Last week REN21 released its annual Global Status Report on the state of renewable energy, which includes renewable energy for transport. Future Fuels Outlook service members can read an analysis here. In summary, REN21 found that additions in installed renewable power capacity is at a all-time high, increasing total global capacity by almost 9% over 2015. Solar accounted for 47% of the total capacity added, followed by wind and hydropower. Moreover, REN21 says renewables are becoming the “least cost option” with some countries at US$0.05 per kilowatt hour or less, below equivalent costs for fossil fuel and nuclear. Still, this transition is not happening fast enough to meet Paris Agreement goals and investments are down 23% since 2015.
However, a lot more needs to happen to decarbonize transport, despite the growth in EV sales and biofuels production and consumption. I spoke to REN21 Executive Secretary Christine Lins about the report, the outlook for renewable energy and why the share of renewable energy in transport is so low and the transition so slow. We also talked about the future of the biofuels and EV markets, as well as renewable energy for shipping and aviation. In the latter context, another REN21 report on feasibility of achieving a 100% renewable energy future was discussed as well. (See Apr. 4, 2017 post) In that report, it was found that R&D for aviation and shipping was urgently needed, and during the interview we discussed what that was and what needs to happen. Finally, we also talked about the U.S. announcement to withdraw from the Paris.
REN 21 was founded in 2004 at the first international conference on renewable energies in Bonn, Germany. I’m always calling it a coalition of the willing, bringing together experts from the private and the public sector that want to advance renewable forms of energy transition. We are based at the United Nations Environment Program. We have a small secretariat here and from here we coordinate a network of over 2,000 experts in the field of renewable energy, energy efficiency, and energy access. We are really bringing together industry, government, international organizations, and NGOs.
If I summarize 2016, it’s really that we see investors were able to acquire more renewable energy capacity for less money. So we had new records of installed power capacity in 2016 with 161 Gigawatts added, which represents an increase of around 9 percent relative to 2015. We see that for the fifth consecutive year, investment in renewable power generating capacity was roughly double the investment in fossil fuels, reaching about US$250 billion. We have also seen that compared to the previous year 2015, investment went down globally by around 23 percent, that on the one hand a result of significant price and cost reduction and that’s why more capacity was added for less money. It is, however, also due to the delay in the auctions in some countries, like South Africa, for example.
We see that renewable energy has now become a global phenomenon. We now have 176 countries around the world with renewable energy targets, and that’s shared with our power policies, but we also see that there is still a gap with countries having policies to support transport. On a positive note, 2016 was the third year in a row where greenhouse gas emissions from the energy sector remain stable, despite a 3 percent growth in the global economy and an increased demand for energy. So basically, what it shows is that we managed to decouple emissions from growth, which I think is really promising.
However, we see that when we look at overall figures at the renewable energy share in final energy consumption, progress is slow. We have about currently 19.3 percent global energy, final energy consumption from renewables that is slowly growing because on the one hand the energy demand is continuing to grow and also most of the progress we are making is in the electricity sector and in heating and cooling and in transport progress is really relatively slow. This is also the key where further action is needed in order to upscale activities in these areas. So when you look for example at the transport sector we see that liquid biofuels provided about 4 percent of the world’s road transport fuels. We also see that we made progress in the electrification of the transport sector. However not all of the electric transport policies are connected to renewable support and this is something which, of course, is something that is important and needs to happen more.
First of all, I think it’s a complex sector in the sense that you need to really change the behavior of people. A modal shift needs to happen, away from individual mobility in parts of the world to more public transport. It requires a system-thinking integration of transport policies in regional planning. On electric vehicles, battery costs have come down substantially. So we see that global development of EVs of all transport, particularly passenger vehicles, has grown rapidly. In 2016, global sales have reached an estimated 775,000 units and that brings the total passenger EVs that are on the world’s roads at the end of the year to 2 million. So we see a rapid acceleration which is really exciting. The top 5 countries for passenger EV development in 2016 were China, United States, Japan, Norway, and the Netherlands. Those five countries together account for about 78 percent of the year’s global sales. Norway is well ahead of all of the countries in terms of market penetration.
It, of course, also requires a roll out of charging infrastructure. What we see is there is relatively little linking of renewable energy support and electric mobility and this is something which should be considered more in the future because what we see in 2016 the majority, the lion’s share of investments was in solar and wind. So what we see is a move toward a system of integrating high shares of renewables. We have situations in countries by now to integrate between 20 and 40 percent of their electricity from these sources. In this situation, base load is becoming less important and flexibility is becoming important. There is a linkage between the electricity sector and the transport sector and ultimately probably also the heating and cooling sector. I think we will see much more sector coupling in the years to come and really a convergence of these different sectors which will enable integration of prior shares of renewables because then the electric vehicles can serve as storage for electricity when it is generated by the reliable sources, but when it is not consumed at the same time. I think lots of opportunities but still, the linking is slow.