After two years of the COVID-19 pandemic, the world was hoping for a green recovery to “build back better”. Yet the global energy transition is not happening. A rebound in economic activity led to a roughly 4% increase in global energy demand, much of which was met by fossil fuels. The spike in energy prices in the second half of the year, followed by the Russian Federation’s invasion of Ukraine in early 2022, contributed to an unprecedented global energy crisis and commodity shock.
The year must serve as a turning point for the energy transition. The crisis facing our current fossil fuel-based energy system is alarming, and we urgently need to transition to renewables in all economic and societal activities. Renewables need to be at the heart of the political response to the energy crisis. Only an energy-efficient and renewable-based economy can be a game changer for a more secure, resilient, low-cost – and sustainable energy system.
The greatest success for renewables in 2021 was in the power sector. A record 315 GW of new renewable power capacity was added – enough to power every household in Brazil. The biggest success stories are solar PV and wind, accounting for 90% of all new renewable power additions. Yet current deployment of renewable power is still far from what we need to keep the world on track to reach net zero emissions by 2050.
We don’t use enough renewables to heat and cool our homes. The energy used in buildings accounts for around one third of the global final energy demand, yet renewables are progressing only slowly in the sector (only 14.7% of energy use in buildings), representing only a 4 percentage-point increase from a decade before.
The industry sector is the largest energy user, accounting for more than a third of global final energy demand. Yet despite large potential to meet industrial energy demand with renewables (especially for low-temperature process heat), little progress has been made on shifting the sector to renewables. Interest in renewables is picking up in agriculture.
Progress in the transport sector remains slow. The share of renewables in the sector’s final energy consumption grew only 1.2 percentage points between 2011 and 2019, to 3.7%. Despite a temporary reduction in transport energy demand related to COVID-19, the overall trend is towards rapidly rising demand, with a whopping 24% increase during the decade.
This report features a number of Snapshots (case studies) from around the world putting forward stories from 2022; where renewables have been deployed in different end-use sectors (buildings, transport, industry and agriculture) at the national and subnational level. These stories showcase the context, drivers, challenges and achievements, as well as stakeholders involved and are portrayed through policy, markets investment, energy access, system integration and cities lenses.
Renewables experienced yet another year of record growth in power capacity, despite aftershocks from the pandemic and a rise in global commodity prices that upset renewable energy supply chains and delayed projects. The role of renewables in improving energy security and sovereignty by replacing fossil fuels became central to discussions, as energy prices increased sharply in late 2021 and as the Russian Federation’s invasion of Ukraine unfolded in early 2022.
Policy support for renewables remained strong throughout 2021, particularly in the power sector. By the end of 2021, nearly all countries had in place a renewable energy support policy, with most support continuing to occur in the power sector and fewer efforts to accelerate renewables in buildings, transport and industry. Electrification of end-uses such as heating and road transport has emerged as a focus for decision makers, also supported by expanding bans on fossil fuels.
Renewable energy continued to grow in 2021. Modern bioenergy provided 5.3% of total global final energy demand in 2020, accounting for almost half of all renewable energy in final energy consumption. New geothermal power generating capacity of 0.3 GW came online in 2021, bringing the global total to around 14.5 GW. In the power sector, the biggest success stories are solar PV and wind, together, accounting for nearly 90% of all new renewable power additions. In comparison, only 27 GW of hydropower capacity was brought online in 2021, and for the first time concentrating solar thermal power experienced a decrease in installed capacity, while the potential for ocean power remains largely untapped. While heat pumps met only around 7% of global heating demand in residential building, they are becoming more common in new buildings.
By the end of 2021, 90% of the global population had access to electricity, although 2.6 billion people still lacked access to clean cooking, relying mostly on traditional use of biomass. In 2021, the market for small off-grid solar devices continued to face supply issues, shortages, and price increases, although there were signs of recovery compared to 2020.
Renewable energy investment reached a record high in 2021 despite impacts from the COVID-19 pandemic. Global new investment in renewable power and fuels (not including hydropower projects larger than 50 MW) reached an estimated USD 366 billion in 2021, a record high. Solar PV and wind power continued to dominate new investment, with solar PV accounting for 56% of the total and wind power for 40%.
The share of variable renewable energy sources (wind and solar) in the global electricity mix exceeded 10% for the first time in 2021. The rise of increasingly cost-effective energy storage combined with greater demand-side flexibility and the expansion of transmission infrastructure is making it possible for regions with widely differing resource endowments to transition to fully renewable-based power systems.
City governments used a broad range of targets, policies and actions to show local commitment to renewables. By the end of 2021, around 1,500 cities had renewable energy targets and/or policies, collectively covering more than 1.3 billion people, or 30% of the global urban population. In line with global trends, net zero announcements skyrocketed, with targets present in more than 1,100 cities.