Policy uncertainty threatens to hold back renewables, says International Energy Agency

International Energy Agency logoGrowth in renewable energy is at risk of slowing down over the next five years unless governments reduce the uncertainty over their climate change policies, a new report has warned.

The International Energy Agency (IEA) said that renewables may not reach the level needed in order to meet climate change targets.

In its third annual “Medium-Term Renewable Energy Market Report”, the IEA said that uncertainty existed within the European Union over the post-2020 targets.

In countries that aren’t members of the Organisation for Economic Development & Cooperation (OECD), including China, the report said that the high cost and lack of availability of finance was holding back renewables, along with a lack of grid connections.

Almost 22% of the world’s power was generated from renewable sources such as wind, solar and hydro in 2013, on a par with the amount that came from gas-fired power stations, the report said.

The IEA added that, although renewable generation is expected to rise by 45% by 2020 to account for 25% of the global total, the growth of the sector is expected to slow down during the second half of the decade.

Maria van der Hoeven, Executive Director, at the IEA, said: “Renewables are a necessary part of energy security.

However, just when they are becoming a cost-competitive option in an increasing number of cases, policy and regulatory uncertainty is rising in some key markets. This stems from concerns about the costs of deploying renewables.

”‘Governments must distinguish more clearly between the past, present and future, as costs are falling over time. Many renewables no longer need high incentive levels.Rather, given their capital-intensive nature, renewables require a market context that assures a reasonable and predictable return for investors.

“This calls for a serious reflection on market design needed to achieve a more sustainable world energy mix.”

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