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INTERNATIONAL ENERGY AGENCY

The International Energy Agency (IEA), an autonomous agency, was established in November 1974.Its primary mandate was and is two-fold: to promote energy security amongst its membercountries through collective response to physical disruptions in oil supply, and provide authoritative

research and analysis on ways to ensure reliable, affordable and clean energy for its 28 membercountries and beyond. The IEA carries out a comprehensive programme of energy co-operation amongits member countries, each o which is obliged to hold oil stocks equivalent to 90 days o its net imports.The Agencys aims include the following objectives:

n Secure member countries access to reliable and ample supplies o all orms o energy; in particular,through maintaining eective emergency response capabilities in case o oil supply disruptions.

n Promote sustainable energy policies that spur economic growth and environmental protectionin a global context particularly in terms o reducing greenhouse-gas emissions that contributeto climate change.

n Improve transparency of international markets through collection and analysis ofenergy data.

n Support global collaboration on energy technology to secure uture energy supplies

and mitigate their environmental impact, including through improved energyefciency and development and deployment o low-carbon technologies.

n Find solutions to global energy challenges through engagement anddialogue with non-member countries, industry, international

organisations and other stakeholders.IEA member countries:

Australia

Austria

Belgium

Canada

Czech Republic

Denmark

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Japan

Korea (Republic o)

Luxembourg

NetherlandsNew Zealand

Norway

Poland

Portugal

Slovak Republic

Spain

Sweden

Switzerland

Turkey

United Kingdom

United States

The European Commission

also participates in

the work o the IEA.

Please note that this publication

is subject to specifc restrictions

that limit its use and distribution.

The terms and conditions are available

online atwww.iea.org/about/copyright.asp

OECD/IEA, 2011

International Energy Agency9 rue de la Fdration

75739 Paris Cedex 15, France

www.iea.org


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Page|3

Tableofcontents

Foreword...........................................................................................................................................5

Acknowledgements..........................................................................................................................7

Keyfindings.......................................................................................................................................9

Growthincleanenergyhasbeenstrong...butneedstoexpandandaccelerate.......................11

Smarter,moreambitiousstrategiesareneeded...........................................................................15

Recommendationsforenergyministers........................................................................................18

MaketheCleanEnergyMinisterialaninternationalforumforcommitment,actionandsharedlearning......................................................................................................18

Cleanenergyprogressreport.........................................................................................................22

Energyefficiency......................................................................................................................22

HigherefficiencycoaluseandCCS..........................................................................................31

Nuclearpower.........................................................................................................................37

Renewableenergy...................................................................................................................40

Biofuels....................................................................................................................................55

Electricvehiclesandvehicleefficiency....................................................................................58

Acronyms,abbreviationsandunits...............................................................................................64

Acronyms.................................................................................................................................64

Abbreviations...........................................................................................................................65

Unitsofmeasure.....................................................................................................................65

References......................................................................................................................................66

Listoffigures

Figure1.IncrementaltotalprimaryenergysupplyinCEMandtheworld,200008..............11

Figure2.Danishwindpowercapacitygrowth........................................................................16

Figure3.ChinaandIndiasgrowthinwindpowercapacity...................................................17

Figure4.KeytechnologiesforreducingCO2emissionsundertheBLUEMapscenario,2010........................................................................................................22

Figure5.EstimateofpotentialCO2emissionssavingsthrough

implementationofIEA25energyefficiencypolicyrecommendations..................................23

Figure6.Changeinenergyefficiencyofnewrefrigerator/freezercombinationunitsinselectcountries.............................................................................................................25

Figure7.EstimatedCFLsalesbyregion..................................................................................26

Figure8.CurrenttrendinglobalmanufacturingenergyintensitycomparedtoBaselineandBLUEMapscenarios.......................................................................................28

Figure9.Publicspendingonenergyefficiencyinbuildingsandindustry..............................30

Figure10.Worldincrementalgrowthinelectricitygeneration,200008..............................31

Figure11.ModernisationoftheChinesecoalfleet................................................................32


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Figure12.CCSdeploymentbyregion,201050......................................................................33

Figure13.GlobalstatusoflargescaleCCSdemonstrationprojects......................................34

Figure14.StatusofpublicfundingsupporttoCCS.................................................................35

Figure15.Publicspendingonenergyefficiencyinbuildingsandindustry............................36

Figure16.Globalnuclearcapacityvs.BLUEMapscenario,200520......................................37

Figure17.Nuclearcapacityunderconstructionandnumberofreactors..............................38

Figure18.PublicspendingonnuclearfissionRD&Din2010..................................................39

Figure19.Globalpowergenerationfromrenewablesourcesvs.BLUEMapscenario..........40

Figure20.CleanEnergyMinisterialcountrieswindpowercapacity.....................................45

Figure21.SolarPVelectriccapacityinCEMCountries...........................................................46

Figure22.Solarheatcapacityinleadingcountries.................................................................47

Figure23.HydropowerelectricityproductioninCEMcountries............................................49

Figure24.GeothermalelectricityproductioninCEMcountries............................................50

Figure25.Top15countriesusinggeothermalheat,excludingheatpumps,2009................51

Figure26.BioenergyforelectricityproductionCEMcountries...........................................52

Figure27.PublicspendingonrenewableenergyRD&D.........................................................54

Figure28.Globalbiofuelsproductionbytypeoffuel,200010.............................................55

Figure29.IEAbiofuelroadmapsvisionforbiofuelsupply,201050.....................................56

Figure30.Advancedbiofuelproductioncapacity:currentstatuswithplannedcapacityto2015andIEABiofuelroadmapvisionforgrowthto2020and2030....................56

Figure31.PublicspendingonbiofuelsinCEMcountriesin2010..........................................58

Figure32.PassengerLDVsalesbytechnologytypeandscenario..........................................58

Figure33.PHEV/EVmodelintroductions................................................................................59

Figure34.AggregatednationaltargetsforEV/PHEVs............................................................59

Figure35.Lightdutyvehiclefueleconomy............................................................................61

Figure36.Averagefueleconomytrendsthrough2008byregion,withenactedorproposedtargetsthrough2020..........................................................................................61

Figure37.PublicRD&DspendingonEV/PHEVsandvehicleefficiencyinCEMcountries,2010............................................................................................................63

Figure38.PublicspendingonelectricvehicleRD&Dcategoryforselectedcountries200811.....................................................................................................63

Listof

boxes

Box1.Windpower:buildingmomentumthroughnationalpolicyleadership.......................16

Box2.Theroleofutilitiesindeliveringenergyefficiency......................................................27


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Foreword

Less than three yearsafter fossil fuel priceshitanall time highand theworldplunged into its

deepestrecessionsincetheGreatDepression,geopoliticaleventsaredrivingpricessteadilyhigher.

Theshorttermriskstopoliticalstabilityandeconomicactivityposedbytheworldsdependenceonfossilfuelsareagainasmanifestas its longtermthreattoenvironmentalsustainability.Tobreak

this dependency, the world needs a clean energy revolution. Such a revolution would enhance

globalenergy security,promoteenduringeconomicgrowthand tackleenvironmentalchallenges

suchasanthropogenic climate change. Itwouldbreak the longstanding linkbetweeneconomic

growthandcarbondioxide(CO2)emissionsonceandforall.Buttosucceed,itmustalsobetruly

global inscope.Even ifcountriesbelongingtotheOrganisation forEconomicCooperationand

Development (OECD) somehowdrove theiremissions to zero,on todayspathemissions from

nonOECDcountrieswouldstillleadtoenvironmentaldisastersonanepicscale.

Sucha sweeping revolutionwill requireunprecedented investments in research,development,

demonstration and deployment (RDD&D) of clean, lowcarbon technologies of all sorts for

decadestocome.However,theseinvestmentswillprovideequallyunprecedentedbenefits.The

IEAestimatesaninternalrateofreturnontheinvestmentofabitmorethan10%peryearfrom

the fuelsavingsalone.Theenormousbenefits topoliticalandeconomicstability,aswellas to

environmentalqualityandhumanwellbeing, thatwealsoexpectwouldadd immeasurably to

thisfinancialreturn.

Butissucharevolutionreallypossible?Cansocietiesmobilisethehugeamountsofcapitalneeded

intime?Thegoodnewsisthatthereisalreadyampleevidencethatwhengovernmentsprovidea

sustained strategic framework for a clean energy future, the private sector invests rapidly in

cleantechnologies.Severalcountries,withintheOECDandoutsideof it,havealreadyachieved

tremendouscleanenergydeployment,leadingthewayforotherstofollow.Manygovernments

haveannouncedtargetsforshiftingtheirenergysystemsontoacleaner,moresustainablepath.

However, are announced policies sufficient? Which policies are approaching the rates of

deployment needed? Where are the biggest challenges to our clean energy revolution? To

answersuchquestions,thisreportanalysesforthefirsttimeprogressinglobalcleanenergy

technologydeploymentagainst thepathways needed toachieve shared goals for sustainable,

affordable energy. It provides an overview of technology deployment status, key policy

developmentsandpublicspendingonRDD&Dofcleanenergytechnologies.

We

find

that

the

past

decade

has

seen

a

dramatic

rise

in

global

investment

in

renewable

energy,

ledbywindandsolar.TherateofenergyefficiencyimprovementinOECDcountriesisstartingto

accelerateagain,aftermanyyearsofmodestgains.Intransport,majorcarcompaniesareadding

hybrid and fullelectric vehicles to their product lines and many governments have launched

planstoencourageconsumerstobuythesevehicles.Public investmentforRD&D inlowcarbon

technologyreachedanalltimehighin2009.

Unfortunately, the news is not all good. The growth of fossil fuels has matched or even

outpaced thatofcleanenergyglobally.Weareenteringaperiodofuncertainty fornuclear

powerafterthenaturaldisasters inJapan.As incomesrise,consumersnaturallydemandmore

productsleadingtoagrowthinpercapitaenergyconsumption.Smarter,moreambitiouspolicies


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are clearlyneeded,ones thatbuildupon thepositiveexampleswehave seen inanumberof

countries.This reportoffersa seriesof recommendationsas input to thediscussions thatwill

take place among the ministers attending the second Clean Energy Ministerial (CEM) in Abu

Dhabi.Working together,we stillhave time toaddress these recommendationsandachievea

sustainableenergyfuture.Butwemustnotbecomecomplacent;timeisrunningout.

NobuoTanakaIEAExecutiveDirector


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Acknowledgements

Tom Kerr coordinated the production of this report, with significant analysis and draftingsupportfromKevinBreen,AntoniaGawelandPaulTepes.WewouldliketothankBoDiczfalusy,

PaoloFrankl,LewFulton,RebeccaGaghen,LisaRyanandPeterTaylorfortheirguidanceandforcoordinating input from their respective teams. The following colleagues also provided data,ideas and/or substantive inputs to sections of the report: Grayson Heffner, Sara Pasquier,Jungwook Park, Aurelien Sassay, Michael Taylor and Nathalie Trudeau on energy efficiency;BrendanBeck,KeithBurnard,JuhoLipponenandUweRemmeonefficientcoalandCO2carboncapture and storage (CCS); Martin Taylor of the OECD Nuclear Energy Association on nuclearenergy;MilouBeerepoot,HugoChandler,ZuzanaDobrotkovaandAdaMarmionon renewableenergy;AnselmEisentrautandMichaelWaldrononbiofuels;FranoisCuenot, LewFultonandTaliTriggonvehicleefficiencyandelectricvehicles;andAlexanderBlackburnandKarenTreantonon research, development and demonstration spending. Dennis Volk also provided data andanalysisonincrementalelectricitydemand.

This reportwouldnothavebeenpossiblewithout the supportof theCleanEnergyMinisterialSecretariat, run by the US Department of Energy, who coordinated a data call to collectinformationfromCleanEnergyMinisterialcountries.Manythanksareduetothestatisticiansandnationalpolicyexpertsthatprovideddata,inputandcommentsinashorttimeframe.Inaddition,IEAimplementingagreementscontributedinformationanddata,includingColinHendersonandJohnTopperoftheIEACleanCoalCentreandStuartJeffcottandDavidWellingtonoftheIEA4eimplementingagreement.

MurielCustodio,CorrineHayworth,AnneMayneandMarilynSmithoftheIEACommunications

and InformationOfficehelped to review,editand format this report.AnnetteHardcastlealso

providedformattingandreviewsupport.


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Keyfindings

Clean energy technologies are making clear progress globally, but fossil fuels continue tooutpace them.Moreaggressivecleanenergypoliciesare required, including the removalof

fossil fuelsubsidiesand implementationof transparent,predictableandadaptive incentivesforcleaner,moreefficientenergyoptions.

Thanks to favourablepolicy support, solarPVandwindpowerareachieving stronggrowth.However,achievingsustainableenergygoalswillrequireadoublingofallrenewableenergyuse by 2020. There are also signs that policy support is weakening due to governmentausterityplans. Insteadofeliminating successfulpolicies,governmentsneed toput inplacedynamicschemesthatrespondtotechnologymarkets.

Forthepastdecade,coalhasbeenthefastestgrowingglobalenergysource,meeting47%ofnew electricity demand. Extensive deployment of CCS is critical to achieve climate changegoals: around 100 largescale projects are needed by 2020, but countries must accelerate

theirpolicyandfundingsupportforthelargescaleCCSdemonstrations.

Progress has been made to transform the market for some key energyefficient products,including compact fluorescent light bulbs. However, in the buildings and industry sectors,significantunderinvestmentremains,resultingfromanarrayofmarketfinancial,information,institutionaland technicalbarriers.Muchmorepolicyeffort isneeded tocapture theneartermprofitableandlowcostenergysavingsopportunities.

Biofuelshaveshownsteadygrowth,butstillonlyrepresent3%ofglobalroadtransportfuelconsumption. A sound policy framework is required to ensure the sustainable growth ofbiofuelproductionbytenfoldtoreachclimatechangetargetsin2050.Commercialisationofadvanced, sustainable biofuels will be particularly critical to meet targets, and will require

significant

expansion

of

production

capacity.

Electric vehicles are poised to take off. Major economies have announced targets thattogether would reach about 7million vehicle sales per year by 2020.If achieved, this willresultinover20millionelectricvehiclesontheroadbythatyear,takingintoaccountallsalesoverthenext9years.However,thiswillonlyaccountforabout2%oflightdutyvehiclestocksworldwide; continued strong growth after 2020 will be important to ensure markettransformation. Fuel economy of conventional lightduty vehicles has also been improvingrecently,butwillneedto improve faster toachieveaglobal targetof50% improvementby2030comparedto2005levels.

While nuclear capacity has remained nearly flat for the past decade, countriesare currentlyconstructing

66

nuclear

reactors

that

should

add

60

Gigawatts

by

2015.

However,

the

recent

earthquake in Japan and resulting damage have led countries to review nuclear safety andinvestmentsacrosstheboard. Asaresult,nuclearexpansionislikelytobeslowerthanplanned.

An increased levelof systems thinking isneeded to integrate thebroad rangeof individualclean energy technologies into the energy system. Increased attention and resources arerequiredtoexpandsmartgridpilotprojectsonaregionallevel.

International collaboration is key to ensuring that momentum is maintained and gaps areaddressed. The Clean Energy Ministerial offers an unique opportunity to acceleratetechnology deployment through government and corporate pledges and tracking progresstowardsharedglobalenergygoals.


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Growthincleanenergyhasbeenstrong...but

needstoexpandandaccelerate

Clean

energy

technologies

came

into

their

own

during

the

last

decade.

Implementation

of

energy

efficiency(EE)measures is improving.Renewableenergyhasseen30%to40%growthrates inrecentyears,due tomarketcreatingpoliciesandcost reductions.Carmakersare releasing thefirstsetofanewwaveofelectricvehicles(EVs)andareattractingcustomers.

Butformidablechallengesremain.Thesedevelopmentsshowthatmanycleanenergytechnologiesaregainingmomentum.However,notallofthenewsisgood.Despitethetremendousgrowthseenin thissector,demand for traditional fossilbasedenergyhasoutpaceddemand forcleanenergy(Figure1).Toachievethecleanenergyrevolutionthathasbeencalled for,thecurrentdoubledigitgrowth seenby renewableenergymustbe sustained for the long term.Energyefficiencyeffortsmustprovidetherightincentivesforutilities,industryandconsumerstoinvest,andmustverify savings through improved monitoring and reporting. Advanced biofuels and electric

vehicles must rampup dramatically. Government funding commitments to largescaledemonstrationsforCCSandsmartgridsmustbeallocated.Inshort,achievingasustainedcleanenergypathwayontheglobalscalewillrequiresignificantscaleupandacceleration.

Figure1.IncrementaltotalprimaryenergysupplyinCEMandtheworld,200008

10 0 10 20 30 40 50

Otherrenewables

Biomassandwaste

Hydro

Nuclear

Gas

Oil

Coal

EJ

CEMEurope

CEMPacific

CEMAsia

CEMAmericas

CEMAfrica

Restofthe world

Note:CEMEuropeisDenmark,Finland,France,Germany,Italy,Norway,Spain,SwedenandUnitedKingdom.CEMPacificisAustralia,Indonesia,JapanandKorea.CEMAsiaisChina,India,RussiaandUnitedArabEmirates.CEMAmericasisBrazil,Canada,MexicoandUnitedStates.CEMAfricaisSouthAfrica.

Source:Unlessotherwiseindicated,materialinfiguresandtablesderivefromIEAdataandanalysis.

Table1 includes an updated assessment of the current gaps faced by key clean energytechnologiesintermsofdeploymentrequirementscomparedagainsttheBLUEMapscenarioandpublicinvestmentsinRD&D.


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Table1.Recentdeploymentgrowthcomparedwithcleanenergytargets

Source:basedonETP2010BLUEMapscenarioandcountrysubmissions.

Energyefficiency

Energy efficiency is often referred to as an important fuel of the future. By reducing energydemand, improvements in energy intensity are estimated to deliver 30% of primary energyconsumption.Publicpolicyhassuccessfullytransformedmarketsforanarrayofenergyefficientproducts,includingcompactfluorescentlightbulbs(CFLs),refrigerators,motorsandkeybuildingcomponents.Thesesuccesseshavebeendeliveredbyasetofwelldesignedand implemented

energyefficiency policies, including building codes, standards and labelling (S&L), energycertification schemes and utility programmes. Nevertheless, significant underinvestment inenergyefficiencygloballyresultsfromanarrayofmarket,financial,information,institutionalandtechnicalbarriers.Moreeffortisneededtoadvanceintegratedbuildingdesignandperformance,strengthenappliance standards globally inallmarkets, improvemonitoringand verificationoflabellingandcertificationschemes, incentiviseutilities to investmore inenergyefficiency,andprovideacompetitiveframeworkforindustrytoinvestinthebestavailabletechnology(BAT).

Technology Current rateRequired annual growth

to 2020Current status

Blue Map

target 2020

Biofuel 18% 7% 2.54 EJ 5.04 EJ

Biomass power 7% 4% 54 GW 82 GW

Hydropower 5% 2% 980 GW 1219 GW

Solar PV 60% 19% 21 GW 126 GW

Wind power 27% 12% 195 GW 575 GW

Energy intensity of manufacturing -1.30% -0.60% 3.73 MJ 3.81 MJ

Geothermal power 4% 7% 11 GW 21 GW

Nuclear power 3% 4% 430 GW 512 GW

CSP 8% 50% 0.6 GW 42 GW

Electricity generaon with CCS Zero projects 3 GW per year Zero projects 28 GW

Electric vehicles -Doubling of sales each year

from 10 000 EV/PHEV sales in

2011 to reach Blue Map target

-7 million sales

in 2020

Achieving or exceeding levels, maintain the course

Progress but more concerted effort needed

Sizeable gap between deployment and goals

Note: Table compares recent rate of improvement/growth in a technology area against the rate of improvement/growth required to reach the ETP BLUE

Map scenario in 2020. Due to gaps in data, different me periods were used. The current rate for wind and biofuels is the annual average growth rate

from 2005 -2010. For solar PV, biomass, geothermal, and CSP this period is 2004-2009. The observed trend in energy intensity is from 2005 2008.

The current rate and status of nuclear includes capacity under construcon up to 2015; the required rate is calculated for 2015 to 2020. Required rates are

measured from the year of the last complete global data set. The Energy intensity is measured in MJ per USD PPP 2009. Biofuel is measured in energy use

from all biofuels in EJ. Electricity generaon with CCS includes generaon from biomass, coal and gas. Assumes 10 000 EV/PHEV sales in 2011.


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HigherefficiencycoaluseandCCS

For the past decade, coal has been the fastestgrowing energy source, meeting 47% of newelectricitydemandglobally.Thisgrowthhasbeenaccompaniedbyamovetowardmoreefficient,cleaner coal plants worldwide. However, to meet global climate change goals at lowest cost,extensivedeploymentofCCSiscritical:around100largescaleCCSprojectsareneededby2020,andover3000by2050.Whilethereareover70projectscurrentlyplanned, it isuncertainhowmany of them will be realised. The currently available public funding for largescaledemonstrationprojects(USD25billion)isnotenough.Delaysinfundingdecisionsarecausedbyanumberoffactorsthatgovernmentsmustaddress,includingthehighcostofCCS,lackofpublicsupportforCCS,andaneedforadequateregulatoryframeworksforCO2transportandstorage.

Nuclearpower

Whilenuclearcapacityhas remainednearly flat for thepastdecade,15countriesarecurrentlyconstructing66nuclearreactorsthattogethershouldadd60GWofcapacityby2015;theseandothercountrieshaveambitiousplanstofurtherexpandglobalnuclearcapacityby2020.However,the recentearthquakeandtsunami in Japan,andtheresultingdamage tonuclear reactors,willleadmanycountriestoreviewthesafetyandsitingoftheirexistingandplannednuclearplants.Asaresult,nuclearexpansionmaybeslowerthanpreviouslyannouncedplanssuggest.

Renewableenergy

Renewable energy market success has been driven by policy support, which has grownconsiderablyinthelastdecade.Policiescontinuetoevolvetoaddressmarketdevelopmentsandreduce costs. In the case of solar energy, at least ten countries now have sizeable domesticmarkets. Both utilityscale and rooftop solar photovoltaic (PV) generation have seen a majorscaleup in the past few years, resulting from marketcreating policies that led to anextraordinarydecline inthecostofPVmodules.Windpoweralsoexperienceddramaticgrowthoverthe lastdecade;global installedcapacityattheendof2010wasaround194GW,upfrom17GWattheendoftheyear2000.

Despitethisgoodnews,worldwiderenewableelectricitygenerationsince1990grewanaverageof2.7%peryear,which is less than the3%growth seen for totalelectricitygeneration.While19.5%ofglobalelectricityin1990wasproducedfromrenewablesources,thissharefellto18.5%in 2008. This decrease is mainly the result of slow growth of the main renewable source,hydroelectricpower, inOECDcountries.AchievingthegoalofhalvingglobalenergyrelatedCO2emissionsby2050willrequireadoubling(fromtodayslevels)ofrenewablegenerationby2020.

Nonhydro renewables will have to increase at doubledigit rates; wind power must see anannualaveragegrowthrateof17%andsolarpower22%.Whiletheselevelshavebeenexceededinthepastfewyears,thislevelofhighgrowthmustbesustainedforthelongterm.

Biofuels

Biofuels have seen steady growth during the last 10 years. Driven by policy support, mostprominently in Brazil and the United States, and more recently in the European Union andSoutheastAsia,globalproduction grew from16billion litres in2000 tomore than100billionlitres in2010.Further,manycountriesareacceleratingtheir investments inadvancedbiofuels,withlargescaledemonstrationplantsunderconstructioninmanyregions.Evenwiththisgrowth,biofuels representedaround3%ofglobalroad transport fuelconsumption in2010.Tostayon


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target,governmentsand industrywillhavetoensurethe largescaledeploymentofsustainablebiofuels.Morespecifically,forbiofuelstoreachin2050a27%shareintotaltransportfuel,theirproductionwillneedtoincreasemorethantenfoldoverthenext40years.1Itwillbeparticularlyimportant thatadvanced biofuels reach commercial scale in thenext10 years,witha30foldcapacityincreaseuntil2030.

Electricvehiclesandvehicleefficiency

Major economies have announced targets that together would reach about 7million vehiclesalesperyearby2020.Ifachieved,thiswillresultinover20millionelectricvehiclesontheroadby that year, taking into account all sales over the next nine years. There has been a stronggrowthinthenumberofnewcarmodelsannounced,andmoreimportantly,modelsbeingsold.Mostof the largemarketsnowoffer incentivesand support schemes toaccelerate consumeradoption.However,vehiclesalesareonlybeginning,andeveniftargetsaremetin2020,thiswillstillonlyrepresent2%ofvehicles.Itwilltakeevenlongersustainedeffortstoachievesubstantialimpactsonlightdutyvehicle(LDV)energyuseandCO2emissions.Toensuresuccessfulrampupof EVs, governments must accelerate grid integration through standards development andprogrammesthatinvestinrecharginginfrastructure.

Vehicleefficiencycontinuesto improve,withaverageglobalnewLDV fueleconomyreachingabout 8litres per 100km (L/100km). Planned tightening of fuel economy standards in mostmajoreconomiesshouldacceleratethistrend.Inordertolockinthelongtermimprovements,and reach the Global Fuel Economy Initiative (GFEI)2 target of halving new LDV fuel use by2030,thesestandardsmustbeextendedbeyond2020andothercountriesmustadoptstrongfueleconomypolicies.

1ThisisthetargetoftheIEABiofuelsroadmap(forthcoming2011).

2FormoreinformationabouttheGlobalFuelEconomyInitiative,visitwww.globalfueleconomy.org.


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Smarter,moreambitiousstrategiesareneeded

The last decade has seen some renewable energy technologies become competitive withconventionalenergytechnologies.Mostcleanenergytechnologies,however,stillcostmorethan

incumbentfossilbasedtechnologiesthathavereceived(andcontinuetoreceive)subsidiesfromgovernment in the formof tax credits, infrastructuredevelopmentand funding for largescaledemonstration. Fossil fuels currently receive USD 312 billion (2009) in consumption subsidies,versusUSD57billion (2009) for renewableenergy (IEA,2010g).The competitivenessof cleanenergytechnologies lagsbehindfossilbasedtechnologiesduetotheir levelofmaturity,aswellas the lack of a price for external environmental impacts, including greenhousegas (GHG)emissions. Moreover, the deployment of technologies is hampered by noneconomic barrierssuchasadministrativeburdens,gridintegrationissues,lackofawarenessandpublicacceptanceproblems. Clean energy technology deployment will therefore require a concerted public andprivatecommitment,supportedbymoreambitiouspolicies.ItisclearthatsettingaCO2pricewillnot be enough to achieve the revolution. Governments need to take action on each of the

followingpolicymeasures: Increase public investment in innovation through support for research and development

(R&D),aswellaslargescaledemonstration.

Implementsmarterenergypolicies, includingremovingnoneconomicbarriersandprovidingtransparent,predictableandadaptiveincentivesforcleaneroptions.

Facilitate the uptake of clean energy technologies into energy systems by supportingintegrationoftechnologiessuchassmartgrids.

Phaseoutsubsidiesforfossilfuels. EstablishapriceonCO2emissions.Agrowingbodyofexperienceshowsthatacleanenergyrevolutioncanbeachievedthroughacomprehensive policy approach. Over the last two decades, several countries have achieveddramatic changes in their energy markets. A key to success has been to create a strategic,comprehensiveapproachthatcommunicatestothepublictheenergysecurity,economicgrowthandenvironmentalbenefitsofcleanenergyinvestment.

Successful national strategies also work with the private sector to identify a set of prioritytechnologies, and provide a package of coordinated, predictable policies to acceleratetechnologydevelopment.Thisinvolvesdesignatingleadinstitutions,providingsustainedfundingandreducingduplicationbyimprovinglinesofcommunicationandcoordination.Italsorequiresproviding smart interventions along the technology development chain from research todemonstration, largescale integrationandmarket commercialisation,andpulling technologies

intothemarketusingtargetedpolicies(Box1).

Other countries benefit in a number of ways from the success of these pioneering countries:testingpolicytoolsandapproaches;creatingasmallinitialmarketfortechnologies,whichsetsapathforfuturecostreductions;andexportingtheirexpertiseandtechnologytotherestoftheworld. This success required a highlevel political commitment, private sector support and, inmostcases,asubstantialcommitmentoffundsfromgovernmentsorelectricitycustomers.Inthecase of renewable electricity, several countries are currently revising policies and tariff rates,givenunexpectedgrowththathasresulted inescalatingpolicycost.However, it isclearthatbybuildingonthesesuccessfulnationalexamples,countriescanacceleratetechnologylearninganddiffusion,achievecostreductionsandbecomeworldleadersincleanenergytechnologies.


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Box1.Windpower:buildingmomentumthroughnationalpolicyleadership

Startinginthelate1980s,Denmarkaimedtoreducefossilfuelimportsandaddressclimatechangeconcernsbydevelopinga localrenewableenergy industry,withafocusonbiomass

and

wind.

Today,

nearly

20%

of

electricity

is

produced

from

wind,

and

Denmark

is

one

of

the

leading exporters of wind energy technology and expertise around the globe (Figure2).Energyproductsandequipment (includingwind turbines)accounted forover11%of totalgoodsexports in2009.Further,Denmarkhasdonethiswhilereducingoil importsandCO2emissions.Keyfactorsofthissuccesswere:

Reliablepublicsupportandprivatecommitmenttothegoalsofthetechnologystrategy. A set of market introduction mechanisms, including loan guarantees for large turbine

exportprojectsand feedin tariffs (FIT) that requiredutilities topurchaseallgeneratedwindenergyataconsistent,abovemarketprice.

Provisionoffinancial incentivesforthepublictobecomesupportersofthewindenergyeconomythroughwindcooperatives.

Supporting industrywindR&Dbydevelopingguidelinesand standards forwind turbineswhileleadingresearchcollaborationontheexplorationandexploitationofwindresources.

Figure2.Danishwindpowercapacitygrowth

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1980 1985 1990 1995 2000 2005 2010

GW

Windcapacity

Wind/totalelectricity(%)

Source:GlobalWindEnergyCouncil(GWEC),andDanishEnergyAgency,2010.

In the past decade, India now has the fifthlargest installed wind power capacity in the

world,morethanthreetimesthe installedcapacityofDenmark(Figure3).As inDenmark,thisgrowthwasdrivenbyasetofstablepoliciesandsupportmechanisms,including:

Effective legislation suchas IndiasElectricityActof2003,which requires stateenergyregulatory commissions to encourage electricity distributors to procure power fromrenewableenergy sources; this led the states todevelopaggressive renewableenergytargetsandpolicysupportmechanisms.

SupportfordevelopmentofdomesticwindmanufacturingcapabilitythroughSuzlon,anIndianownedcompanythatholdsover50%oftheIndianwindturbinemarketshareandhasalsocapturedalargeshareoftheglobalmarket.


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Figure3.ChinaandIndiasgrowthinwindpowercapacity

0

5

10

15

20

25

30

35

40

45

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

GW

India China

Source:GlobalWindEnergyCouncil(GWEC)andcountrysubmission.

China began installing wind power capacity in 2005, but has since become the worldslargestdomesticwindmarket,achievingthree timesthe installedcapacity in India (ortentimesthecapacityinDenmark)injustgiveyears(Figure3).AsinDenmarkandIndia,Chinacreatedstrong incentivesanddriversforprivate investmentthroughacomprehensivemixofsupport,including:

The 11th FiveYear Plan (2006) included renewable energy scaleup to meet growingelectricity

demand

and

achieve

energy

security

and

pollution

reduction

goals.

The

plan

includednationaltargetsforwind:5GWinstalledin2010;and30GWinstalledin2020.

These targetsare implementedby theprovincesandby electricityproducers throughmandated shares of renewable energy. The policy combines market instruments (e.g.biddingonconcessionsandmandatedmarketshare)withgovernmentintervention(e.g.pricecontrolsandtechnologytargets).

SupportforstateownedcompaniestoinvestinwindR&D.Notably, Chinas central government (through the National Development and ReformCommission(NDRC))replacedthetendersystem,whichhadgrantedongridpricesthatvariedsignificantly.Recognisingthatthebiddingsystems lowtariffswereakeybarriertoprofitable

winddevelopment,theNDRCestablishedinmid2009afixedFIT,differentiatedbyregionalwind resource. As a result of this pragmatic, integrated approach, Chinas installed windcapacityexceededthe2010targetby320%(ChinaElectricityCouncil,2010).The12thFiveYearPlan (published in lateMarch2011)will likelycontaina further increaseof the2020targetsabove100GW.


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Recommendationsforenergyministers

MaketheCleanEnergyMinisterialaninternationalforumfor

commitment,action

and

shared

learning

The reality of the clean energy challenge is such that individual and isolated actions will notenable the rapidand largescale transition required. Increased collaborationamong countries,stakeholdersand initiativesthatseektoachievethesharedbenefitsofcleanenergytechnologydeployment is imperative to rapidly scaleup investment, replicate the positive steps that arebeing taken, and enhance the costeffectiveness and efficiency of action. Several examplesdemonstrate that when one (or more) country sets a pioneering pathway in clean energytechnologydevelopment, it increases thepotential fordomestic scaleup,withassociatedcostreductions in the technology. This shared learning needs to accelerate if countries want toremainontracktorealisethefullpotentialofcleanenergytechnologies.Onestrategywouldbe

to create a forum within the Clean Energy Ministerial for common pledges to develop newmarketsforcleanenergytechnologies.

The Clean Energy Ministerial provides a unique opportunity for governments to translatedialogue intoconcreteaction, inorder tocollectivelyenhanceenergy technologydevelopmentanddeployment.Throughagreementtoasetoffarreachingandambitiousgoals,thisgroupofkey governments can make a significant difference to the global deployment of clean energytechnologies.TheinitialsuccessfulestablishmentoftheCEMprocess,withitsrelatedtechnologyinitiatives, isapositive step that clearlydemonstrates the shared interest in learning togetherand inacceleratingthetransitiontocleanenergy.ThereareanumberofactionsthattheCEMcouldpromote,inclosecollaborationwithexistinginternationaltechnologyinitiatives.3Clean

energy

ministers

should:

UtilisetheregularCEMmeetingstomakesharedgovernmentandcorporatepledgestoinvestin targeted clean energy technologies, through the launch of new financial mechanisms,targetedpoliciesand/orprocurement.Trackprogressinfulfillingthesepledges.

Working with the IEA, collect and share data on technology deployment, policyimplementation and investments in clean energy RD&D.4 Initiate discussion among CEMcountries on a common set of data that will be collected on a regular basis, and providetrainingandothersupporttocountriesthatrequireit.UtiliseCEMmeetingsasanopportunityto provide updated data on deployment, policy implementation and RD&D investmenttherebyprovidingtheevidencebaseforpolicyannouncementsandactivities.

Identify themostpromisingproductsand technologies for common standardsanddevelopprojects to map existing harmonisation efforts in specific technology areas; developharmonisedapproachesbasedontheseefforts.

Engage the corporate sector on best practices in energy technology RD&D policy andinnovation.CreateamechanismthroughwhichcompaniescanreportRD&Dexpendituresina

3 IncludingtheInternationalLowCarbonTechnologyPlatform,theEuropeanUnionStrategicEnergyTechnologyPlan,anda

numberofothermultilateralandbilateralefforts.4Thisreportincludesdatafromthefollowingcountries: Australia,Brazil,Canada,Denmark,Finland,France,Germany,Italy,

Korea, Japan, India (Policies only), Mexico, Norway, Spain, Sweden, UK, USA, UAE. Future data collection efforts need toexpandtoincludeallmajoreconomies.


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mannerthatmaintainstheircompetitivenesswhileofferinggovernmentguidanceastogapsand priorities for government spending. Explore ways to create innovative financingmechanismsthatreducethecostofcleanenergyfinancing.

Continueto

increase

public

investment

in

technology

innovation

Governmentshaveaclearroleintechnologyinnovation.TechnologiesrangingfromrailtransportandnuclearenergytotheInternetandglobalpositioningsystems(GPS)wereallinventedbygovernmentsupported researchers, developed with public funding or first deployed through governmentpurchasingand incentives.Public investmentsareneededtotrainthehumancapitalandbuildtheenablinginfrastructuresrequiredforthewidespreaddeploymentofmanytechnologies.

In2009,governments recognised thatcleanenergy isadriving force foreconomic recovery.AnumberofmajoreconomiesinvestedrecentstimulusfundsincleanenergyRD&Dprojectssuchashighspeedrail,CCSdemonstrationprojectsandsmartgridpilotprojects.Asaresult,publicsectorenergyRD&D in2009roseto itshighest levelever,eclipsingtheprevioushighachieved

duringtheoilcrisisofthe1970s.AnnualglobalpublicRD&DspendingonenergyinCEMcountriesnow exceeds USD21 billion. This is likely the minimum level needed to achieve the rate oftechnology deployment required to attain climate change targets (IEA, 2010c). However,indicationsfor2010showthatspendinglevelsonceagaindroppedmarkingtheendofstimulusspendingandwerecloserto2008levels.

Toachievethenecessarycleanenergytargets,higherspendinglevelsmustbesustainedoverthelongtermandspendingprioritiesneedtoshift.Duringthe lastdecade,countriesspentUSD56billiononnuclearenergyresearchandUSD22billiononfossilresearch,butonlyUSD17billiononrenewableenergyandenergyefficiencyresearchcombined.

Cleanenergyministersshould:

Realigngovernmentsubsidiesforfossilfuelstosupportcleanenergy. Usemarketmechanisms,suchascarbontaxesorproceeds fromGHGauctions,togenerate

dedicatedfundingforRD&D.

Provide incentives forgreaterprivate sector investment incleanenergy through taxcreditsandmarketcreatingmechanisms,andthroughinnovativepublic/privatepartnerships.

Toaddresstheimpactofcontinuedfossilfueluse,provideimmediateallocationofannouncedfundsforlargescaleCCSdemonstrationprojects.

Unleashthepotentialofenergyefficiency

Globalenergy intensity is improvingbut leavesno room for complacency;much costeffectiveenergyefficientpotentialisnotyettappedandenergydemandisgrowing.Energyefficiencycanandshouldbeimprovedacrossallsectors.Carbonpricesareessentialbutwillnotaloneaddressallthebarrierstoenergyefficiency,otherpoliciestargetingenergyefficiencyareneeded.


Develop policy packages that target energyefficiency actions in all sectors and strive forsustainedefficiencyimprovements.

UsetheCEMprocesstotrackanddelivermoredetaileddataonenergyefficiencytechnologydeploymentandRD&Dspendingtoidentifyprioritiesforactionandcollaboration.


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UsetheCEMprocesstoidentifysignificantendusetechnologyareasasprioritiesforimprovedenergyefficiency market transformation, including domestic cold appliances, domesticlighting,electricmotors,airconditionersandnetworkstandbypower,amongothers.

Sustainthe

momentum

of

innovation

in

renewable

energy

Several countries have successfully triggered the sustainable, largescale deployment ofrenewableenergytechnologies.Thissuccesshasbeen theresultofsmartsupportpoliciesthattheseleadingcountrieshavedevelopedandapplied.Theirexperiencepointstoanumberofkeydesign principles that policy makers should follow to arrive at investment grade policies. Ifpolicy makers adhere to these basic design principles, the vast potential renewable energytechnologieshavetomeetglobalenergyneedscanbeunlocked.


Removenoneconomicbarriers,suchasadministrativehurdles,obstaclestogridaccess,poorelectricitymarketdesign,lackofinformationandtraining,andsocialacceptanceissues.

Developadaptive,predictableandtransparentsupportframeworkstoattractinvestment. Developandimplementtransitionalincentivesguaranteeingspecificbutdecreasinglevels

of support as different technologies advance in their degree maturity and move towardsmarketcompetitiveness.

Give due consideration to the impact of largescale penetration of renewable energytechnologies on the overall energy system, especially in liberalised energy markets, withregardtooverallcostefficiencyandsystemreliability.

Expandtheuseofrenewableenergyforoffgridandminigridapplications.

Ensure

synergies

with

climate

change

policy

frameworks.

Fosterelectricvehiclemarketintroduction

InorderforEVstosucceed,governmentsmustmakecommitmentstobuildingsustainedmarketsthat last forat leastthenext10years.Thisshould includeprice incentives forconsumers (andadequateandstablefundingtopayfortheseincentivesoveratleastthenext5years,followedbyaphaseoutperiod);supportforconstructionofadequaterecharginginfrastructure;workingwithcities toensurecohesive regionalandnationalsystems; funding forRD&D, includingpilotprogrammesandconsumereducationcampaigns.

Clean

energy

ministers

should:

Ensurethatsufficientrecharging infrastructureisput inplacenotonlyforthe initialwaveofvehicles (e.g.a few thousandwithinacountry, through2012)butalso thesecondphaseofmarketrampup(e.g.potentiallyuptohundredsofthousandsorevenafewmillionvehicles,through201520).

Send clear signals that vehicle price incentive support will not suddenly disappear. At thesametime,governmentsneedtoavoidexposuretolargepotentialsubsidycosts.Oneoptionis to allocate an annual limit on incentive expenditures, and keep that amount each yearthrough 2020, reducing the amount per vehicle as sales rise. This has the benefit ofautomaticallyloweringthesupportlevelpervehicleassalesincrease.


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Developintegratedcleanenergysystems

Theyear2000markedanimportanthistoricalmoment,astheshareofglobalpopulationlivinginurban environments surpassed 50%. This proportion will continue to grow over the next fewdecades. The energy infrastructures on which communities depend will therefore need to beadapted and upgraded to meet increasing demands for energy services. This provides theopportunity for localgovernment leaders toencourage increaseddeploymentof cleanenergysystemsandgainthebenefitsthattheyoffer.

Thedevelopmentof smartgrids isanessential step toenableand integrate the cleanenergytechnologies needed to support demand, supply and transport. Smart grids are needed toprovidethe informationandtoolstoallowelectricityconsumerstodecreasecostsand increaseefficiencyofenergyuse.Severalconceptsareemergingthatextendthereachofthesmartgridsfrom electricity systems to broader energy and societal contexts. One of these is the smartcommunityorsmartcity.

Asmartcommunityintegratesenergysupplyandusesystemswithinagivenregioninanattempt

tooptimiseoperationthroughcustomerenergymanagementwhilealsoallowing formaximumintegrationof renewableenergy resources, from largescalewind farms tomicroscale rooftopPVsystems.Smartcommunitiesincludeexistinginfrastructuresystems,suchaselectricity,water,transportation,gas,wasteandheat,aswellasfuturesystemssuchashydrogenandEVcharging.The goals of such integration through the use of information and communication technology(ICT) include increasedsustainability,securityandreliability,aswellassocietalbenefitssuchasbetterservices,reducedcapitalinvestmentandjobcreation(IEA,2011c).


Commit toscaleupexisting smallscalesmartgridpilotefforts tocarryoutseveral regionallarge

scale

and

system

wide

demonstrations

that

identify

technology,

regulatory

and

customersolutions.

Provide assistance to local governments to develop tailored approaches that engage andeducate energy customers by supporting technologies, developing regulations and helpingindustrytocreatebusinessmodelsforsmartgridsrollout.


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Cleanenergyprogressreport

The BLUE Map scenario sets a goal of halving global energyrelated CO2 emissions by 2050(comparedto2005 levels)andsetsoutthe leastcostpathwaytoachievethatgoalthroughthe

deploymentofexisting lowcarbontechnologies(Figure4).Thiscanserveasavisionforsharedglobal goals to reduce GHG emissions while enhancing energy security and advancingeconomicgrowth.

Figure4.KeytechnologiesforreducingCO2emissionsundertheBLUEMapscenario,2010

0

5

10

15

20

25

30

35

40

45

50

55

60

2010 2015 2020 2025 2030 2035 2040 2045 2050

GtCO

2

CCS19%

Renewables17%

Nuclear6%

Powergeneration

efficiency

and

fuelswitching5%

Endusefuelswitching15%

Endusefuelandelectricity

efficiency38%

BLUEMapemissions14Gt

Baselineemissions57Gt

WEO2009450ppmcase ETP2010 analysis

The BLUE Map scenario, togetherwith IEA technology roadmaps,provides clear pathways fordeploying clean energy technologies. These can be compared against current deployment, asreportedinIEAstatisticsandindatacollectedfromcountriesthatparticipateintheCEMprocess,thereby providing a preliminary assessment of global progress toward the clean energytransition. The following section provides a more indepth discussion of deployment status,policy implementation and public spending on RD&D for six categories of clean energytechnologies: energy efficiency; higherefficiency coal use and CCS; nuclear power; renewableenergy;biofuels;andEVsandvehicleefficiency.

Energyefficiency

Sincetheearly1970s,globalenergyintensityhasimprovedatanaveragerateof1.7%peryear,butthis improvementmustbemeasuredagainstoverall increases inCO2emissionsandenergyconsumption resulting from economic growth. Without energyefficiency improvements, finalenergyuse in2006wouldhavebeen63%higher intheOECD11than itwas intheearly1970s(IEA,2010d). Ithasbeenestimated thatglobalsavings fromenergyproductivity improvementswas 3.6 gigatonnes of oil equivalent (Gtoe) in 2008, or almost 30% of primary energyconsumption (WEC,2010).However,energyefficiencyspotentialhasbarelybeen tapped.Theeconomic crisisand resulting stimulusprogrammes,aswellas rising fuel costs,haveactedasstrongdriversof recentenergyefficiency,yet theseareoffsetby increasedconsumerdemandandwillingnesstoinvestandlendintimesofeconomicrecession.


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Underinvestment in energyefficiency results from an array of market, financial, information,institutionalandtechnicalbarriers;carbonpricingalonewillnotbeenoughtoovercomethese.The IEA has developed 25 policy recommendations to help governments achieve the fullpotentialofenergyefficiencyimprovementsacrossallenergyconsumingsectors.Ifimplementedgloballywithoutdelay,proposedactionscouldcumulativelysavearound7.3gigatonnes (Gt)of

CO2/yearby2030(Figure5).

Figure5.EstimateofpotentialCO2emissionssavingsthroughimplementationofIEA25energyefficiencypolicyrecommendations

28

30

32

34

36

38

40

2010 2015 2020 2025 2030

GtCO2

Buildings25%

Appliances10%

Lighting4%

Transport29%

Industry32%

Baselineemissions40Gt

The consolidated set of recommendations covers seven priority areas: crosssectoral activity,buildings,appliances, lighting,transport, industryandpowerutilities.The2009progressreportshowedthatIEAmembercountrieshadimplemented57%ofthe25IEAenergyefficiencypolicyrecommendations(IEA,2010d).Nosinglepolicycanovercometheenergyefficiencygap.Policiesare required in all sectors to achieve significant improvements in energy efficiency. Effectiveapproaches that reflect the diffuse and incremental nature of energyefficiency actions areneeded.Policiesalsoneedtoincludeasystemicratherthanindividualcomponentapproach.Thissectionprovidesasnapshotoftheenergyefficiencylandscapeacrosskeyconsumingsectorsandenduses, highlighting key technologies, policy developments in CEM countries, and RD&Dspendingtrends.5

Energyefficientbuildingsdeployment

Theenergyconsumptionofthebuildingssectorisprojectedtogrowfrom2759Mtoe(2007)toover4400Mtoeby2050,withmorethanhalfofthisconsumptioninresidentialbuildingsandasignificant increase of the nonOECD countries share of the total energy consumption in thebuildings sector (IEA, 2010a). Deep cuts in building energy consumption are achievable byimplementing stringent requirements for both new and existing buildings and deploying theexisting technologies on a global scale. Achieving significant energy reduction in the buildingssector is feasible with existing technologies if the investment costs are lowered and efficientdesignsareemployedinanintegratedway.However,inordertoreduceenergyconsumptionofthebuildingssectortothelevelsthatareneededforthelongerterm,newbuildingswillneedto

5Vehicleefficiencyiscoveredseparatelyinthelastsectionofthisreport.


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be zeroenergy and deep renovation of existing buildings will be required. Therefore, thechallenge for the next decades is to put in place policies that target improvements in thetechnicalefficiencyofbuildingcomponentsaswellasefficiency improvements inthedesignofthenewbuildingsandthedesignofsystems,especiallyheating,ventilationandcoolingsystems.

During the last three decades, improvement has been made on the energy performance ofinsulatingmaterialandwindows;keycomponentsoftheenergyefficiencyofthebuildingshell.Most IEA member countries now use highperformance insulating materials; double glazingwindows are becoming standard. The increase of the sales of highperforming windows andinsulatingmaterialsshowthepositivestepsthatarebeingtakentoensureimprovedefficiencyofbuildingsenvelopeandshelltechnologies.

Policydevelopments

Majoreconomiesuseavarietyofpoliciestomaketheirbuildingsmoreenergyefficient,includingbuilding codes, building certification and standards and labels (S&L) for buildings and building

components. However, these policies lack verification of the performance in the field. Buildingcodes that include energyefficiency standards for new buildings are used in all IEA membercountries.ManyCEMcountrieshaveintroducedminimumenergyrequirementsfornewbuildings,with 13 IEA countries including mandatory energyefficiency requirements in codes for newbuildings,aswellastheUAEandIndia.Buildingcodestandardstringencyvarieswidely.TheUnitedKingdomsminimumenergyperformancestandards(MEPS)forbuildingsaresettotightensothat,by2016,allnewdwellingswillbezerocarbon.Germanyscurrentstrongefficiencystandardsareexpectedtoberaised30% in2012.Denmarkalsohasstrongrequirementsthatwillriseby2015.Oncetheseamendmentsareinforce,itisexpectedthatGermanysandDenmarksbuildingcodesfor new buildings will be close to the level of stringency recommended by the IEA. OthercountriesincludingtheNetherlandsaremovingtoimplementmoreambitiousrequirements.

In the case of existing buildings, many CEM countries have introduced energy certificationschemes thatanalyseenergyuseand recommend improvements.Eight IEAmember countrieshave successfully implemented mandatory certification schemes for buildings. There are alsoseveralvoluntarycertificationschemes.Anumberofnationsalsoimplementvoluntarystandardsandlabellingschemesandenergyrequirementswindows.6

Deploymentofenergyefficienthouseholdappliances

Theuseofelectricity byappliances in IEA countries grewby53%over theperiod19902006,accountingfor15%oftotalelectricityconsumption(IEA,2010d).Inallcountrieselectricityusebyhousehold appliances e.g., refrigerators, air conditioners, washing machines, stoves is

forecast to rise, and particularly in emerging markets. A key issue will be strengthening andbroadeningtheappliancestandardsandlabellingprogrammesincountriesthatmanufactureandimporttheseappliances.

Householdappliancesrepresentthebestexampleofhowgovernmentpoliciesandpublicprivatepartnershipscantransformconsumerpurchasingofenergyconsumingequipment.Inthecaseofrefrigerators,energyconsumptionhassteadily improvedwhilepurchasepriceshavedecreased.Figure6 shows the increasedefficiency fornew refrigerator/freezer combinationunits ineachcountry,resultingfromimprovedproductperformance.

6Additionaldetailsonnationalenergyefficiencypolicyimplementationcanbefoundatwww.iea.org/textbase/pm/?mode=pm


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Figure6.Changeinenergyefficiencyofnewrefrigerator/freezercombinationunitsinselectcountries

0.8

1.0

1.2

1.4

1.6

1.8

1996 1998 2000 2002 2004 2006 2008 2010

SalesWeightedkWh/AdjustedVolume

normalizedto2007

Australia

Canada

China

Korea

UnitedKingdom

UnitedStates

EuropeanUnion

Note:Thisdatahasbeennormalisedto2007tohighlightthetrend.USdatapriorto2005isestimated.

Source:IEA4EImplementingAgreementandcountrysubmissions.

Thesetrendsinefficiencyimprovementsare,however,offsetincreasedglobalsalesandresultingenergydemand.

Policydevelopments

Major economies actively implement energyefficiency policies for appliances, with 73% of CEMcountries implementing MEPS and labelling for a growing list of appliances. Over 50 nations

implementenduseequipmentprogrammeswhichseek to improveenergyefficiency forelectricalappliances and equipment in the residential, commercial and industrial sectors (CLASP, 2010).Productenergylabelingtakesoneoftwoformsendorsementlabeling,suchastheUSENERGYSTARlabel,andcomparativelabeling,asfoundinAustralia,KoreaandtheEU.Governmentstandardsandlabelling programmes have transformed the market for many appliances by increasing theirfunctionality and efficiency while reducing unit cost. However, noncompliance is a major factorwhich limits S&L programmes in achieving their potential energy efficiency. Better monitoring,verificationandenforcement (MVE)ofS&Lprogrammes isneeded. International coordinationandcollaborationcanassistinloweringthecostsofsuchprogrammes(IEA,2010f).

Energyefficientlightingdeployment

Lightingisoneofthemainenergyconsumingsectors,consumingafifthofglobalelectricity.Formost of the 20th century, incandescent light bulbs were the only costeffective technology toprovideartificial indoor lighting.However, since theearly2000s theproduction costsofmoreefficienttechnologiessuchasCFLsdropped,makingthemacosteffectivealternative. Inrecentyearstherehasbeenarapid increase inglobalCFLsales.Between2000and2007,theaveragegrowthrateinIEAcountrieswas34%,22%inChina,23%inLatinAmerica,33%inEasternEuropeand 26% in Asia Pacific (Figure7). China is now not only the dominant producer but is alsocomfortably the largest single market, accounting for sales of about 1 billion lamps in 2007.Another1.5billion lampsaresold intherestoftheworld.Thesesalestrends illustratethatthelastdecadehasseenaglobalmarkettransformationinlighting.(IEA,2010e).


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Figure7.EstimatedCFLsalesbyregion

In addition, more efficient lighting technologies are becoming available, namely solid statelighting(SSL)technologiessuchaslightemittingdiodes(LEDs).Potentialimprovementsholdthepromise of more costeffective energy savings in the lighting sector after the phaseout ofincandescentlightsiscomplete.

Policydevelopment

The high purchase cost held back the market penetration of CFLs initially. To overcome this

marketbarrier,almostallmajoreconomieshaveintroducedMEPSforlampswhichhavehadthe

effectofabanonincandescentlights.Examplesofthesepoliciesinclude:

EuropeanUnion:progressivephaseoutofincandescentlightbulbsfrom2009to2012. Japan:progressivephaseoutofincandescentlightbulbsto2012. Brazil:progressivephaseoutofincandescentlightbulbsstartingin2010.Canada, Australia, Korea and Switzerland have also announced a policy of phasing outincandescent lamps;China and India are considering aphaseout.To realise the fullpotential

energysavingsresultingfromtheswitchtoenergyefficientCFLs,thephaseoutpoliciespassedworldwideneedtobeenforcedinthecomingyears.


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Box2.Theroleofutilitiesindeliveringenergyefficiency

Energyefficiencydeploymentinindustry

Between 1990 and 2006, the overall energy efficiency of manufacturing industry in 21 IEAmembercountries improvedby1.6%peryear.Withouttheenergysavingsresultingfromtheseimprovements,manufacturingenergy consumption in the IEAwouldhavebeen21%higher in2006.Thisrepresentsanannualenergysavingof9.5exajoules(EJ)in2006,equivalenttoalmost600MtCO2emissionsavoided.Theeffectofthesesavingsissignificant:despitea45%increaseinoutput,finalenergyinthemanufacturingsectordecreasedby0.6%between1990and2006.Therateof improvement inenergyefficiencyduring thisperiodwasmuch lower than inpreviousdecades.However, thereare indications that the rateof improvementhasaccelerated in the

Energyprovidershavedistinctadvantagesindeliveringenergyefficiencyimprovementsforarangeofresidential, commercial and industrial customers. They enjoy ready access to capital, an existing

relationship

with

end

users,

extensive

information

about

customers

and

markets,

a

familiar

brand

name, and a readymade service network within theirjurisdiction. Utilities play a major role indelivering energy efficiency in many IEA member countries. For example, in 2008 utilitydeliveredenergyefficiencyprogrammesintheUnitedStatesandCanadasaved105TWhofelectricityandmorethan367millionthermsofgas,reducingGHGemissionsbyanestimated.06GtofCO2(ACEEE,2010).

Policydevelopments

Certain enabling conditions areneededbefore energyproviders can embrace the role of energyefficiency implementer,namely theability to recoverprogrammecosts,compensationof foregonerevenuesowingtolowersales,andacceptablelevelsofregulatoryandotherrisk.Establishingtheseconditionsrequirestailored institutional,regulatoryandmarketmechanisms.Iftheenergyproviderisaforprofitbutregulatedentity,theremustbeamechanismtoadjustpricesorrates inordertorecoverprogrammecostsandmakeaprofit.Forretailenergyprovidersoperatinginfullycompetitive

markets,obligationstodelivercarbonemissionsreductionsorenergysavingshaveprovedeffective.Stateowned energy providers will need other enabling conditions depending on organisation,autonomyandfundingneeds.

Theseenablingconditionshavebeenachieved inmanyjurisdictions,notably InNorthAmericaandpartsof Europe,where energyproviders play a central role in the funding and implementationofenergy efficiency. Recent studies on ratepayerfunded energyefficiency programmes for gas andelectricityintheUnitedStatesandCanadaput2009spendingatUSD6.1billionandforecastthatUSspendingalonewouldtopUSD10billionby2015(BarboseandGoldman,2009)(CEE,2010).InsomeUSjurisdictions,utilitiesspendasmuchas3%ofcollected revenueonenergyefficiency.Utilities inBrazilcollect1%ofelectricityrevenues,whichisusedtofundEEprogrammesaswellasR&D.IntheUnited Kingdom, energy provider spending on energy efficiency is about USD3billion under theCarbon Emissions Reduction Target (CERT) supplier obligation. This obligation has a target CO2

emissionsreductionof0.19Gtbetween200812(EnergySavingsTrust,2009).TheFrenchandItalianWhite Certificates programmes, which give energy providers the choice between implementingenergyefficiency programmes and purchasing energyefficiency offsets in a secondary market,togetheraccountforaboutUSD700millioninannualspendingonenergyefficiency.

Thesuccessofprogrammesandpoliciesthatmobiliseenergyproviderstodeliverenergyefficiencyhas led to increased interest in this sector.Most recently, the2011 theEUEnergyEfficiencyPlanproposes legislation that will oblige energy regulators and energy companies to take steps thatenabletheircustomerstocuttheirenergyconsumption.Thiscouldtakethe formofobligationstocutcustomerenergyconsumption,asiscurrentlythecaseintheUnitedKingdom,orrequirementstoimplement certain types of efficiency investment programmes, either directly or through EnergyServiceCompanies(EC,2011).


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recent past. Both process and individual component energy efficiency are important indetermining theenergy intensityof industry.Acrossall industrial sectorselectricmotordrivensystems(EMDS)haveanimportantroleintheenergyefficiencyofthesystem.

TheIEABLUEMapscenarioestimatesthatindustrialenergyintensitywillincreaseinthenextfew

years,peakbetween2015and2020,andthenstartdecreasing.Inreality,globalenergyintensityofthemanufacturingindustryhasdecreased1.3%peryearsince2005andisasignthatcountriesmaybeontracktoachievelongertermclimatechangegoals(Figure8).However,thistrendmayhide important fluctuations thatare causedby factorsbeyondenergyefficiency, including the200809economicrecession.

Figure8.CurrenttrendinglobalmanufacturingenergyintensitycomparedtoBaselineandBLUEMapscenarios

3.5

3.7

3.9

4.1

4.3

4.5

4.7

2005 2010 2015 2020

MJperUSDPPP2009

ETP2010Baseline

ETP2010BlueMap

Currenttrend

Deploymentofelectricmotordrivensystems

Electric motordriven systems comprise the largest single end use in the industrial sector,consumingmore than40%ofelectricity consumption.Theyare fundamental componentsandtheirapplicationrangeswidelyinsystemsasvariedaslargeindustrialequipmentandprocessestosmallhouseholdappliances.Themarketshareofmoreefficientmotorshasbeenincreasinginmanyregionsandcountries.Aleastlifecyclecost(LLCC)savingspotentialexistsof20%to30%,accountingfor10%ofglobalelectricityconsumption,usingBAT(IEA,2011b).

Policydevelopments

Even thoughenergy costs typicallyaccount forover95%ofanelectricmotors lifecycle cost,mostcompaniesorganisationalstructuresseparateequipmentprocurementfromoperationandmaintenance,giving littlereasonto lookbeyondthe lowestpurchaseprice.Alackofawarenessamongmotorpurchasersof thepotential savings fromusingmoreefficientmotors isanotherbarriertouptakeofmoreefficientmotors.Onewaytoovercomethisistointroducemandatoryminimumenergyperformance standards (MEPS).TheUnitedStatesandCanadaare leaders insettingmotorenergyefficiencystandards,astheyintroducedMEPSregulationsformotorsinthelate 1990s followed by many countries such as China, Australia, Korea, Brazil, Mexico, and


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Taiwan. The European Union also passed MEPS legislation for electric motors in 2009 as animplementing measure under the Ecodesign Directive. India, Japan and Russia have not yetadoptedMEPS,butarecurrentlyconsidering their implementation.Globalcooperationwillbeimportant formotors,as theyareamong themosthighly tradedgoodsandmanymotorsareintegrated into equipment before being sold. Recently the the International Electrotechnical

Commission (IEC) completed the task of aligning the existing national and regional efficiencyclassificationforelectricmotors.GlobalcooperationisneededtoacceleratesimilaralignmentinregulationssuchasMEPSforelectricmotors.

Energyefficiencydeploymentinenergyintensivesectors

The rapid expansion of production capacity has generally had a positiveeffect on the energyefficiencyoftheironandsteelindustry.Additionalcapacityhasreducedtheaverageageofthecapitalstock.Newplantstendtobemoreenergyefficientthanoldplants,althoughnotallnewplants have introduced BAT. Energyefficiency equipment has been retrofitted to existingfurnaces and ambitious energyefficiency policies have led to the early closure of inefficientplants inseveralcountries.Thedecrease insteeldemand (andproduction) resulted ina lowercapacityutilisationoftheplants;which inturnresulted in lossofeconomiesofscales.The ironandsteelindustrywasontracktoachievetheoutcomesoutlineintheBLUEMapscenariountil2007.However,therecenteconomiccrisishashadanoticeableimpact:thesectorsintensityin2008increasedtotheBaselinelevelforCEMcountries.

The thermalenergy consumptionof the cement industry is strongly linked to the typeofkilnused.Verticalshaftkilns,ofwhichtherearethreemaintypes,consumebetween4.8GJ/tand6.7GJ/tclinker.Theintensityofwetkilnsvariesbetween5.9GJ/tand6.7GJ/tclinker.Thelongdryprocess requiresaround4.6GJ/tclinker,whereasaddingpreheatersandprecalciners furtherreduces the energy requirement to between 2.9 GJ/t and 3.5 GJ/t clinker. Since 1990, dry

technologieshaveexhibitedamarkedincreaseinalltheregionsforwhichdataareavailable.

As inthe ironandsteelsector,thecement industrywasalsogreatly impactedbytheeconomicdownturn.Initialassessmentsfor2008indicatethatwhileintensityincreasedbymorethan5%,thesectorsintensityisstillontrackwiththeBLUEMapscenario.

It isdifficulttomeasurethephysicalproductionoftheorganicchemical industrygiventhe largenumber of products. Polymer production represents both the largest and the fastestgrowingsegmentof thechemicalandpetrochemicalsector, representingapproximately75%of the totalphysicalproductionandrisingnearly6%peryeartoapproximately300Mtin2006(PlasticsEurope,2008; SRI Consulting, 2008). While growth has levelled off in industrialised countries, polymerproduction in China and some other emerging economies has continued to increase rapidly.

However,

worldwide

growth

has

been

negatively

affected

by

the

recent

economic

turmoil.

Data

thatareavailableto2007forCEMcountriesshowthatwhileenergyintensityhasbeenattheleveloftheBaselineScenario,therearesignsthatthesectorisslowlymovingintherightdirection.

Themainproductionfacilitiesforthepulpandpapersectorarepulpmillsandintegratedpaperandpulpmills.Mostofthesectorsefficiencyimprovementshavecomefromintegratedpulpandpapermills thatuse recoveredheat in theproductionprocess.Additionally, theproductionofrecoveredpaperpulpuses10GJ to13GJ lessenergyper tonne than theproductionofvirginpulp.Current levelsofrecoveredpaperproductionvary from30% intheRussianFederationtoover60% inJapanandGermany.Recyclingratescanbe increased inmostregions,especially inmanynonOECDcountrieswheretherecoveredpaperproductionratevariesfrom10%to50%.Theuppertechnical limittowastepapercollection isover80%(CEPI,2006),butpracticallythe


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upper limitmaybecloserto60%.Pulpandpapermills intheCEMcountrieshavedramaticallyimproved their energy intensity since 2005, improving by 1.2% per year. Globally, the sectorachieveda1.8%peryearimprovement.

Policydevelopments

Many countrieshave introduced taxandother fiscal incentives toencourageenergyintensivesectorstopurchaseefficientequipment.Manycountriesprovidelistsofeligibleenergyefficientequipment which act as an information or benchmarking tool for company or public sectorprocurement(IEA,2011a).Inaddition,severalnationsareexpandingtheirpromotionofenergymanagement in industry by providing energy management tools, training, energy managercertification and quality assurance. Nevertheless, with under half of the CEM countriesimplementing energy management support programmes, significant room for improvementremains.Sinceaglobalcarbonmarketisnotimminent,internationalagreementscoveringsomeofthemainenergyintensiveindustrialsectorsisatransitionalsteptosecuresectoralreductionsinenergyconsumption.

Publicspendingonresearch,developmentanddemonstrationfor

energyefficiencyinbuildingsandindustry

Energyefficiencyinindustryencompassestechniquesandprocessesaswellasindustrialequipmentandsystemsinmanufacturing,constructionandminingindustries.Energyefficiencyinthebuildingssector comprises advanced design and buildings envelope components, building equipment andoperationsystems,appliancesandlightingaswellasheating,coolingandventilationtechnologies.7

Figure9.Publicspendingonenergyefficiencyinbuildingsandindustry

a) CEM countries annual spending, 2010 b) IEA countries cumulative spending, 2005-10

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1433

599

791

748

Notes:Chinais2008data,FranceandRussiais2009data.DataforIndiaarefromtheOfficeofthePrincipalScientificAdvisertotheGovernmentofIndia;amountsareestimatedonayearlybasisasonefifthoftotalbudgets.

Source:Countrysubmissions,Kempeneretal.,2010

Between2005and2010,theUnitedStatesandJapanspentmoreonenergyefficiencyRD&Dthanmostothermajoreconomies,followedbyItaly,FinlandandKorea(Figure9b).Japanhasthelargestbudget forenergyefficiency inbuildingsand industrywith fairlyequal sharesbetween the two

7SolarheatingandcoolingisincludedinrenewableenergyRD&D.


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sectors in2010,althoughspendinghassteadilydeclinedsince2001.Datawerenotavailable forlargeemergingeconomiesotherthanRussia,whichspentUSD120millionbetween2007and2009,splitevenlybetweenindustryandbuildingsefficiency.Figure9aidentifiesCEMcountryspendingin2010,basedonIEAstatisticsandcountrydatasubmissions.Figure9bcomparesselectIEAmembercountriesspendingbetween2005and2010, showing thatmostcountriesdonotsplit spending

evenlybetweenbuildingsand industry.Koreaand Finland spendmuchhigher amountsonenergyefficiencyinindustry,theUnitedStates,ItalyandFrancespendmoreonbuildings.TheUnitedKingdomspentslightlylessthanUSD16milliononenergyefficiencyinindustryduringthistimeperiod.

HigherefficiencycoaluseandCCS

Theworldcontinuestorelyheavilyoncoalasanenergysource;forthepastdecade,coalhasmet47%ofnewelectricitydemandglobally(Figure10).There isalsoagrowingdifferencebetweenthe use of coal for power generation between OECD and nonOECD regions. Thoughcontributions from hydropower, nuclear and natural gas use are increasing, growth in energy

demandinthesecountriesislargelybeingfedbycoal.Bycontrast,inOECDcountriesnewpowerdemandisbeingmetbynaturalgasandnewrenewableenergy,especiallywindpower;andcoaliscontributingsubstantiallyless.

Figure10.Worldincrementalgrowthinelectricitygeneration,200008

157 3

225 8

7414 0

58931 2

4788

10 0

40 0

90 0

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1900

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Gas Coal Oil Nuclear Hydro Renewables

andwaste

Total

TWh

Note:Renewablesandwastecategoryexcludeshydropower

IntheBlueMapscenariotheamountofrelatively lessefficientsubcriticalcoalcapacitybeginsto

declinebetween2010and2015and the shareof supercritical,ultra supercriticalandcombinedheatandpower(CHP)plantsincreases.Thisprocesshasalreadybegun.Chinahasbegunthephaseoutofsubcriticalplantsandallnewconstructionissupercriticalorultrasupercritical.Between2010and2015itisestimatedthataround250GWofsupercriticalandultrasupercriticalcapacitywillbeinstalled inCEMcountriesalone. In2008,whereascoalaccountedfor41%oftotalgeneration, itproduced73%ofpowerrelatedCO2emissions.Thoughmorerecentlyconstructedcoalplantsarehighlyefficient,even thebestplantsemitmore than750gCO2/kWh.Andglobally, theaveragecoalfiredpowerplantemitsalittleover1000gCO2/kWh,ormorethan1MtCO2/TWh.

Forthisreason,raisingtheefficiencyofexistingandnewcoalfiredplantsisimportant.Switchingto lesscarbonintensivefuels(e.g.fromcoaltonaturalgas)and improvingtheefficiencyofcoalplantswillachievesignificantreductionsinCO2andshouldbeatoppriority.However,improving


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efficiencyalonewillnotmeetthereductionsneededtosatisfytheBLUEMapscenario.Fordeepcutsinemissionsatlowestoverallcost,CCSmustbedeployed.AsaresultoftheadditionalenergyrequirementsofCCS,improvingtheefficiencyofexistingcoalfiredpowerplantsandensuringthatnewplantsmeetshighefficiencystandardswillbeacriticalfirststeptodeployment.

Highefficiencycoaldeploymentstatusandpolicydevelopments

Thelastdecadesgrowthincoalusehasbeendrivenbyamovetowardmoreefficient,cleanercoalplants. New plant construction is generally based on the latest, most efficient technology. Theoldest,leastefficientplantsarebeingphasedoutofoperationandremaining,inefficientplantsaresystematically being upgraded,withaging components replaced andmore effective operationalpractices introduced.Themajorityofcoalfiredgenerationcapacity inChina is lessthan10yearsold,whileintheUnitedStatesandEurope,mostofthefleetisbetween31to40yearsold(IEACCC,2011).Chinahasbeenroutinelyclosingdownold,inefficientcoalfiredplants(lessthan200GWcapacity)andreplacingthemwithmodern,efficienttechnology,forexample,in2010,morethan11GWofsmallplantsweretakenoutofoperation.Figure11showstheestimatedcapacitiesandthermalefficienciesofChinesehardcoalfiredunitsexpectedtobeoperatingin2015.

Figure11.ModernisationoftheChinesecoalfleet

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fficiency(%)

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pacity(GWe)

Subcriticalcapacity(>100MWe)

Supercritical andultrasupercritical

capacity

Subcriticalefficiency(>100MWe)

Supercritical andultrasupercritical

efficiency

Notes:Capacitiesandthermalefficienciesareonagrossgenerationandfuellowerheatingvaluebasis.Theyearrangesatthebaseshowtheyearsoffirstoperationoftheseplants.Notethatthe201115daterange,forsupercriticalandUSCplants,includessomecommissioned from 2006. Plants that have already closed or are due to close before 2015 are excluded. Data consists of earlyestimatesfromastudythatisstillinprogress.

Source:

IEA

Clean

Coal

Centre,

using

information

from

the

Centre's

power

station

database

and

additional

data

from

Dr

A.

Minchener.

This illustrates the rapid modernisation of the Chinese coal fleet through the introduction ofsupercritical and ultrasupercritical units in the last decade. With these developments, theaverageefficiencyofChinesecoalfiredplantislikelytooutstripthecurrentaverageefficiencyofplant in the OECD. Coal is also fuelling Indias economic growth, providingalmost 70%of thecountryspowerneeds.LikeChina,Indiaalsohasplanstoreducethecarbonintensityofitscoalfired fleetofpowerplants. Indiahasatotalcoalfiredcapacityofmorethan80GW,morethanhalfofwhich isat least20yearsold.Indiasplantshave lowefficiency,theresultofavarietyoftechnicalandinstitutionalfactorssuchaspoorqualityofcoal,electricitygridconditions,lowplantloadfactor,degradationduetoage, lackofproperoperationandmaintenanceatpowerplants,ineffectiveregulationsandlackofincentivesforefficiencyimprovements(Chikkatur,A.,2008).


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Thereisapromisingopportunitytoimprovetheefficiencyofexistingpowerplantsbyatleastonetotwopercentagepoints.Theretrofitofplantsbuiltduringthelast30yearsisconsideredacosteffectivemeasure to improveoperationalefficiencyandprovideadditionalcapacity (Remmeetal.,2011). In its11thFiveYearPlan(200712), Indiaplanstorenovateandmodernise26GWofcoalcapacity,whilethe12thFiveYearPlan(201217)proposestomoderniseafurther17GW.In

addition,while1.1GWofold,inefficientplanthasalreadybeenretired,closureof4GWistobewritten intoboth the12thand13thFiveYearPlans (Mathur,2010). InOECDcountries,on theother hand, coal consumption is projected to decrease, with ageing plants and higher costsexpected to result in the retirementof significantcoalfiredcapacityover thecomingyears.Thegrowthindemandforelectricityisalsolikelytobemodestoverthisperiod,duetoexpectedstablepopulationandmodesteconomicgrowth.Theshortfallresultingfromthereducedcoalcapacitywilllikelybereplacedbyrenewableenergy,nuclearandgasfiredgeneration(IEA,2010a).

CCStechnologydeploymentstatus

To meet global emissions reduction goals at lowest cost, extensive deployment of CCS isrequired.Figure12 shows thataround100 largescaleCCSprojectswillbeneededby2020 tomeettheBLUEMapgoal,andover3000by2050.ThisrepresentsasignificantscaleupfromthefivelargescaleCCSprojectsthatareinoperationtoday.

Figure12.CCSdeploymentbyregion,201050

GovernmentsrecognisethecriticalroleofCCSinmitigatingthegrowingfleetofpowerandindustrialplantspoweredbyfossilfuels,andhavemadeanumberofpubliccommitmentstofundthefirstsetoflargescale8demonstrationprojects.Figure13showsthecurrentsetof77operationalandplannedlargescaledemonstrationprojects.NorthAmericaandEuropecontain68%oftheactiveorplannedprojects31and21projectsrespectively followedbyCanada(eightprojects),Australia(sixprojects)andChina(fiveprojects).TherearecurrentlynolargescaleprojectsinJapan,IndiaandRussia.

8Largescaleisdefinedasstoringmorethan1millontonnesofCO2annually.


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Figure13.GlobalstatusoflargescaleCCSdemonstrationprojects

Source:GCCSI2011


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Approximately twothirdsof theplannedprojectsare in thepowergenerationsector. Industryandupstreamprojectsarealsowell represented, inparticular innaturalgasprocessing.Thereare also projects related to the cement, aluminium and iron and steel industries, but thesesectorsareunderrepresented.Manyoftheseprojectsarestillintheearlystagesofdevelopment.

Asof2010,governmentfundingcommitmentstotalledaroundUSD25billion(Figure14).However,onlyUSD13billionofthesecommitmentshavebeenallocatedtospecificdemonstrationprojects.Thecountrieswiththe largestamountsallocatedaretheUnitedStates(USD6.1billion),Canada(USD3 billion) and Norway (USD1.3 billion). 2010 also saw a worrying gap between fundingneedsandnewcommitmentsthatmustbeaddressedifCCSistosucceed.(Figure14).

Figure14.StatusofpublicfundingsupporttoCCS(USDbillion)

Source:GCCSI2011

Further,fundingisoftencontingentonindustryandmaybesusceptibletoreviewdependingongovernment priorities and financial constraints. Financial incentives for nonOECD CCSdeploymentarealsocrucial.

Developingpolicyframeworksandengagingthepublic

Important progress is being made towards developing national CCS legal and regulatoryframeworks. Although developments are generally concentrated in OECD regions, includingEurope,Australia,theUnitedStatesandCanada,nonOECDcountriessuchasSouthAfricaandtheUAEarebeginningCCS regulatorydiscussionsand frameworkdevelopment (GCCSI,2011).Thisprogressmustcontinue,inparticularinnonOECDcountrieswhichwillplayasignificantrole

inglobalCCSdeployment.

Currently, CO2 mitigation incentives are insufficient to cover the additional costs and risksassociated with building and operating firstofakind, CCS demonstration plants. Accordingly,additional financial incentives are required in the nearterm where CCS activities are notsupportedbyothermechanisms suchasa sufficientCO2price

9oradditional revenue streams

(enhanced hydrocarbon recovery). While global understanding ofCO2 storage opportunities isimproving, there is limited practically usable and characterised storage capacity at the levelneeded to support largescaleproject investment.CO2 storage site characterisations, includingsuitablepathwaysfortransportandstorage,needtoaccelerate.

9NorwayhasacarbontaxonoffshoreoilandgasoperationswhichhasincentivisedtheSleipnerandSnhvitoperations.


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Publicoutreach iscritical toCCSdeploymentbuthasnotreceivedsufficientattention.ProjectssuchasBarendrecht intheNetherlands,whichwasrecentlycancelledduetopublicopposition,emphasisethispoint.Governmentsanddevelopersmustengagethepublic inthedevelopmentofCCSprojects ina timelyand transparentmanner.Work isongoing internationally tobettermanage public engagement processes, drawing on lessons learnt. This development is also

startingtobevisibleoutsideOECDcountries.Forexample,SouthAfricahasrecentlylaunchedanewCentre forCCS that will focuson acceleratingCCSdemonstration, raisingawareness andensuringpublicengagement;moresucheffortsinkeyfossilbasedeconomiesareneeded.

Publicspendingonresearch,developmentanddemonstration

Higherefficiency, cleaner coal technologies comprise coal conversion and combustiontechnologies such as integrated gasified combined cycle (IGCC), as well as coal production,preparation and transportation. RD&D spending on CCS includes CO2 capture/separation,transportand storage.Figure15 showsmost recentdataonRD&DexpendituresoncleancoalandCCS: in2010 for IEAcountries,2009 forRussia,2008 forChina, IndiaandSouthAfricaand2007forMexico.10

Figure15.PublicspendingonenergyefficiencyinCCSandcleancoal

a) CEM countries annual spending, 2010 b) IEA countries cumulative spending, 2005-10

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MillionUSD2010

Total

CCS

Cleancoal3958

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4119

1187

Notes:ChinaandSouthAfrica is2008data,FranceandRussia is2009data.Datafor IndiaareR&DbudgetsfromtheOfficeofthePrincipalScientificAdvisertotheGovernmentofIndia;amountsareestimatedon

cem progress report

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