 and 2030, driven by economic and
  population growth.
• In 2030, some 55 of the world energy demand is
  expected from developing countries, compared to
  40 now.
• The world energy system will continue to be
  dominated by fossil fuels. In 2030, they are
  expected to represent almost 90 of total energy
  demand.
• At least 1.5 billion people in developing
  countries will not have access to electricity

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World Energy Consumption
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Regional Share in World Energy Demand
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World power generation Capacity additions 2000 -
2030
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Business As Usual Scenario will not result
in a sustainable energy future (1)

• non-hydro renewables will grow faster than any
  other primary energy source. Nonetheless, due to
  the small base upon which they start (2 of the
  portfolio), the share of renewables in
  electricity consumption will remain small in
  2030
• hydrogen fuel cell technologies will remain
  marginal
• fossil dependency will grow, leading to more
  serious prices and supply vulnerabilities,
  besides increasing the barriers to the access to
  electricity in the developing countries
• the future energy demand cannot be met by
  traditional fossil-fuel based energy systems
  without strongly increasing the pressure on the
  environment, natural resources, public health and
  welfare, energy security and international
  relations

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Business As Usual Scenario will not result in
a sustainable energy future(2)

• global motor vehicle emissions of NOx, VOCs, CO,
  are more than twice the level of 1990, affecting
  both health of populations and crops
  productivity
• world CO2 emissions are expected to grow
  rapidly, at a rate slightly higher than energy
  consumption (2,1 year on average), corresponding
  to a total increase of about 60 compared to the
  1990 level. In the EU, emissions are projected to
  increase by 18. In the USA, the increase is
  around 50. While the emissions from developing
  countries represented 30 of the total in 1990,
  these countries will emit more than half the
  world CO2 emissions in 2030.

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Business As Usual Scenario GLOBAL MOTOR
VEHICLE EMISSIONS
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Business As Usual Scenario ENERGY-RELATED C02
EMISSIONS
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Energy-related CO2 Emissions by Region
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The next challenges of the Global Energy System

• In the next 25 years , the global energy system
  will face four major challenges
• the increasing health external costs from air
  pollution, in morbility and mortality, mainly in
  the urban areas of the developing countries,
  will request the development and dissemination of
  clean fuels and engines
• the IPCC Third Assessment Report on Climate
  Change suggests that a global emissions
  reduction by 50-60 should be reached in the
  timeframe 2040-2060, in order to meet the
  stabilization of CO2 concentrations in the
  atmosphere at a safe level by the end of the
  century
• both the diversification of energy sources and
  the development of high efficient energy
  technologies are essential to reduce the
  vulnerability and to meet the energy security
• the access to electricity is a priority to combat
  poverty and to meet the Millennium Development
  Goals.

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The challenge of Climate Change in the Kyoto
System

• The Alternative Scenario to the Business As
  Usual Scenario in the World Energy Outlook 2004,
  based on the mandatory policies, regulations and
  voluntary agreements, already adopted or
  considered by the industrialised countries to
  improve energy efficiency and to reduce CO2
  emissions, is consistent with the Kyoto system.
• Nevertheless, it is not enough to drive the
  global extraordinary effort towards a
  de-carbonized economy, and towards the CO2
  concentration within a safe range by the end of
  the century in 2030, it would reduce the
  global emissions by 5, and the OECD emissions
  by 16 in comparison with the 1990 levels.

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The energy challenge beyond Kyoto (1)

• A much broader long term strategy, and much more
  global effective measures, than those within the
  Kyoto Protocol, are needed, involving both
  developed and emerging economies, in
• an extraordinary effort of research innovation,
  and energy policies, to reduce the carbon
  intensity of the economy through the development
  of the NEW ENERGIES based on Renewable and
  Hydrogen technologies, such as on Energy
  efficiency
• making the new clean and safe energy sources and
  technologies available and cost effective in the
  developing world, to address both the energy
  security and the emissions reductions.

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The energy challenge beyond Kyoto (2)

• The main challenge is to identify a new model
  for long term international cooperation to
  address the de-carbonization of the global
  economy, with a set of flexible mechanisms, in
  the framework of the Climate Change Convention,
• promoting and disseminating technology
  innovation in the energy system, setting common
  standards and goals for the different
  technologies , rather than setting absolute
  targets for countries
• supporting partnership initiatives, involving
  developed and emerging economies, improving the
  model of REEP, IPHE, Carbon Sequestration
  Leadership Forum, Methane.
• creating markets for renewable and new low carbon
  energy technologies, based on CDM/JI and Tradable
  Renewable Energy Certificates schemes

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Supportive policies framework for
the New Energies (1)

• Although the stages of development are
  differentiated, the new energies
• New Renewable technologies
• Hydrogen production from renewables, such as
  from fossil fuels and associated carbon
  sequestration
• Hydrogen for transport and electricity
  generation
• Efficiency in energy production, conversion and
  use,
• are the best option both to increase energy
  security and to deal with local and global
  environmental issues.
• Nevertheless, without a supportive policies
  framework, the market costs of the new energies
  are higher than those of the conventional
  technologies and fuels.

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Supportive policies framework for the New
Energies (2)

• Based on a life-cycle analysis, and including
  the added value of the environmental benefits,
  energy efficiency and new renewable
  technologies, can compete in cost, energy
  efficiency and safety with conventional energy
  production and use. To secure sustainable
  commercial success, policies should be focused on
  the recognition of the added value of the new
  energies
• Enhancing human and institutional infrastructures
  with an increase of experience and investments
• Addressing front costs and other impediments to
  capital mobilisation, leading to inadequacies and
  shortfalls in financing programmes
• Providing adequate incentives and setting up
  energy policy frameworks

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Supportive policies framework for the New
Energies (3)

• Reduce technology costs
• expanding international co-operation and support
  in RD of renewable and hydrogen technologies,
  such as in the energy efficiency) that address
  all sectors of the energy economy (buildings,
  industry, transport, and utility energy
  services)
• taking steps to remove incentives and other
  supports for environmentally harmful energy
  technologies, and developing market-based
  mechanisms that address externalities, such as JI
  and CDM, and Renewable Energy and Energy
  Efficiency Tradable Certificates schemes
• encouraging and supporting industry in making
  voluntary global commitments to procure and use
  renewable and hydrogen based energy.

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Supportive policies framework for the New
Energies (4)

• 2. Mobilise financing
• promoting patient capital from industry and
  private financiers through appropriate tax and
  other support schemes
• placing more trust fund resources, and
  establishing in the World Bank and International
  Finance Institutions subsidy programs to promote
  projects in developing countries, in order to
  provide support to renewable energy and fuel cell
  industries, for the creation of joint ventures
  and other manufacturing, assembly, and
  distribution/installation capabilities

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Supportive policies framework for the New
Energies (5)

• Build a strong international and local market
  environment
• supporting projects where energy efficiency,
  renewables and hydrogen technologies (i) are the
  least cost option on a life cycle basis and/or
  (ii) achieve protection of local and/or global
  environment at a reasonable cost.
• expanding support for assistance programmes and
  networks for capacity building, training, quality
  control and maintenance to ensure full life-cycle
  benefits are obtained