International Energy Agency Releases Renewables Report, 2021-2026

On December 1st, 2021, the International Energy Agency (IEA) released Renewables 2021, a 175-page analysis and forecast of the major trends in global renewable energy technologies over the next five years to 2026. The report looks at four major overarching trends in the renewable energy market: renewable electricity, biofuels, renewable heat, and renewable electricity.

Here are the key forecasts and analyses from the report:

  1. Renewable electricity. Between 2021 and 2026, global year-over-year additions to global renewable electricity capacity “are expected to average around 305 GW per year,” or slightly more than 1,800 GW in total. While this represents a significant increase in capacity, approximately 60% when compared to the previous five years, the report states that this will not be enough to meet net-zero by mid-century. The primary drivers in renewable electricity capacity additions will be driven by China, Europe, the United States, and India, or around 80% of the market.
  2. Biofuels. Despite rising prices since the onset of the COVID-19 pandemic, the IEA forecasts that “global demand for biofuels is set to grow by 41 billion litres, or 28%, over 2021-2026.” The primary markets to watch over the next five years for biofuel production and consumption are the United States, Europe, India, and China. The IEA forecasts that by 2026, Asia will overtake Europe in total biofuel production “thanks to strong domestic policies, growing liquid fuel demand and export-driven production.” The report notes that while demand for biofuel will remain strongest in North America during this five-year period, “40% of this growth is demand recovery following COVID-19 declines.” The growth in biofuels to will primarily be led by ethanol and renewable diesel, with the U.S. and Brazil remaining “the largest centres for both biofuel demand and production.”
  3. Renewable heat. According to the IEA, between 2021-2026, global heat demand is expected to rise by 17 EJ. This represents a 9% expansion from current demand levels, or a three-fold increase when compared to 2011-2020. As the report correctly identifies, “heat is the world’s largest energy end-use, accounting for almost half of global final energy consumption in 2021,” significantly more than electricity (20%) and transport (30%). Industrial processes and space and water heating in buildings are largely responsible for the global demand for heat. Agriculture and other residential and commercial activities such as cooking also account for global heating demands, but much less so. And while global heat demand saw a minor dip in 2020, due largely to nationwide shutdowns around the world caused by the pandemic, the report argues that policymakers are not doing enough to put the renewable “heat sector on track to meet climate ambitions.”

According to the report, “In 2020 the number of countries with national regulatory policies for renewable heating and cooling was less than a sixth of those with regulatory policies for renewable electricity. More than a third of global heat consumption was not covered by any financial incentive for renewables, and more than half was not subject to any national or provincial renewables-related regulatory measures. At the end of 2020, only ten countries had renewable heat policies covering all sectors (residential and commercial buildings, public facilities and industry).” Most countries with renewable heating and cooling targets are in the European Union.

  1. Renewable energy. The largest section of the report focuses on the global renewable energy market, particularly the impact that rising prices are having on the manufacture and production of solar PV modules, wind turbines, and biofuels. The report notes that “while uncertainty remains as to how long commodity prices will continue their upswing, the impact of rising material costs on the profitability of the renewable energy industry could have long-term implications for the cost of clean energy transitions.” This is particularly true given the trillions in climate finance commitments that policymakers, financial institutions, and other capital investors made at the recent UN Climate Change Conference in Glasgow, Scotland.

Over the next several editions of HRAI’s newsletter, we will provide members with a high-level overview of what Canada (federally and provincially) is doing to contribute to the growth of renewable heating and cooling as well as address more fully the analysis and forecasting on global renewable heating and cooling in the IEA’s report which cannot be included in this summary.

HRAI recognizes that the HVACR industry needs to take centre stage on not only informing policymakers about the heating and cooling market with respect to major climate change discussions but ensuring government policy follows the industry’s lead and not the other way around.

The report highlights the importance of the industry’s role in this discussion when it notes that “designing policy for renewable heating and cooling can be a challenge due to the fragmented and diverse nature of heat markets and the local characteristics of heat demand. This makes collaboration with sub-national actors necessary, and partly explains the limited national policy coverage.”

For more information, contact Stephen Chartrand at 1-800-267-2231 ext. 276, or email schartrand@hrai.ca.

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