A record amount of renewable electricity was added to energy systems globally in 2021 but it remains about half of what is needed annually to be on track to reach net zero emissions by 2050, according to the International Energy Agency.
New renewable power capacity is forecast to reach 290 gigawatts this year, surpassing last year’s record of 280GW, said the IEA in its annual review of renewable energy. This compares with current fossil fuel and nuclear power capacity of 4,800GW.
However, higher commodity prices, which were driving up the cost of producing and transporting solar panels and wind turbines, threatened to undermine investments in the short term, the report said.
The global energy supply shortage “definitely provides a setback, but at the same time it shows us the way out”, Fatih Birol, head of the IEA, told the FT.
While commodity prices and energy bills have soared, oil and gas suppliers such as Russia’s Gazprom have reported record profits and forecast further rises.
But renewable energy sources remained “much more cost-competitive” than fossil fuels, and “nuclear is set to make a comeback in many countries”, Birol said. “A new global energy system is emerging.”
Efforts to replace fossil fuels with clean sources of energy should not be blamed for the soaring costs, he said.
The recent COP26 climate conference sent “an unmistakable signal” to investors that the fossil fuel era was beginning to draw to a close, despite a last-minute wording change to the pledge to “phase down” coal rather than “phase out” the polluting energy source.
The latest IEA report forecasts that renewable electricity growth will accelerate faster than ever. Within five years, its total capacity is likely to exceed 4,800GW — or more than 60 per cent above 2020 levels, and the equivalent of all current global fossil fuel and nuclear capacity combined.
Stronger national climate policies and clean energy goals meant that renewables would account for almost 95 per cent of the increase in global power capacity in the years to 2026, said the report.
The IEA also forecasts that China, the world’s biggest emitter, will reach its 1,200GW clean energy target four years ahead of its 2030 goal, and could also reach peak carbon emissions before the 2030 target date.
India, meanwhile, was set to double its new renewable electricity installations in the years to 2026, compared with the 2015-2020 period, the report said.
Despite these leaps forward, renewable capacity would still “fall well short” of what would be needed to set the world on track for net zero greenhouse gas emissions by mid-century, the agency concluded.
Globally, annual renewable power capacity additions in the years to 2026 would need to nearly double to be on track, compared to what was expected to be installed, the IEA said.
Moreover, if commodity prices were to remain high in 2022, new wind energy costs could rise to levels last seen in 2015 while the falls in the cost of installing solar energy over the past three years could be reversed, said the report.
To accelerate the shift to clean power, governments had to increase support for renewables and provide incentives for investment, said Birol. Policymakers should also consider how they might retire fossil fuel plants early, he said.
“It is important that financial institutions and developed countries help [developing nations] to ‘buy out’ some of the coal plants,” said Birol.
At COP26 in Glasgow, developed countries agreed a $8.5bn partnership with South Africa to help the country close its coal plants more quickly than scheduled.