Market analysis and forecast from 2019 to 2024
IEA (2018), "Renewables 2018", IEA, Paris https://www.iea.org/reports/renewables-2018
The electricity sector remains the brightest spot for renewables with the exponential growth of solar photovoltaics and wind in recent years, and building on the significant contribution of hydropower generation. But, electricity accounts for only a fifth of global energy consumption, and the role of renewables in the transportation and heating sectors remains critical to the energy transition. This is why Renewables 2018, the annual IEA market analysis and forecast on renewable energy, takes an in-depth look at bioenergy, the largest source of renewable energy globally. Often overlooked, the contribution of sustainable bioenergy represents a blind spot in the global debate about renewables. Bioenergy makes a significant contribution across the energy system, particularly in the heat and transport sectors. In addition to looking at renewable energy across the entire energy system, Renewables 2018 provides a detailed market analysis and overview of renewables in the electricity, heat and transport sectors, as well as forecasts for the period between 2018 and 2023. The report also highlights policy and market improvements that can unlock further growth of renewable energy in electricity and transport biofuels, and it underlines the untapped potential of sustainable bioenergy and other renewable sources in greening the industry and transport sectors. For the first time, Renewables 2018 also includes a chapter dedicated to answering some of the key questions raised by the latest developments in renewable energy markets.
Renewables 2018 is the IEA market analysis and forecast from 2018 to 2023 on renewable energy and technologies. It provides global trends and developments for renewable energy in the electricity, heat and transport sectors.
The analysis this year contains an in-depth look at bioenergy, the world’s largest source of renewable energy, highlighting the untapped potential of modern bioenergy and other renewable sources for greening the industry and transport sectors. Under an accelerated case, the report also highlights policy and market improvements that can unlock further growth of renewable energy in electricity and transport biofuels.
Modern bioenergy is the overlooked giant within renewable energy. Modern bioenergy (excluding the traditional use of biomass) was responsible for half of all renewable energy consumed in 2017 – it provided four times the contribution of solar photovoltaic (PV) and wind combined. Most modern bioenergy is used in final energy consumption to deliver heat in buildings and for industry.
Bioenergy is the largest source of growth in renewable consumption over the period 2018 to 2023. Bioenergy – as solid, liquid or gaseous fuels – will account for 30% of the growth in renewable consumption in this period. This is a result of the considerable use of bioenergy in heat and transport. Other renewables have less penetration in these two sectors, which account for 80% of total final energy consumption.
In 2023, bioenergy will remain the predominant source of renewable energy, although its share of total renewable energy declines from 50%, in 2017, to 46% as the expansion of both solar PV and wind accelerates in the electricity sector.
The share of renewables in meeting global energy demand is expected to grow by one-fifth in the next five years to reach 12.4% in 2023.
Renewables will have the fastest growth in the electricity sector, providing almost 30% of power demand in 2023, up from 24% in 2017. During this period, renewables are forecast to meet more than 70% of global electricity generation growth, led by solar PV and followed by wind, hydropower, and bioenergy. Hydropower remains the largest renewable source, meeting 16% of global electricity demand by 2023, followed by wind (6%), solar PV (4%), and bioenergy (3%).
While growing more slowly than the power sector, the heat sector – which includes heating for buildings or industry – will account for the biggest overall share of renewables in meeting energy demand in 2023. Renewable heat consumption is expected to increase by 20% over the forecast period to reach a share of 12% of the heating sector demand by 2023. However, a modest increase in the share of renewable heat is foreseen, as robust growth in total heat demand is expected to result from continuous economic and population growth.
Renewables in transport have the lowest contribution of all three sectors, with their share growing only minimally from 3.4% in 2017 to 3.8% in 2023. Although they expand by almost one-fifth over the forecast period, renewables cover only a small portion of all energy demand in transport because of ongoing petroleum product consumption. Renewables in transport mostly comes from biofuels, and although renewable electricity consumption in road (such as electric cars, two- and- three wheelers, and buses) and rail transport modes increases 65% over the forecast period, this is from a low base.
Brazil has the greenest energy mix, and China leads absolute growth. Of the world’s largest energy consumers, Brazil employs the highest share of renewables by far – almost 45% of total final energy consumption in 2023.
Bioenergy consumption in transport and industry is significant, and hydropower dominates the electricity sector. Meanwhile, because of policies to decarbonise all sectors and reduce harmful local air pollution, China leads global growth in absolute terms during the forecast period, surpassing the European Union to become the largest consumer of renewable energy. In the European Union, greater use of renewables is spurred by binding renewable energy targets for 2020 and 2030 as well as implementing country-level policies and improved energy efficiency.
To meet long-term climate and other sustainability goals, renewable energy development in the heat, electricity and transport sectors must accelerate. Should progress continue at the pace currently forecast, the share of renewables in final energy consumption would be roughly 18% by 2040 – significantly below the IEA Sustainable Development Scenario’s benchmark of 28%.
Robust sustainability frameworks are key to bioenergy growth. Only bioenergy that reduces lifecycle GHG emissions while avoiding unacceptable social, environmental and economic impacts has a future role in decarbonising the energy system. Robust sustainability governance and enforcement must therefore be a central pillar of any bioenergy support policy.
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