Renewable energy consumption - outlook from IEA

Assessment versions

Published (reviewed and quality assured)

• No published assessments

Rationale

Justification for indicator selection

The share of energy consumption from renewable energy provides a broad indication of progress towards reducing the environmental impact of energy consumption, although its overall impact has to be seen within the context of the total fuel mix, potential impacts on biodiversity and the extent to which pollution abatement equipment is fitted.

Renewable energy sources are generally considered environmentally benign, with very low net emissions of CO₂ per unit of energy produced, even allowing for emissions associated with the construction of the plant. Emissions of other pollutants are also often lower for renewable energy production than for fossil fuel energy production. The exception to this is municipal and solid waste (MSW) incineration which, due to the cost associated with separation, usually involves the combustion of some mixed wastes including materials contaminated with heavy metals. However, emissions from MSW incineration are subject to stringent regulations including tight controls on quantities of cadmium, mercury, and other such substances.

Most renewable (and non-renewable) energy sources have some impact on landscape, noise and ecosystems, although many of these impacts can be minimised through careful site selection. Large hydropower schemes in particular, can have adverse impacts including flooding, disruption of ecosystems and hydrology, and socio-economic impacts if resettlement is required. Some solar photovoltaic schemes require relatively large quantities of heavy metals in their construction and geothermal energy can release pollutant gases carried by its hot fluid if not properly controlled. Some types of biomass and biofuel crops also have considerable land, water and agricultural input requirements such as fertilisers and pesticides

Scientific references

• World energy outlook 2004 IEA (2004) International Atomic Agency (2004) . World energy outlook 2004, OECD/IEA, Paris. Online not available
• EEA Core set of indicators (CSI)
• EECCA core set of environmental indicators guidelines for EECCA countries for use of environmental indicators produced by UNECE currently available in Russian; and will be available in  English from December 2006

Indicator definition

Definition: Renewable energy consumption is the ratio between the gross inland consumption of energy from renewable sources and the total (primary) gross inland energy consumption calculated for a calendar year.. It is calculated as the sum of the gross inland consumption of energy from renewable sources. Renewable energy sources are defined as renewable non-fossil energy sources: hydropower, wind, solar, geothermal, wave, tidal, biomass, landfill gas, sewage treatment plant gas and biogases.

Model used: World Energy Model (WEM)

Ownership: International Energy Agency

Temporal coverage: 2004 - 2030

Geographical coverage: Transition countries, excluding the Russian Federation (Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Estonia, Serbia and Montenegro, the Former Yugoslav Republic of Macedonia, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Republic of Moldova, Romania, Slovenia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Cyprus, Malta); the Russian Federation; OECD Europe (Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, Turkey, the United Kingdom); USA; India; China.

Units

Both, renewable final energy and total final energy consumption are measured in million tonnes of oil equivalent (Mtoe). Therefore, the amount of renewable final energy is measured in absolute value, as well as can be presented in the form of a percentage.

Policy context and targets

Context description

Global level

The  Plan of Implementation adopted at WSSD is particulary concerning sustainable energy future. It aims to diversify  energy supply by developing more cost-effective energy technologies such as renewable energy technologies including hydro-technologies.

Pan-European level

 The Guidelines on Reforming Energy Pricing and Subsidies prepared jointly by the UNECE Committees on Environmental Policy and on Sustainable Energy (UNECE Guidelines) as a means of implementing the energy-related provisions of the Aarhus decisions have a number of ways how to meet increasing role of renewable energy within economic instruments and marketing mechanisms.

EU level

On 23 January 2008 the European Commission adopted the 'Climate Action and Renewable Energy' package. The Package sets a number of targets for EU member states with the ambition to achieve the goal of limiting the rise in global average temperature to 2 degrees Celsius compared to pre-industrial times including: GHG reduction of 20% compared to 1990 by 2020. (under a satisfactory global climate agreement this could be scaled up to a 30% reduction); 20% reduction in energy consumption through improved energy efficiency, an increase in renewable energy's share to 20% and a 10% share for sustainably produced biofuels and other renewable fuels in transport. With these goals in mind, each Member State will by June 30th 2010 submit a National Renewable Energy Action Plan to the Commission.

EECCA level

EECCA Strategy follows the proclamations of the Kiev Declaration. However, conceptions of the "renewable energy consumption" are still developing in EECCA regions and are not proclaimed clearly in the current policies.

Targets

Pan-European level

• Increasing the share of renewable energy sources (published in Kiev Declaration in 2003).
• Reforming energy prices and subsidies to promote renewable energy (UNECE Guidelines)

EU level

• increase the share of renewables in its overall energy mix to 20%, including a 10% biofuel target for transport by 2020

EECCA level

• Mobilise investments for renewable energy (EECCA Strategy) 

Links to policy documents

• EECCA Environematal Strategy
• UNECE Guidelines
• Kiev Declaration

Related policy documents

• COM(97) 599 final. Energy for the future.
  Energy for the future: Renewable sources of energy. White Paper for a Community strategy and action plan. COM(97) 599 final.
• COM(2005) 627 final - The support of electricity from renewable energy sources, European Commission.
• COM(2005) 628 final. Biomass Action Plan, European Commission.

Methodology

Methodology for indicator calculation

Renewable final energy consumption is the sum consumption of energy from renewable sources by the different types of these sources: hydro, biomass and waste and other renewables.

Other renewables are a group that includes geothermal, solar, wind, tidal and wave energy. Direct use of geothermal and solar heat is also included in this category.

The term can be presented in 2 ways: absolute and relative ways. In a relative way Renewable Final Energy Consumption is the ratio between the Total Final Energy Consumption of energy from renewable sources and the Total Final Energy Consumption. It is usually expressed as a percentage of the former to the latter. It measures the contribution of renewable energy sources to the Total Final Consumption of energy.

Overview of the World Energy Model 2004

The projections are made with use of the World Energy Model 2004 developed by Internation Energy Agency

The WEM is a mathematical model made up of five main modules: final energy demand, power generation; refinery and other transformation; fossil fuel supply and CO2 emissions. Figure C1. (World Energy Outlook, 2004, p.532) provides a simplified overview of the structure of the model.

The main exogenous assumptions concern economic growth, demographics, international fossil fuel prices and technological developments. Electricity consumption and electricity prices dynamically link the final energy demand and power generation module.

The IEA's WEM is a principal tool used to generate detailed sector-by-sector and region-by-region projections for the Reference and the Alternative Scenarios. (see definitions of scenarios under section reference scenario). The model has been updated and revised over years and the development process continues.
In the WEM 2004 projections of Total Primary Energy Consumption and, consequently, Total Renewable Consumption are made within such categories as: coal, oil, gas, nuclear, hydro, biomass and waste, and other renewables. More detailed descriptions concerning calculating procedures by end-use sectors can be found in the methodology of the Total Primary Energy Consumption since the Renewable Energy Consumption is included into the Total Primary Energy Consumption.  

Key model assumptions for the reference case

The central projections derived from a Reference Scenario. They are based on  a set of assumptions about governmental policies, microeconomic conditions, population growth, energy prices and technology.

Governmental policies and measures
The reference Scenario takes into account only those governmental policies and measures that were already enacted - though not necessary implemented - as of min-2004.   The Reference Scenario does not include possible< potential or even likely future policy initiatives. Major new energy policy initiatives will inevitably be implemented during the projection period, but it is difficult to predict which measures will eventually be adopted and how they will be implemented, especially towards the end of the projection period.

Although the Reference Scenario assumes that there will be no change in energy and environmental policies through the projection period, the pace of implementation those policies and the way they are implemented in practice are nonetheless assumed to vary by the fuel and region. For example electricity and gas market reforms are assumed to move ahead, but at varying speeds among countries and regions. In all cases, the share of taxes in energy process is assumed to remain unchanged, so that retail process are assumed to change directly in proportion to international prices. Similarly, it is assumed that there will be no changes in national policies on nuclear power. As a result, nuclear energy will remain an option for power generation only in those countries that have not officially banned it or decided to phase it out.

Macroeconomic factors
Economic growth is by far the most important driver of energy demand. The link between total energy demand and economic output remains close. Detailed GDP assumptions by region are set out in Table below.

Economic Growth Assumptions (average annual growth rates, in %)

Population growth affects the size and composition of energy demand, directly and through its impact on economic growth and development. The WEO population growth rate assumptions are drawn from the most recent UN populations' projections contained in World population Prospects: the 2002 Revision. Detailed populations assumptions by region are set out in Table below.

Population growth assumptions (average annual growth rates, in %)

As in previous additions of the WEO, average and-user process for oil, gas and coal are derived from assumed price trends on wholesale or bulk markets. Tax rates are assumed to remain unchangeable over the projection period. Final electricity prices are based on marginal power generation costs. The assumed price paths assumed in the table presented below should not be interpreted as forecasts. Rater, they reflect IEA judgment of the prices that will be needed to encourage sufficient investment in supply to meet projected demand over the Outlook period.

Fossil-Fuel Price Assumptions (in year-2000 dollars)

Technological innovation and the rate of development of new technologies for supplying or using energy are important considerations. In general, it is assumed that available end-use technologies become steadily in use and the overall intensity of energy consumption will depend heavily on the rate of retirement and replacement of the stock of capital. Since the energy-using capital stock in use today will be replaced only gradually, most of the impact of technological developments that improve energy efficiency will not be felt until near the end of the projection period.

The rate of capital-stock turnover varies considerably according to the type of equipment. Most cars and trucks, heating and cooling systems and industrial boilers will be replaced by 2030. on the other hand, most existing buildings, roads, railways and airports, as well as many power stations and refineries will still be in use then. The very long life of this type of energy-capital stock will limit the extent to which technological progress can alter the amount of energy needed to provide a particular energy service. Retiring these assets before the end of their normal lives is usually costly and would, in most cases, require major new governmental initiatives - beyond those assumed in the Reference Scenario. Refurbishment can, however, achieve worthwhile improvements in energy efficiency in some cases.

Technological developments will also affect the costs of energy supply and the availability of new ways of producing and delivering energy services. Power generation efficiencies are assumed to improve over the projection period, but at different rates for different technologies. Towards the end of the projection period, fuel cells based on hydrogen are expected o become economically attractive in some power generation applications ad, to a much smaller extent, also expected to improve, lowering the unit production costs and opening up new opportunities for developing resources. But the Reference Scenario assumes that no new breakthrough technologies beyond those known today will be used before 2030.

The World Alternative Scenario

WEO also considers Alternative policy Scenario to analyze how the global energy market could evolve were countries around the world to adopt a set of policies and measures that they are either currently considering or might reasonably be expected to implement over the projection period. The purpose of this scenario is to provide insights into how effective those policies might be in addressing environmental and energy-security concerns

Methodology for gap filling

The development and running of the WEM requires access to huge quantities of historical data on economic and energy variables. Most of the data are obtained from the IEA's own databases of energy and economics statistics. A significant amount of additional data from a wide range of external sources is also used.

The parameters of the demand-side modules' equations are estimated econometrically, usually using data fro the period 19971-2002. Shorter periods are sometimes used where data are unavailable or significant structural breaks are identified. To tae into account expected changes in structure, policy or technology, adjustments to these parameters are sometimes made over the Outlook period, using econometric and other modeling techniques. In regions such as transition economies, where most data are available only from 1992, it has not been possible to use econometric estimations. In such cases, IEA results have been prepared using assumptions based on cross-country analyses or expert judgment.

Simulations are carried out on annual basis. Demand modules can e isolated and simulations run separately. This is particularly useful in the adjustment process and in sensitivity analyses of specific factors.

The WEM makes use of wide range of software, including specific database management tools, econometric software and simulation programmes.

Methodology references

• World energy outlook 2004 IEA (2004) International Atomic Agency (2004) . World energy outlook 2004, OECD/IEA, Paris. Online not available

Data specifications

EEA data references

• No datasets have been specified here.

External data references

• Input data to WEO model - technological developments
• Input data to WEO model - fuel prices
• Input data to WEO model - population
• Input data to WEO model - economic growth
• Input data to WEO model - electricity consumption
• Input data to WEO model - electricity prices
• Input data to WEO model - primary demand for fossil fuels
• Outlook from WEO - Renewable energy consumption

Data sources in latest figures

Uncertainties

Methodology uncertainty

In common with all attempts to describe future market trends, the energy projections presented in the Outlook are subject to a wide range of uncertainties energy markets could evolve in ways that are much different from either the Reference Scenario or the Alternative Policy Scenario. The reliability or WEM projections depends both on how well the model represents reality and on the validity of the assumptions it works under.

Macroeconomic conditions are, as ever, a critical source of uncertainty. Slower GDP growth than assumed in both scenarios would cause demand to grow less rapidly. Growth rates at the regional and country levels could be very different from those assumed here, especially  over short periods. Political upheavals in some countries could have major implications for economic growth. Sustained high oil process  which are not assumed in either of WEM scenarios – would curb economic growth in oil importing countries and globally in the neat term. The impact of structural economic changes, including the worldwide shift from manufacturing to service activities, is also uncertain, especially late in the projection period.

Uncertainty about the outlook for economic growth in China is particularly acute.

The effects of resource availability and supply costs on energy process are very uncertain. Resources of every type of energy are sufficient to meet projected demand through to 2030, but the future costs of extracting and transporting those resources is uncertain – partly because of lack of information about geophysical factor.

Changes in government energy and environmental policies and the adoption of new measures to address energy security and environmental concerns especially climate change, could have profound consequences for energy markets. Among the leading uncertainties in this area are: the production and pricing policies of oil-producing countries, the future of energy-market reforms, taxation and subsidy policies, the possible introduction of carbon dioxide emission-trading and the role of nuclear power.

Improvements in the efficiency of current energy technologies and the adoption of new ones along the energy supply chain are a key source of uncertainty for the global energy outlook. It is possible that hydrogen-based energy systems and carbon-sequestration technologies, which are now under development, could dramatically reduce carbon emissions associated with energy use. If they did so, they would radically alter the energy supply picture in long term. But these technologies are still a long way from ready to be commercialized on a large scale, and it is always difficult to predict when a technological breakthrough might occur.

It is uncertain whether all the investment in energy-supply infrastructure that will be needed over the projection period will be forthcoming. Ample financial resources exist at a global level to finance projected energy investments, but those investments have to compete with other sectors. More important than the absolute amount of finance available worldwide, or even locally, is the question of whether conditions in energy sector are right to attract the necessary capital. This factor is particularly uncertain in the transition economies and in developing nations, whose financial needs for energy development are much greater relative to the size of their economies than they are in OECD countries. In general, the risks involved in investing in energy in non-OECD countries are also greater, particularly for domestic electricity and downstream gas projects. More of the capital needed for energy projects will have to come from private and foreign sources than in the past. Crating an attractive investment framework and climate will be critical to mobilizing the necessary capital

Data sets uncertainty

Major challenge is a reliable input data energy statistics. The statistics of IEA which provide a major input to the WEO, cover 130 countries worldwide. Most time-series begin in 1960 for OECD counties and in 1971 for non-OECD countries. Recently, however, maintaining the very high caliber of IEA statistics has become increasingly difficult, in many cases because national administrations have faced growing problems in maintaining the quality of their own statistics. Breaks in time series and missing data have become frequent in some countries. The lapses compromise the completeness of IEA statistics. They could seriously affect any type of analysis, including modeling and forecasting.

The projections from WEO should not be interpreted as a forecast of how energy markets are likely to develop. The Reference Scenario projections should rather be considered as a baseline vision of how the global energy system will evolve if governments will take no further action to affect its evolution beyond that which they have already committed themselves to.

Rationale uncertainty

In common with all attempts to describe future market trends, the energy projections presented in the Outlook are subject to a wide range of uncertainties energy markets could evolve in ways that are much different from either the Reference Scenario or the Alternative Policy Scenario. The reliability or WEM projections depends both on how well the model represents reality and on the validity of the assumptions it works under.