12 January 2013 | Articles
Despite the significant progress made over the past decade and the growth in policy support, renewables are yet to reach their full potential and key barriers still inhibit further development. These relate to technology, awareness and capacity, cost, finance, infrastructure and public acceptance, in addition to policy, regulatory, institutional and administrative barriers. Unless renewable energy and energy efficiency are scaled up more rapidly, international climate objectives will not be met, and even the 2‑degree Celsius limit for global warming, as set out in the 2015 Paris Agreement, will not be achievable.
The report Renewable Energy Policies in a Time of Transition, prepared jointly by the International Renewable Energy Agency (IRENA), the International Energy Agency (IEA) and the Renewable Energy Policy Network for the 21st Century (REN21), identifies key barriers and highlights policy options to boost renewable energy deployment. The report highlights that substantial efforts are still required to scale-up deployment (together with energy efficiency) to meet climate objectives. To this end, a combination of policy measures are needed focusing on direct support (deployment), integration and enabling environment.
Direct policy support for renewable energy has to be increased in the power and end-use sectors, which both account for large shares in final energy consumption as well as energy related CO2 emissions. In the power sector, IRENA has been analysing renewable energy auctions globally and disseminating lessons learned and best practices in the design and implementation of auctions since 2012, and has become the go-to organisation for the design of auctions.
Meanwhile, enabling policies are needed to ensure effective operating conditions for renewables in energy systems and markets. Enabling policies contribute to a wider environment for renewable energy development. These include policies that issue clear signals to stakeholders (e.g., clearly defined targets, environmental and climate policies and regulations), level the playing field for renewables (e.g., fossil fuel subsidy reforms, carbon pricing policies), ensure the reliability of technology (e.g., quality and technical standards, certificates), facilitate access to affordable financing at multiple levels, manage land use, and support labour-market needs (through direct measures and through education and training). In addition, the development of a local industry can be supported through industrial policy (e.g., leveraging local capacity) and trade policies (e.g., trade agreements, export promotion).
As renewables transition from niche to mainstream, the policies that drive the transition must cover their integration into the broader energy system. Integrating policies incorporate the use of renewables and energy efficiency in the heating and cooling, transport, and power end-uses, and into the larger energy and economic system and into consumers’ daily lives. As such, policies are needed to ensure the development of the infrastructure needed (e.g., transmission and distribution networks, charging stations for electric vehicles, district heating infrastructure), policies to enhance system flexibility (e.g., support for energy storage deployment), to promote sector coupling and to support research, development and demonstration. Measures to encourage the economy to take full advantage of successive steps in the energy transition are also needed to ensure a smooth and sustainable energy transition for all. Integrating policies also include measures to encourage behavioural change (through raising awareness programmes) and policies to couple renewable energy technologies with livelihoods (in the access context).
In any area of energy use, no single instrument can fulfill all country objectives. Policies must be selected with care and designed or adapted to reflect specific national and local circumstances. The long-term stability of targets and policies is key to ensuring investor confidence and continued growth. At the same time, policies need to continuously adapt to changing market conditions, to achieve greater cost-competitiveness and improved integration of renewables into the system. To ensure that the energy transition accelerates, greater attention must be paid to the transformative impact on society, institutions, financing, ownership structures and the wider economy. This requires supporting effective participation by all stakeholders.