Policy Options Presented to Scale Up Renewables, Including for Biofuels & EVs, to Help Meet 2C

In a first joint report from REN21, the International Renewable Energy Agency (IRENA) and the International Energy Agency (IEA), the three organizations outlined the options available to policymakers to support the development of renewables. In Renewable Energy Policies in a Time of Transition, the organizations provide an updated policy classification and terminology providing a global reference for policy instruments and in the last chapter proposing a holistic approach for policymaking.

I’ve seen a number of reports with similar themes like this before. In fact, I was even part of a team that looked at renewable energy in transport in 2015 for the IEA. (See slide presentation on key findings in that report here, and see blog posts June 8, 2017; Apr. 4, 2017;  Mar. 28, 2017; Mar. 20, 2017; Oct. 18. 2016.) Nevertheless, I’m including this post because I see a kind of groundswell of support bubbling up for biofuels as part of renewable energy in transport.

No doubt this is in response to all the interest, publicity and policy focus happening in the electric vehicle sector and general “biofuels fatigue” demonstrated by some policymakers that want to move away from biofuels and toward electrification. As I detailed for Future Fuels Outlook members in a recent report, both the Biofutures Platform and IEA/IRENA’s Technology Roadmap to Delivering Sustainable Energy are other recent actions to emphasize the role of biofuels in helping to decarbonize transport.

One of the key conclusions in the REN21/IRENA/IEA report is that policy frameworks need to take a “systems approach” with more fully integrated policies across sectors if we are serious about achieving the energy transition. Measures are needed to support the integration of variable renewable energy policies need to be more comprehensive than those devised for the energy sector alone. The organizations looked at renewable energy in the power, heating and cooling and transport sectors.

The three organizations say that “renewables have experienced a remarkable evolution over the past decade now forming the cutting edge – with energy efficiency– of a global energy transition. The growth in the deployment of renewable energy technologies now outpaces that of any other energy source.” The number of renewable energy incentives and mandates by type for the years 2014-2016 is shown in the graphic below.

Number of Renewable Energy Regulatory Incentives and Mandates, by Type, 2014-16

The three organizations noted that policymakers ought to consider, and they are largely the same types of recommendations we’ve seen before:

• Integrated policies that address three dimensions of renewable transport: the availability of energy carriers and fuels produced from renewable energy sources; the deployment of vehicles capable of running on renewable energy fuels; and the development of infrastructure for the distribution of energy and fuel.
• Policies to level the playing field for renewable energy transport options, notably by reforming fossil fuel subsidies and putting a price on carbon. Fuel standards that encompass life-cycle reductions in emissions of GHGs and sustainability criteria are other technology-neutral measures that can facilitate decarbonization of transport.
• Blending mandates to provide guaranteed demand for biofuels and thereby encourage investment. Higher blend mandates were supported; however, for the organizations say that for blending mandates to increase, fleet standards may have to be adapted to accommodate higher blends.
• Financial instruments to encourage R&D as well as demonstration of less mature renewable fuels (g. advanced biofuels, power-to-X) that are critical in certain transport sub-sectors (long-haul transport, aviation and shipping). Low carbon fuel targets and sub-targets will be needed to ensure at least minimum shares for these fuels.
• Closer collaboration among decisionmakers in energy and transport to align goals and facilitate integrated planning and policy design.

The Pace of the Energy Transition Needs to Be “Substantially Accelerated”

The pace of the energy transition needs to be substantially accelerated to meet decarbonization and sustainable development objectives. As outlined in IRENA’s recently-released Global Energy Transformation: A Roadmap to 2050, to achieve the 2°C goal of the Paris target, the share of renewables in the primary global energy supply must increase from 15% today to 65% by 2050.

IRENA says gains in the electricity sector must be matched in end-use sectors such as heating and transportation, which together account for 80% of global energy consumption. And right now, the world is not on track to meet the 2°C goal, as the figure below shows, though IRENA says it’s technically feasible even with economic and population growth.

What does it look like to meet the goal? IRENA says the total share of renewable energy must rise from around 18% of total final energy consumption (in 2015) to around two-thirds by 2050. Over the same period, the share of renewables in the power sector would increase from around one-quarter to 85%, mostly through growth in solar and wind power generation. The energy intensity of the global economy will have to fall by about two-thirds, lowering energy demand in 2050 to slightly less than 2015 levels.

What does it mean, or what does this look like for transport? The figure below shows a 28% increase in renewable electricity for EVs, an 8% increase for hydrogen and a 22% increase in biofuels and biogas (or 900 billion liters) uptake for the sector by 2050. What’s it going to cost? About US$14 trillion with $3.4 trillion for the biofuels (primarily advanced biofuels) and hydrogen industries under IRENA’s REmap case, which focuses on meeting that 2°C target. However, those costs (and costs for other sectors not covered in this post) would be offset by health, environmental and other benefits, including job creation.

Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transportation fuels to the auto and oil industries, governments, and NGOs. She writes and advises on petroleum fuels, biofuels, alternative fuels, automotive fuels, and fuels policy.