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Agency increases its five-year renewables forecast by 30 per cent in wake of fossil fuel supply crunch triggered by Russia's invasion of Ukraine
The global energy crisis has unleashed an unprecedented wave of momentum across the renewables industry that will see wind, solar, and hydro power replace coal as the largest source of electricity generation by early 2025.
That is the view of the International Energy Agency (IEA), which today predicted the world will add as much renewables capacity in the next five years as it did in the past 20.
The influential organisation said energy security concerns prompted by Russia's invasion of Ukraine have driven an acceleration of wind and solar power projects globally as governments have looked to slash their reliance on imported fossil fuels.
The IEA said the momentum behind renewables over the last year had prompted it to increase its renewables forecast for the next five years by 30 per cent. It said it was now predicting renewable power capacity to grow by 2,400GW over the 2022 to 2027 period, an amount equal to the entire power capacity of China today.
"Renewables were already expanding quickly, but the global energy crisis has kicked them into an extraordinary new phase of even faster growth as countries seek to capitalise on their energy security benefits," said IEA executive director Fatih Birol. "The world is set to add as much renewable power in the next five years as it did in the previous 20 years. This is a clear example of how the current energy crisis can be a historic turning point towards a cleaner and more secure future world energy system. Renewables' continued acceleration is critical to help keep the door open to limiting global warming to 1.5C."
The report, titled Renewables 2022, dubs the war in Ukraine as a "decisive moment" for renewables in Europe, where governments and businesses are under pressure to rapidly replace Russian fossil gas with alternatives. It predicts that the continent will add twice as much capacity between 2022 and 2027 than it did in the previous five-year period.
China, the US, and India are all also singled out as a major growth regions for renewables by the IEA, which noted that the world's biggest markets have implemented policies and introduced regulatory and market reforms that are driving renewables uptake more quickly than previously expected.
Solar is expected to triple over the five-year period, surpassing coal and becoming the largest source of power capacity in the world. Wind, meanwhile, is expected to double over the same period. And together, wind and solar are projected to account for more than 90 per cent of renewable power capacity added over the next five years.
Despite the positive results, the IEA said there is scope for countries to go faster and further in accelerating renewables deployment in pursuit of their climate goals. Echoing a host of recent studies, the report warned that even if the world delivers on the now upgraded forecasts for the renewables sector it will still be off track to meet the goals of the Paris Agreement.
As such, the report sets out an 'accelerated case' scenario, which explores the various planning, policy, and grid issues advanced and developing economies must tackle to deliver 25 per cent more renewables growth than the IEA's main forecast. The faster growth delivered through this 'accelerated case' scenario would move the world closer to a pathway consistent with reaching net zero emissions by 2050 and give it a chance of limiting global warming to 1.5C.
The report also predicted the next five years will see China's dominance of global renewables manufacturing capacity erode from 90 per cent of the market today to 75 per cent in 2027 as domestic manufacturing policies come into force in the US and India . And it notes that biofuel demand is expected to grow by 22 per cent between 2022 and 2027, with demand being largely driven by the US, China, Brazil, India, and Indonesia.
The report comes just a few days after the IEA released a similar analysis of energy efficiency measures, which detailed how the rate of energy efficiency improvement across the global economy increased sharply this year in response to Russia's invasion of Ukraine.
The report showed that the global economy used energy two per cent more efficiently in 2022 than it did in 2021, marking a step change in global efforts to consume energy more carefully after years of flat-lining progress. The findings also suggest energy efficiency spending is set to reach an all-time high this year, with investment increasing a massive 16 per cent on 2021 levels to reach $560bn.
