OECD/IEA 2016 OECD/IEA Marco Baroni Milano, 25 November 2016

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1 Marco Baroni Milano, 25 November 2016

2 The world post-paris the global coverage of climate pledges is impressive Russia and Caspian Europe North America 2.0 Gt China 3.8 Gt Middle East 6.1 Gt Africa 2.0 Gt India 8.6 Gt Other Asia OECD Asia Oceania South America 1.1 Gt 1.9 Gt 1.7 Gt 2.2 Gt 1.2 Gt Pledges submitted Pledges from countries that account for 95% of global energy-related GHG emissions; their full implementation would be consistent with a temperature rise of 2.7 C The boundaries and names shown and the designations used on maps included in this publication do not imply official endorsement or acceptance by the IEA.

3 Renewables Renewables Mtoe A new fuel in pole position Change in total primary energy demand Nuclear Rest of world European Union Latin America India US Africa China Nuclear Coal Oil Gas Lowcarbon Coal Oil Gas Lowcarbon Low-carbon fuels & technologies, mostly renewables, supply nearly half of the increase in energy demand to 2040

4 Decarbonising the power sector is central to a low-carbon world Share of low-carbon sources and unabated coal in total electricity generation 100% New Policies Scenario 450 Scenario 80% 60% 40% 20% Other renewables CCS Nuclear Hydro Coal (excludes CCS) In the New Policies Scenario, all the growth of low-carbon electricity generation share comes from renewables other than hydro but much more needs to be done

5 Greater policy support boosts prospects for solar PV and wind Wind and solar PV generation in WEO2015 and WEO2016, 2040 Wind power: TWh Solar PV: TWh WEO2015 Increase in WEO2016 China United States India Other Asia Mexico Rest of world Additional in 450 Scenario Stronger policies on solar PV and wind help renewables make up 37% of electricity generation in 2040 in our main scenario & nearly 60% in the 2 C scenario

6 Dollars per MWh (2015) Renewables are increasingly competitive in all markets Thousand TWh Subsidy rate for new wind and solar PV projects in the New Policies Scenario Competitive and supported generation in the New Policies Scenario, Competitive Subsidy level Less than $15/MWh Above $15/MWh 80 Solar PV 4 40 Wind Hydro Wind Solar PV Subsidy rates plunge over the next decade as costs fall and fossil fuel prices rise, and by 2040, two-thirds of wind and solar PV require no or very low subsidies

7 Integration measures are key for more use of wind & solar PV Share of solar PV generation Amount of hours of curtailment without system measures 20% 16% 12% India 2.5 months 1.2 months 8% 4% 1 month 4 months European Union 10% 20% 30% 40% Share of wind generation Grid expansion & flexible plants can integrate wind & solar PV to close to 30% share. Beyond, demand-side response and storage are needed, requiring market reform

8 Trillion dollars (2015) The power sector requires the largest investment 8 Power sector cumulative investment by type, Power plants Infrastructure 6 Other, 0.5 Bioenergy, 0.6 Hydro, Solar PV, Gas, 1.2 Oil, 0.1 Coal, Wind, 2.4 Fossil fuels Nuclear Renewables Transmission & distribution Power sector investment totals $19.2 trillion to 2040, over 40% of total energy supply investment, and 60 cents of every dollar in new power plants goes to renewables

9 The next frontiers for renewables are heat and transport Renewable energy use by sector Mtoe Other fuels Renewables: Additional to Electricity Heat Transport Today renewables in electricity and heat use are nearly at par; by 2040, the largest untapped potential lies in heat and transport

10 Conclusions The Paris Agreement is a framework; its impact on energy depends on how its goals are translated into real government policy actions Energy security remains a major concern; potential vulnerabilities are growing, so too is the range of tools available to address them Wind and solar PV are increasingly competitive, but continued support is needed to build on recent progress Achieving climate goals hinges on a range of integration measures and the market reforms to enable their deployment The next chapter in the rise of renewables requires policies to push their role in heat & transport & changes in power market design

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