The IEA said that this reflects the continued domination of fossil fuels—particularly coal—in the energy mix and the slow uptake of other, lower-carbon supply technologies. The world must slow the growth of energy demand as well as make its energy supply cleaner, the IEA said.

I am particularly worried about the lack of progress in developing policies to drive carbon capture and storage (CCS) deployment. Without CCS, the world will have to abandon its reliance on fossil fuels much sooner—and that will come at a cost.

There is a danger, however, in focusing on individual technologies without considering the larger picture. We must invest heavily in infrastructure that improves the system as a whole. Smart grids, for example, make it easier and cheaper to replace fossil-fired power with renewables without jeopardizing the reliability of the energy system.

Alongside these grim messages there are also positive developments. In 2012, sales of hybrid-electric vehicles passed the one million mark. Solar photovoltaic systems continued to be installed at a record pace, contrary to many expectations. Emerging economies are stepping up their efforts to promote and develop clean energy. The costs of most clean energy technologies fell more rapidly than anticipated. Many countries, including emerging economies, introduced or strengthened energy efficiency regulations. Given that the world’s energy demand is set to grow by 25% in the next decade, it is hard to overstate the importance of energy efficiency. The world must slow the growth of energy demand while making the energy supply cleaner.

—Maria van der Hoeven, IEA Executive Director

In addition to the progress in renewables, the report noted that there is a “window of opportunity” opening in the transport sector, headlined by the progress in growth of hybrid electric (HEV) and electric vehicle (EV) sales.

HEV sales broke the one million mark in 2012, and reached 1.2 million, up 43% from 2011. Japan and the United States continue to lead the market, accounting for 62% and 29% of global sales in 2012 (740,000 and 355,000 vehicles sold). In order to hit 2020 2DS targets, sales need to increase by 50% each year.

EV sales more than doubled in 2012, passing 100,000. This rate of sales growth puts EV deployment on track to meet 2DS 2020 targets, which require a 80% annual growth rate. Cumulative government targets for EV sales increased in 2012, with India announcing a total target of 6 million EVs and HEVs on the road by 2020. The target is to be backed by government funding of US$3.6 billion to US$4.2 billion, representing more than half of total required investment.

While fuel economy of engined-cars is the key technology pathway to decarbonizing the transport sector by 2020, the 2DS also envisages 20 million EVs on the road by 2020, with yearly sales reaching seven million vehicles. To hit the 2DS target for 2020, EV sales have to grow by around 80% each year.

HEVs, play an important transitional role in the 2DS. The scenario sees annual HEV sales at 10 million by 2020, or 12% of global market share; this peaks at 40 million in 2040 (30% of market share), as EV and fuel-cell vehicle deployment increases.

Fuel economy levels for new passenger light-duty vehicles LDV vary by up to 55% from country to country, demonstrating enormous scope for improving efficiency through policy. Fuel economy improvements accelerate where implementation of fuel economy standards and other policy measures has been scaled up, the report notes. The pace of improvement in some regions shows the strong potential to bring fuel-saving technologies—most of which are already commercially available—into the market through policy action.

Improving the fuel economy of conventional vehicles fitted with internal combustion engines (ICEs) holds the greatest potential to reduce fuel consumption and CO₂ emissions in the road transport sector over the next decade. Conventional ICEs are expected to represent more than 90% of LDVs sold between 2010 and 2020, making efficiency gains in these vehicles critical to achieving 2DS targets.

...While the efficiency of both gasoline and diesel engines has increased in the past decade, the IEA estimated in 2009 that further improvement of around 25% as against 2005 average performance could be achieved with technologies already commercially available. By the end of 2012, some of this improvement had already occurred, but around 35%-50% of the potential for improvement still remains, depending on the country.

Engine downsizing and weight reduction represent around 30% of that potential collectively. Vehicle downsizing has enabled considerable efficiency improvements, particularly in OECD regions and since 2005. Reduced friction losses and the use of advanced combustion systems and diesel engines have also improved fuel economy in OECD countries. In non-OECD regions, progress through technology improvement has been hampered by a shift towards bigger vehicles, leading to little fuel economy progress on average.

—“Tracking Clean Energy Progress”

Global biofuels production—including bioethanol and biodiesel—was static in 2012. Despite strong growth of 7% in biodiesel output in the United States (to 4 billion liters) and Latin America (to 7 billion liters), global volumes remained at roughly 110 billion liters.

The slowdown in production growth reflects higher feedstock prices and lower production volumes in key producing regions. This is principally due to extreme weather conditions such as the 2012 drought that compromised the US corn harvest. The events in 2012 highlight the vulnerability of conventional biofuels production to high feedstock prices, which account for 50% to 80% of total production costs.

The advanced biofuels sector added about 30% of capacity in 2012. More than 100 plants are now operating, including commercial-scale projects, with 4.5 billion litres in total capacity by end-2012. Yet some large-scale projects were cancelled or shelved in 2012; in part, the report said, this reflects a lack of adequate policy mechanisms for advanced biofuel deployment in most regions.

Among the other key findings of the report were:

• Governments have the power to create markets and policies that accelerate development and deployment of clean energy technologies, yet the potential of these technologies remains largely untapped.

• Coal technologies continue to dominate growth in power generation. Coal-fired generation, which rose by an estimated 6% from 2010 to 2012, continues to grow faster than non-fossil energy sources on an absolute basis. Around half of coal-fired power plants built in 2011 use inefficient technologies. This tendency is offsetting measures to close older, inefficient plants. For example China closed 85 GW in 2011 and was continuing these efforts in 2012, and the United States closed 9 GW in 2012.

• The dependence on coal for economic growth is particularly strong in emerging economies.

• Natural gas is displacing coal-fired generation in some countries but this trend is highly regional.

• Construction began on seven nuclear power plants in 2012, but meeting 2DS goals will require far more significant construction rates.

Resources

• Tracking Clean Energy Progress