World Energy Outlook 2007

Box 1.2: Renewable Energy in the Alternative Policy Scenario
Renewable energy plays a much greater role in the Alternative Policy
Scenario, reflecting increased government support worldwide. Excluding
traditional biomass, renewable energy increases from 713 Mtoe in 2005 to
1 976 Mtoe in 2030 – 27% more than in the Reference Scenario.
Most of the policies currently under consideration (and therefore taken into
account in the Alternative Policy Scenario) focus on the power sector and
on transportation. The most significant increases come from the power
sector, where renewable energy is projected to account for 29% of global
electricity generation in 2030, compared with 18% now. Renewables
overtake gas to become the second-largest source of electricity after coal.
Renewables account for 43% of incremental electricity generation between
2005 and 2030, with most of the increase coming from hydropower, wind
power and biomass. In transport, global biofuel consumption increases
from 19 Mtoe to 164 Mtoe, displacing around 3.4 mb/d of diesel and
gasoline in 2030 (compared with 2.1 mb/d in the Reference Scenario).
Excluding traditional biomass and hydropower, other renewables’ share of
primary energy demand increases five-fold to 1 512 Mtoe in 2030, 33%
higher than in the Reference Scenario.
The European Union already has ambitious policies in place to promote
renewable energy. Implementation of these policies results in a 15% share
of renewables in primary energy demand in 2030 in the Reference
Scenario.
The target set by EU governments is to reach 20% in 2020. To meet it,
additional measures going beyond those already announced must be put in
place. In the Alternative Policy Scenario, renewables account for 19% of
primary energy demand and 38% of electricity generation in 2030.
Nonetheless, the indicative EU target, to reach a 34% share in 2020, is
projected to be met only in 2024. Renewables for electricity represent about
60% of capacity additions between now and 2030. This would call for
investment of $603 billion (in year-2006 dollars), or almost two-thirds of
total investment in power generation. The proposed target for biofuels, to
meet at least 10% of road transport fuel needs by 2020, is reached in 2022
in this scenario.
firms – invest more in energy-efficient appliances and equipment, while energy
suppliers generally invest less in new energy-production and transport
infrastructure, in response to lower demand, compared with the Reference
Scenario. Overall, the net investment required by the energy sector – ranging
from end-use appliances to production and distribution of energy – is
$386 billion less over 2006-2030 (in year-2006 dollars) in the Alternative
106 World Energy Outlook 2007 - GLOBAL ENERGY PROSPECTS: IMPACT OF DEVELOPMENTS IN CHINA & INDIA