ENERGY
LONG-TERM
POLICIES
FOR THE
RENEWABLE
ENERGY
TRANSITION
DR FATIH BIROL
Executive Director,
International Energy Agency
48
Almost one year ago, the world greeted
the Paris Agreement with enthusiasm.
Yet as the initial excitement began to
settle, the question that remained was
whether or not this event marked a true
sea change in the energy transition.
We have long said that predictable
and stable policies can provide long-
term price signals that attract fi nance.
So, will the Paris Agreement spur the
appropriate policies and investment
necessary to keep us on track to a
2 degree scenario?
Investment in low-carbon electricity
is a crucial component of a successful
climate strategy. Electricity is the single
greatest contributor to global emissions,
with electrifi cation and growth driving
demand in emerging economies. The
IEA’s annual Tracking Clean Energy
Progress report concluded in 2016
that the deployment of the majority of
low-carbon technologies will need to
signifi cantly accelerate to put the global
energy system on track for an impactful
low-carbon transition.
Yet what we are seeing lately is
encouraging. Investment into renewable
electricity was nearly three times higher
than for fossil fuel generation in 2015.
China reached a new high of nearly
US$ 100 billion, making up 60% of its
total generation investment, with wind
investment for the fi rst time surpassing
hydropower. Meanwhile, renewable
investment in India increased to near
US$ 10 billion, with strong underlying
momentum where policy support
and improving economics are driving
an expansion of onshore wind and
solar photovoltaics. While renewable
investment in the European Union has
trended down in recent years, off shore
wind reached its highest level to date.
Three broad trends are at work here.
First, the spread and implementation of
enabling policies to countries with good
resources are supporting the cases
for investment. This momentum was
enhanced with climate pledges stemming
from the 2015 Paris Agreement, providing
further long-term decarbonisation signals.
Second, cost defl ation and technology
improvements mean that a dollar invested
in renewables yields far more capacity
and energy than it did fi ve years ago.
Third, supportive fi nancing factors, such
as availability of lower cost debt, are
enhancing investment.
However investment challenges persist.
While Paris Agreement pledges underpin
a new normal for renewable deployment,