Policy Landscape

Increasing renewable energy deployment contributes to multiple policy objectives, including boosting national energy security and economic growth, creating jobs, developing new industries, reducing emissions and local pollution, and providing affordable and reliable energy for all.1 Policy makers continue to promote renewable heating and cooling, renewable transport technologies and renewable power by implementing a range of policies including targets, regulations, public financing and fiscal incentives as well as, increasingly, complementary policies enacted together. (→ See Table 2.) As of year-end 2017, 179 countries had renewable energy targets at the national or state/provincial level, up from 176 the previous year.2

The interaction of policy, cost reductions and technology development has led to rapid change in the energy sector, prompting both proactive and reactive responses from policy makers. Market and regulatory environments are being adjusted, with many countries introducing mechanisms designed to accelerate investment, innovation and the use of smart, efficient, resilient and environmentally sound technology options.3 Renewable energy policies are just one component of broader energy sector policies, such as fossil fuel subsidies or carbon pricing mechanisms.

The challenges and opportunities, as well as the suite of policies adopted, vary widely by region and country, and also by level of government. In more mature renewable energy markets, policy makers are starting to grapple with integrating rising shares of distributed and variable renewable energy (VRE) into power systems that were developed primarily for centralised fossil fuel, nuclear and hydropower generation. Policy makers also are dealing with the challenges posed by traditional grid-connected consumers who are producing their own electricity and wish to feed their surplus generation into the grid. To advance the integration of VRE, some policy makers have begun to adopt policies that increase the electrification of the thermal (heating and cooling) and transport sectors. To increase access to modern energy services, many policy makers in developing countries are designing mechanisms to maximise the potential of renewable energy-powered micro-grids as an alternative to expanding traditional centralised power networks, especially in rural areas where expanding the grid is not cost effective. (p See Distributed Renewables chapter.)

Policy makers at the sub-national level often play a leading role in renewable energy policy, with the re-emergence of more decentralised energy systems spurring the engagement of city and local officials. Many have used the direct control over planning policies – including building regulations and purchasing authorities – that their national-level counterparts may lack to shape energy pathways for their communities. Local commitments to renewable energy frequently are driven by the economic benefits deriving from renewable energy, as well as by the potential for climate change mitigation, improved local air and/or water quality, and local job creation.

Cities regularly lead on efforts to deploy innovative technologies in the power sector and may be key drivers for transitioning other energy end-use sectors by promoting electric vehicle (EV) integration, modernising public transport fleets and mandating the use of biofuels or solar water heating to meet municipal heating needs. Lessons learned at the local level often inform the development of national policy.

The following sections provide an overview of renewable energy policy developments in 2017 by end-use sector. The chapter has evolved to keep pace with emerging trends in the energy sector, such as the need for more systematic sector coupling and integration of VRE. The examples featured are intended to provide a snapshot of developments and trends in renewable energy policy in 2017 and are not intended to be a comprehensive list of all policies enacted to date. In addition, the chapter does not attempt to assess or analyse the effectiveness of specific policy mechanisms.

Further details on newly adopted policies and policy revisions are included in the Reference Tables and endnotes associated with this chapter. Policies for energy access are covered in the chapter Distributed Renewables for Energy Access.

Trends in 2017

Many historical trends remained unchanged in 2017, with the growth of renewable energy around the world spurred by a combination of targeted public policy and advances in energy technologies. A trend is emerging towards coupling of the thermal (heating and cooling), transport and power sectors, as well as towards increasing linkages between renewable energy and energy efficiency, although such measures remain limited.

New cross-sectoral integrated policies were introduced in 2017 in several countries. Indonesia outlined goals for reducing energy intensityi by 17% across the industry, transport, residential and services sectors and for achieving a 23% renewable share of primary energy by 2025.4 Switzerland also introduced new cross-sectoral policies in 2017.5 (→ See Box 1.) By end-2017, 87 countries had economy-wide renewable energy targets for either primary or final energy, and Ukraine increased its target during the year.6 (→ See Reference Tables R3 and R4.)

Direct policy support for renewable energy, as in past years, continued to focus primarily on power generation, with direct support for renewable technologies lagging in the heating and cooling and transport sectors. (→ See Figure 10 and Reference Tables R5-R11.) However, efforts to increase renewable energy in heating, cooling and transport benefit from rising shares of renewable power to the extent that electricity is used in these sectors. A focus also is emerging on integrating VRE into existing energy systems, which may necessitate sector coupling

The European Union (EU) was the only regional entity to adopt a collective regional commitment to renewable energy in 2017.7 The EU’s Clean Energy for All Europeans package covers the energy market, renewable energy and efficiency policies, and will use a common reporting framework to measure the impact of policies on the power system as well as on emission goals.8 The first legislative element of the package, on energy efficiency, was passed in 2017.9 The debate around the next round of European energy targets extending to 2030 continued throughout the year, with the European Parliament voting in January 2018 in favour of a goal for renewables to meet 35% of regional energy demand by 2030.10

Local government continues to play a leading role in the global energy transition, as demonstrated by the ambitious targets that many have set, with hundreds of jurisdictions having made commitments to 100% renewable energy or electricity by end-2017. (→ See Reference Table R14.) These targets typically take one of two forms: either the establishment of a renewable energy goal for energy use across the municipality, or a commitment to use renewable energy for government-controlled energy generation and consumption. Municipal leaders in Japan released the Nagano Declaration in 2017 committing to work towards 100% renewable energy for cities and regions across the country.11 New 100% renewable energy or electricity targets were established in 8 US cities in 2017, bringing the nationwide total to 48, of which 5 had already met their 100% goals by year’s end.12

Cities also have taken collective action to aggregate the impacts of their commitments. In 2017, more than 250 US mayors committed to the US Conference of Mayors’ goal of 100% renewable energy by 2035 (although these have not all been enacted in legislation yet).13 In Germany, over 150 districts, municipalities, regional associations and cities had committed to 100% renewable energy by the end of 2017 through the 100% Renewable Energy Regions network.14 Initiatives such as C40 Cities also are driving collaboration, allowing cities to share practices to advance their energy transitions.15

Renewable Energy Linkage to Climate Change Policies

Many commitments to advance renewable energy have been made through climate change policies worldwide, which often feature specific renewable energy and energy efficiency goals. (→ See Table 2.) Increasingly ambitious climate targets in some jurisdictions will require action across all energy end-use sectors, even in cases where specific energy targets are not included. In 2017, 25 C40 member cities from across the world established goals to reach net-zero emissions by 2050.16 New Zealand also proposed a target of net-zero carbon by 2050, and four out of seven Australian states or territories introduced net-zero emissions targets for 2050.17

Specific mechanisms such as carbon taxes, the elimination of fossil fuel subsidies, and emissions trading schemes often are used to meet carbon reduction goals. (→ See Figure 4 in Global Overview chapter.) The impact of each of these policies on the renewable energy sector varies widely. Historically, renewable transport fuels or technologies for renewable heating and cooling, for example, have been more likely to benefit from carbon pricing mechanisms than have renewable power generating technologies, although this is not always the case.18

In 2017, China launched the world’s largest emissions trading scheme, with the first phase of the new cap-and-trade programme focusing on the country’s power sector.19 In the United States, the nine northeast states that make up the Regional Greenhouse Gas Initiative agreed to reduce power plant greenhouse gas emissions across the region 65% by 2030.20 Additionally, the 19 member countries of the BioFuture Platform, a global network aiming to fight climate change through scaling up deployment of modern sustainable low-carbon transport options, made a formal commitment to develop targets for biofuels to address the climate impacts of the energy-transport nexus.21

The social cost of carbon also can be used to promote low-carbon energy sources in energy sector regulation.22 In 2017, public utility commissions in the US states of Colorado and Minnesota both issued rulings requiring that a cost of USD 43 per tonne be considered by utilities when they plan new power plants.23