Energy Technology Perspectives 2017Key points of orientation • Global energy markets are changing rapidlymarkets are changing rapidly Renewables supplied half of global elec tricity

Energy Technology Perspectives 2017 Catalysing Energy Technology Transformations

Jean-François Gagné, Head, Energy Technology Policy Division, IEA77th CERT ti P i 9 J 2017

IEA© OECD/IEA 2017

77th CERT meeting, Paris, 9 June 2017

IEEJ：July 2017 © IEEJ2017

Key points of orientation

• Global energy markets are changing rapidly• Global energy markets are changing rapidlyRenewables supplied half of global electricity demand growth in 2016, and increase

in nuclear capacity reached highest level since 1993

Global energy intensity improved by 2.1% in 2016

Electric car sales were up 40% in 2016, a new record year

• The energy sector remains key to sustainable economic growth1.2B people lack access to electricity; 2.7B people lack access to clean cooking

Largest source of GHG emissions today, around two-thirds of global total

Largest source of air pollution, linked to 6.5 million premature deaths per year

h l b h f f l b l

© OECD/IEA 2017

• There is no single story about the future of global energyFast-paced technological progress and changing energy business models


Global CO2 emissions flat for 3 years – an emerging trend?

30

35Gt

Global energy-related CO2 emissions

20

25

30

5

10

15

5

1970 1975 1980 1985 1990 1995 2000 2005 2010 2014 2015 2016

© OECD/IEA 2017

IEA analysis shows that global CO2 emissions remained flat in 2016 for the third year in a row, even though the global economy grew, led by emission declines in the US and China.


How far can technology take us?

Technology area contribution to global cumulative CO reductions

40

Efficiency 40%

Technology area contribution to global cumulative CO2 reductions

Efficiency 34%

Global CO2 reductions by technology area

Reference Technology Scenario – RTS

0 200 400Gt CO2 cumulative reductions in 2060

20

30

CO2

Efficiency 40%

Renewables 35%

Fuel switching 5%

Efficiency 40%

Renewables 35%Fuel switching

Efficiency 34%

Renewables 15%

Fuel switching 18%

2 degrees Scenario – 2DS

10

20

GtC Fuel switching 5%

Nuclear 6%

CCS 14%

5%Nuclear 6%

CCS 14%

Fuel switching 18%

Nuclear 1%

CCS 32%

Beyond 2 degrees Scenario – B2DS

02014 2020 2030 2040 2050

CCS 14%CCS 32%

© OECD/IEA 2017

Pushing energy technology to achieve carbon neutrality by 2060 could meet the mid-point of the range of ambitions expressed in Paris.


The potential of clean energy technology remains under-utilised

Energy storage Solar PV and onshore wind

Electric vehicles Nuclear

Transport – Fuel economy of light‐duty vehicles

Li hti li d b ildi i tEnergy‐intensive industrial processes

Building construction

Lighting, appliances and building equipment

Carbon capture and storage More efficient coal‐fired power

Building construction Transport biofuels

●Not on track ●Accelerated improvement needed ●On track

© OECD/IEA 2017

Recent progress in some clean energy areas is promising, but many technologies still need a strong push to achieve their full potential and deliver a sustainable energy future


Solar PV and Wind are still leading the transition…

Electricity generation of selected renewable power generation technologies

1 200PV

2 400

Onshore Wind

600

800

1 000

Wh 1 200

1 600

2 000

TWh

0

200

400

TW

0

400

800

T

02000 2005 2010 2015 2020 2025

02000 2005 2010 2015 2020 2025

Data Forecast Target

© OECD/IEA 2017

Solar PV and onshore wind electricity generation are expected to grow by 2.5 times and by 1.7 times, respectively, over 2015-20.


… but can’t make up for other low-carbon generation sources

i iTotal renewable power generation by region

35%

40%

12 000

14 000Rest of Non-OECD

BrazilHistorical Forecast Targets

25%

30%

35%

8 000

10 000

12 000

able

Gen

erat

ion

atio

n (T

Wh) India

China

OECD Europe

10%

15%

20%

4 000

6 000

hare

of

Rene

wa

Gen

era OECD Europe

OECD Asia Oceania

OECD Americas

0%

5%

0

2 000

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2025

Sh

Share of renewable generation

Share of renewable generation 2025

in the 2DS

in the 2DS

© OECD/IEA 2017

While renewable power additions keep breaking records, they need to grow much faster to reach the 2DS electricity generation targets. Progress on early-stage technologies also needs to accelerate.


Can we push up the low-carbon power deployment pace?Average capacity additions in different periods in the B2DSg p y p

2030‐2060

Last year

2017‐2030

Last Decade

0 100 200 300 400 500 600 700GW per year

Fossil CCS (Incl.BECCS) Nuclear Hydro Wind Solar PV Other renewables

© OECD/IEA 2017

Recent successes in solar and wind will have to be extended to all low-carbon solutions, and brought to a scale never experienced before.


Systems Integration is essential for a sustainable energy future

Centralised fuel production,power and storagepower and storage

© OECD/IEA 2017

We need to move away from a one-directional energy delivery philosophy


Renewable energy resourcesCo-generation

Systems Integration is essential for a sustainable energy future

Centralised fuel production,power and storagepower and storage

Distributed

Smart energysystem control

Distributedenergy resources

EVSurplus heat

H vehicle2

© OECD/IEA 2017

EV

We need to move away from a one-directional energy delivery philosophy to a digitally-enhanced, multidirectional and integrated system that requires long-term planning for services delivery.


The value of storage is starting to drive new solutions

Globally installed non pumped hydro Gl b ll i ll d l i i (G )Globally installed non-pumped hydro electricity storage (GW)

200

250

3.5

4.0

Globally installed electricity storage (GW)

150

200

W2.0

2.5

3.0

GW

50

100

GW

0 5

1.0

1.5

G

02016 2020 2025

non-PHS Storage Pumped Hydropower Storage

0.0

0.5

2011 2014 2016

© OECD/IEA 2017

Positive market and policy trends supported a year-on-year growth of over 50% for non-pumped hydro storageBut near-term storage needs will remain largely answered by existing or planned pumped hydro capacity.


Can we enact a storage revolution

Installed battery storage and costs under various scenariosInstalled battery storage and costs under various scenarios

700

800

900

1000

50 000

60 000All other sectors

400

500

600

700

30 000

40 000

USD

/kWh

GWh

EV batteries

Battery costs,

100

200

300

400

10 000

20 000

U 2DS

Battery costs, B2DS

002000 2015 2030 2045 2060 2015 2030 2045 2060

2DS B2DS

© OECD/IEA 2017

Batteries experience a huge scale-up in the B2DS, with EV battery markets leading other sectors in size


EVs are still on track,

Evolution of the global BEV and PHEV stock, 2010-2016

2 000PHEV

BEV

O h

1 000

1 500

cles on the road

sand

s)

Others

Germany

France

United Kingdom

500

1 000

Num

ber o

f veh

ic(Tho

us Netherlands

Norway

Japan

USA

02010 2011 2012 2013 2014 2015 2016

China

EV Growth Rate

© OECD/IEA 2017

The global PEV car stock has reached 2 million units in circulation last year,


EVs are still on track, but need continued support

Evolution of the global BEV and PHEV stock, 2010-2016

200%2 000PHEV

BEV

O h

100%

150%

1 000

1 500

cles on the road

sand

s)

Others

Germany

France

United Kingdom

50%

100%

500

1 000

Num

ber o

f veh

ic(Tho

us Netherlands

Norway

Japan

USA

0%02010 2011 2012 2013 2014 2015 2016

China

EV Growth Rate

© OECD/IEA 2017

The global PEV car stock has reached 2 million units in circulation last year, but sales growth went from 70% last year to 40% this year, suggesting an increasing risk to start diverging from a 2DS trajectory.


Can we change the landscape of transport ?

Vehicle sales and technology shares under different scenariosVehicle sales and technology shares under different scenariosHeavy-Duty Vehicles (millions)Light-duty Vehicles (millions)

160

200

20

25

120

160

15

20

40

80

5

10

02015 RTS ‐ 2060 B2DS ‐ 2060

02015 RTS - 2060 B2DS - 2060

© OECD/IEA 2017

The transportation sector already experiences technological change,but won’t shed its oil dependency without assertive policies.


Enhanced buildings efficiency could also improve system flexibilityEnergy use in the buildings sector under different scenarios

2014(123 EJ)

RTS 2060(157 EJ)

B2DS 2060(112 EJ)

Electricity ElectricityElectricity

112 EJ157 EJ123 EJ 31% 54% 61%

Fossil fuels Traditional biomass Renewables Other Electricity

© OECD/IEA 2017

Efficiency technologies can provide the same level of comfort while reducing energy demand despite doubling floor area.


We need to produce materials more sustainablyEnergy use and direct CO2 emissions in various industrial sectors under different scenarios

10

12

250

300Other industries

Pulp and paper

4

6

8

100

150

200

Gt C

O2

EJ

Aluminium

Chemicals and petrochemicals

0

2

4

0

50

100

Cement

Iron and steel

2014 2030 2060 2030 2060

RTS B2DSDirect CO2 emissions

© OECD/IEA 2017

Effective policies and public-private collaboration are needed to enable an extensive roll-out of energy and material efficiency strategies as well as a suite of innovative technologies.


Optimising the use of sustainable biomassBioenergy use by sector

125

150

Transport

gy y

75

100

EJ

Industry

Buildings

25

50 Agriculture

Fuel transformation

0RTS 2DS B2DS

2014 2060

Power

© OECD/IEA 2017

Around 145 EJ of sustainable bioenergy is available by 2060 in IEA decarbonisation scenarios, but gets used differently between the 2DS and the B2DS.


A challenging task ahead for CCS

A t f CO t d d i i

10 000

12 000Rest of world

EU

Amount of CO2 captured under various scenarios

6 000

8 000

Mt C

O₂

EU

IND

CHN

2 000

4 000CHN

MEA

USA

20

40

Mt C

O₂

02030 2060 2030 2060

Today 2DS B2DS

USA0Today

© OECD/IEA 2017

CCS is happening today,CCS is happening today, but needs to be ramped up hundreds of times to achieve long-term goals.The role for CCS varies based on local circumstances.


Global clean energy RD&D spending needs a strong boost

40

ion 40

ion

Global clean energy RD&D spending

40

ion Mission Mission

Top 3 IT company R&D spenders

20

30

D (201

6) billi

20

30

D (201

6) billi

20

30

D (201

6) billi

InnovationInnovation

0

10

2012 2015

USD

0

10

2012 2015

USD

0

10

2012 2021

USD

2012 2015

Private Public Top 3 firms

2012 2015


2012 2021


© OECD/IEA 2017

Global RD&D spending in efficiency, renewables, nuclear and CCS plateaued at $26 billion annually, coming mostly from governments.

Global RD&D spending in efficiency, renewables, nuclear and CCS plateaued at $26 billion annually,coming mostly from governments. Mission Innovation could provide a much needed boost.


Conclusions

• Early signs point to changes in energy trajectories helped by• Early signs point to changes in energy trajectories, helped by policies and technologies, but progress is too slow

• An integrated systems approach considering all technology• An integrated systems approach considering all technology options must be implemented now to accelerate progress

• Each country should define its own transition path and scale-• Each country should define its own transition path and scaleup its RD&D and deployment support accordingly

• Achieving carbon neutrality by 2060 would require• Achieving carbon neutrality by 2060 would require unprecedented technology policies and investments

• Innovation can deliver but policies must consider the full

© OECD/IEA 2017

Innovation can deliver, but policies must consider the full technology cycle, and collaborative approaches can help


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Energy Technology Perspectives 2017Key points of orientation • Global energy markets are changing rapidlymarkets are changing rapidly Renewables supplied half of global elec tricity