MAKING RENEWABLE ENERGY A KEY PERFORMANCE INDICATOR

2020 – a year of new norms

The year 2020 was one of new norms. As the world witnessed the tragic impacts of a pandemic, communities also experienced the health and well-being benefits stemming from the sudden decline in the use of fossil fuels, such as higher air quality and bluer skies. People also understood, collectively, the importance of governments mobilising quickly in the face of a crisis – in response not only to the immediate public health challenge and the economic recession that followed, but also to longer-term crises related to air pollution, climate change and biodiversity loss.

As a result, 2020 was also a year of accelerating ambition. The total number of national targets for achieving net zero emissions (including targets already in law, proposed and drafted) covered countries responsible for more than 80% of global carbon dioxide (CO2) emissions. The public consensus increasingly reflects the emerging vision to move beyond fossil fuels, which are responsible for nearly 90% of CO2 emissions. Under pressure from citizens, civil society and the courts, countries are being forced to strengthen their own climate plans, while fossil fuel companies are losing legal and shareholder battles. At the same time, businesses are buying ever larger amounts of renewable energy.

Renewable energy is central to the solution, both to continue to fight climate change at scale and to overcome the post-pandemic economic recession. Growing commitments towards net zero emissions highlight a rising tide of awareness of the urgent action needed to address climate change and air pollution and to accelerate sustainable development. Rising ambition and economic recovery packages also provide an opportunity to channel needed funding to renewable energy and further accelerate the transition.

Persistent Challenges for Renewables

However, a heightened profile does not automatically translate into action and implementation. Obstacles that have prevented the growth of renewable energy in past years continued during 2020. They include the lack of integrated, cross-sectoral strategies to drive the transition; the lack of sufficient policy support and enforcement; persistent support for fossil fuels; the need for infrastructure development and increased affordability in some markets; and the need for more innovation in some sectors. Together, they have led to only a slow increase in the share of renewable energy in final energy demand.

At the same time, the world is burning more fossil fuels than ever. Since 2009, the share of fossil fuels in final energy consumption has remained the same, and global energy demand has expanded around 20%. Renewable energy meets just over 11% of global final energy demand – only a slight increase from around 9% a decade ago.

The share of renewables has increased only moderately each year despite tremendous growth in some renewable energy sectors. Renewables grew almost 5% per year between 2009 and 2019, outpacing growth in fossil fuels (1.7%). However, energy demand also grew significantly over the period. As a result, renewables accounted for only one-quarter of the total growth in the world’s use of energy.

Energy efficiency also faced challenges in 2020. The rate of improvement in energy intensity (a common indicator of energy efficiency) has been declining since 2015, and in 2020 the rate was half that of the previous two years.

The persistent share of fossil fuels, as well as increasing energy demand, underscore the complementary and fundamental roles of energy conservation and efficiency alongside renewables to increase the renewable share while meeting global energy needs. However, energy conservation, energy efficiency and renewable energy are not enough by themselves; it also is necessary to leave fossil fuels in the ground and to phase out existing fossil fuel capacity.

Progress that has been made has occurred primarily in the power sector, where the share of renewables is highest. However, overall energy use in the power sector is much lower than energy consumed in other sectors, such as heating, cooling and transport. Together, these other sectors account for more than 80% of final energy demand, yet their renewable energy shares are much lower than for the power sector.

These sectors also saw more difficulty in 2020 than in past years. The uptake of modern renewables for heating and cooling progressed slowly, and consumption of renewable heat fell during the pandemic. Similarly, in contrast to previous years when the share of renewables showed some growth, albeit limited, the transport sector’s renewable energy share did not increase in 2020. The uptake of renewables in heating and transport is constrained by these sectors’ high dependence on fossil fuels, which is exacerbated by persistent fossil fuel subsidies, insufficient renewable energy policy support and enforcement, and slow developments in new technologies (such as advanced biofuels).

At the same time, 2020 offered some bright spots. Although the early phase of the pandemic was a difficult period for renewables, new renewable power capacity hit a record increase globally. Renewables were the only source of electricity generation to experience a net increase. Investment in renewable power grew for the third consecutive year, and corporations continued to break records for sourcing renewable electricity. More countries are turning to electrification of heat with renewable energy, and although production of transport biofuels decreased, electric vehicle sales expanded, as did the linking of these vehicles to renewable electricity.

The status of renewable energy in 2020 shows that a structural shift from fossil fuels to renewables is required. A structural shift does not mean moderately increasing the share of renewable energy from one year to another. It does not mean gradually lowering the contribution of fossil fuels. It means transitioning from fossil fuels to a renewable energy-based system in all societal and economic activities. Targets, policies and investment are the tools on our workbench – and reaching significantly higher shares of renewable energy is the blueprint we must follow.

Renewable
Energy
Targets

Most of the world’s largest countries and greatest emitters of greenhouse gases lack clear, economy-wide objectives to shift to renewables in all sectors. Only five members of the G20 – the European Union (EU-27), France, Germany, Italy and the United Kingdom – had set 2020 targets to achieve a specific share of renewables in final energy use, and some were clearly not on track to achieve their own targets by year’s end.

Overall, 165 countries had targets in place to achieve certain levels of renewable energy by 2020. However, most of the targets were only for the power sector. In addition, these target-setters were not always on track leading up to 2021. Overall, some 80 targets for 2020 had already been met, while the majority (134) had not yet been achieved, according to the latest data available.

Even when countries meet their commitments, they do not always set new ones to chart the path towards higher ambition. Only half of the countries with 2020 targets had set later more ambitious targets by year’s end. Worse still, most of the countries that have not set new targets had not yet even achieved their first. In short, countries are missing the mark and are failing to plan ahead to increase their ambition.

Policies to Support Renewable Energy and Phase Out Fossil Fuels

Countries do not achieve their targets in large part because they lack a supportive policy framework, or because the policy frameworks they have are ineffective or not enforced. This year of new norms – 2020 – highlighted inaction among the world’s policy makers and the lack of concrete measures to decarbonise their economies. It was the first year in which the number of countries with renewable energy support policies did not increase.

In addition, the heating and cooling and transport sectors lag far behind the power sector. While the number of countries with policies for renewable energy in transport plateaued in 2017, the number of countries with policies for heating and cooling peaked that year and has been declining ever since.

Supportive policy frameworks are critical to build renewables-based energy systems around the world. The successful uptake of renewable energy has been driven by bold policy making. However, unconditional support for propping up fossil fuels continues, while renewables receive far less support. The world will not reach its climate and development goals until renewable energy is prioritised.

In addition, stable policies are crucial to ensure that targets for renewables and net zero emissions are achieved. Today’s stop-and-go policy making poses a grave threat to the future development of renewables.

Renewable Energy Investment

Global investment in renewable power capacity withstood the economic crisis triggered by the COVID-19 pandemic, totalling USD 303.5 billion in 2020. This 2% increase over 2019 marks a significant rebound, particularly given conditions at the start of the year.

However, this annual increase of 2% is well below necessary levels. At this rate, total growth in renewable energy investment will be only 22% by 2030. To reach global climate and sustainable development goals, annual investment in renewables must at least triple by 2030i, for a total increase of 200%.

Economic recovery packages provide an opportunity to reorient investment. However, despite international calls to “build back better” during the COVID-19 crisis, investment in fossil fuels in COVID-19 recovery packages was six times higher than for renewable energy.

Beyond recovery funds, fossil fuel subsidies remain in the hundreds of billions of dollars, far above the support for renewables. In addition, investment in new fossil fuel production and related infrastructure continued in many countries. In 2020, the world saw the first annual increase in global coal capacity since 2015.

Renewable Energy as a Key Performance Indicator in all Economic Activities

Nothing will happen unless we measure the right indicator. Considering the urgency of accelerating the structural shift from fossil fuels to renewables in all societal and economic activities, it is not enough anymore to track renewable energy targets, policies and investment. The world’s progress towards global climate and sustainable development goals can be measured by a simple key performance indicator: the share of renewable energy.

The share of renewable energy reflects developments in energy demand, energy conservation, energy efficiency and emissions in addition to renewable energy uptake and the reduction of fossil fuel use. Reaching a high renewable energy share can be used as the blueprint for a structural shift towards a transformed energy world.

Therefore, this indicator should be integrated at every level of decision making. Because energy is everywhere, the energy transition needs to happen everywhere. This particular key performance indicator lets people measure progress and ensure engagement globally, nationally, in regions, in cities, in any economic sector and even in businesses.