© OECD/IEA 2018

Tracking clean energy transitions

Luis Munuera, Strategy and Initiatives Office

International Energy Agency, Paris

IEA

© OECD/IEA 2018

Where do we need to go?The global challenge: Climbing down the mountain

0

10

20

30

40

1900 1925 1950 1975 2000 2025 2050

Gt

CO

2

SDS

“Getting to the top is optional.

Getting down is mandatory.”

- Ed Viesturs

© OECD/IEA 20183

Where we need to be in 2040 to reach sustainable goals

A wide variety of technologies are necessary to meet sustainability goals,

notably energy efficiency, renewables, CCUS and nuclear

Global energy-related CO2 emissions

16

20

24

28

32

36

2010 2020 2030 2040

Central Scenario

Sustainable

Development Scenario

Efficiency

Renewables

Fuel-switching

CCS

Other

Nuclear

44%

36%

2%6%9%2%

Gt CO2

© OECD/IEA 20184

Global energy demand last year grew by 2.3%, the fastest pace this decade, an exceptional performance

driven by a robust global economy, weather conditions and moderate energy prices.

2018 – a remarkable year for energy

Annual change in global primary energy demand, 2011-18

100

200

300

400

2011 2012 2013 2014 2015 2016 2017 2018

Mtoe

Coal

Oil

Gas

Nuclear

Renewables

© OECD/IEA 20185

Renewables accounted for the largest growth in electricity demand, led by growth in solar, wind and hydro.

However, this growth was not fast enough to bend power sector emissions.

Electricity growth outpaces renewables acceleration

2010-16 2017 2018

0

200

400

600

800

1 000TWh

Average annual change in

electricity generation, 2010-18

Solar PV

and wind

Hydro and

biomass

Other sources

Electricity generation mix in 2018

Coal 38%

Solar PV and

wind 7%

Gas 23%

Nuclear

10%

Oil 3%

Hydro and biomass

19%

© OECD/IEA 20186

In 2018 energy intensity improved by 1.3%, half the rate of the period 2014-2017. Weaker energy efficiency policy

implementation and strong demand growth in more energy intensive economies contributed to this slowdown.

Efficiency improvements slowed again in 2018

Average annual change in primary energy intensity, 2010-18

-4%

-3%

-2%

-1%

0%

2010-14 2015 2016 2017 2018

© OECD/IEA 2018

Higher demand for fossil fuels drove up global CO2 emissions for a second year after a brief hiatus.

Increases in efficiency, renewables, coal-to-gas switching and nuclear avoided 640 Mt of CO2 emissions.

Annual change in global energy-related CO2 emissions, 2014-2018

Energy-related CO2 emissions hit a record high…

- 200

0

200

400

600

2014 2015 2016 2017 2018

MtCO2

© OECD/IEA 2018

..led by coal in power generation in Asia

Emissions from coal continue to rise, driven by increasing coal use mostly for power generation in Asia.

Global energy-related CO2 emissions, 1990-2018

5

10

15

20

25

30

35

1990 2000 2010 2018

GtCO2

Other

Other coal use

Coal-fired power

generation

Coal

Coal is the largest source of emissions, and associated with around one-third of the warming to date.

© OECD/IEA 20189

TCEP-2018

Power

Renewable power

Solar PV

Onshore wind

Offshore wind

Hydropower

Bioenergy

Geothermal

Concentrating solar

power

Ocean

Nuclear power

Natural gas-fired power

Coal-fired power

CCUS in power

Industry

Chemicals

Iron and steel

Cement

Pulp and paper

Aluminium

CCUS in industry &

transformation

Transport

Electric vehicles

Fuel economy

Trucks & buses

Transport biofuels

Aviation

International shipping

Rail

Buildings

Building

envelopes

Heating

Heat pumps

Cooling

Lighting

Appliances &

equipment

Data centres

and networks

Energy storage

Hydrogen

Smart grids

Demand response

Energy integrationOther supply

Methane emissions from oil and gas

Flaring emissions

© OECD/IEA 201810

TCEP-2019 preview

Power

Renewable power

Solar PV

Onshore wind

Offshore wind

Hydropower

Bioenergy

Geothermal

Concentrating solar

power

Ocean

Nuclear power

Natural gas-fired power

Coal-fired power

CCUS in power

Industry

Chemicals

Iron and steel

Cement

Pulp and paper

Aluminium

CCUS in industry &

transformation

Transport

Electric vehicles

Fuel economy

Trucks & buses

Transport biofuels

Aviation

International shipping

Rail

Buildings

Building

envelopes

Heating

Heat pumps

Cooling

Lighting

Appliances &

equipment

Data centres

and networks

Energy storage

Hydrogen

Smart grids

Demand response

Energy integrationOther supply

Methane emissions from oil and gas

Flaring emissions

© OECD/IEA 201811

Technology progress in the energy is slow compared to other sectors

The energy sector is among the most regulated and shielded from change - Transitions

typically take 30-40 years

Sources: Based on BNEF (2017), Utilities, Smart Thermostats and the Connected Home Opportunity; Holdowsky et al. (2015), Inside the Internet of Things; IEA (2017), Renewables; Tracking Clean Energy

Progress; World Energy Investment; Navigant Research (2017), Market data: Demand Response. Global Capacity, Sites, Spending and Revenue Forecasts.

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20

40

60

80

100

2008 2010 2012 2014 2016

2008 = 100

EV batteries

Utility-scale PV

Data storage

Internet bandwidth

Sensors

© OECD/IEA 201812

Solar PV is the only renewable technology on track

Solar PV has shown record growth in 2017; it is well on track to meet its SDS target oil on a rising trend

0

500

1 000

1 500

2 000

2 500

3 000

2011 2016 2021 2026

TWh

Solar PV

0

10

20

30

40

50

60

China UnitedStates

India Brazil Japan EU

GW

Solar PV deployment

2015

2016

2017

© OECD/IEA 201813

So despite progress in solar PV, renewables growth is not fully on track

Renewables saw the highest rate of generation growth among all energy sources in 2017,

but overall deployment must speed up to meet the renewables SDS target by 2030.

0

2000

4000

6000

8000

10000

12000

14000

16000

Renewables generation by technology

Ocean

Geothermal

CSP

Offshore wind

Bioenergy

Hydropower

Onshore wind

Solar PV

9

© OECD/IEA 201814

The number of passenger electric cars on the road passed 3 million in 2017,

although they still represent just 0.3% of the global car fleet

The number of passenger electric cars on the road passed 3 million in 2017,

but it needs to grow to 240 million by 2030 in the SDS

EV growth has grown rapidly; strong momentum needs to continue

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2013 2014 2015 2016 2017

millio

ns

Others

United States

Europe

China

Global electric car stock

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300

400

500

600

700

800

900

1000

2013 2014 2015 2016 2017 2030 2040

Ele

ctri

c ca

r st

ock

(m

illio

ns)

SDS Target

Others

United States

Europe

China

10

© OECD/IEA 201815

Battery storage also needs to prove stable growth, and policy support is key

The expansion of grid-scale batteries, which are used mainly for frequency regulation and demand

shifting, will hinge on policies to reward additional capacity, flexibility and avoided grid cost services.

0

50

100

150

200

250

2016 2020 2025

GW

non-PHS Storage Pumped Hydropower Storage

Globally installed electricity storage (GW)

200

400

600

800

1 000

1 200

1 400

2012 2013 2014 2015 2016 2017

MW

Behind-the-meter

Utility-scale

© OECD/IEA 201816

A huge scale-up in batteries coming – high profile announcements only part of the story

With China particularly taking big leaps in manufacturing output, the PV story could be repeated for

storage

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3

6

9

0

200

400

600

2010 2011 2012 2013 2014 2015 2016 2017E 2022 (announced)

USD (2016) billion

Manufacturing capacity, GWh

China Asia Pacific North America Europe Other Annual investment (right axis)

© OECD/IEA 201817

Corporate energy R&D spending is recovering slowly

The private sector remains the largest single source of funding for energy R&D, despite

lower spending in recent years

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30

40

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60

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100

2012 2013 2014 2015 2016 2017E

USD (2017) billionOther

Oil and gas

Thermal power and combustion equipment

Nuclear

Electricity generation and networks

Renewables

Automotive

© OECD/IEA 201818

The energy innovation system is changing

Corporate venture capital and growth equity for energy tech startups reached USD 6 billion in 2017;

companies are taking strategic positions in a changing energy system, digital firms above all others.

Corporate investments in new energy technology companies, by sector of investing company

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1

2

3

4

5

6

7

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

USD (2017) billion

Oil and gas Utilities Transport ICT Other energy Other

© OECD/IEA 2018

Conclusions

• Of 38 clean-energy technologies 4 are on track, 23 need improvement & 11 are off track

• Need to focus on all technologies; lack of progress on some puts even more pressure on

others

• Government policy & market design will be instrumental in spurring innovation,

deployment and private investment

• Faster technological innovation can spur economic growth, while also improving energy

security & sustainability

© OECD/IEA 2018

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