Fuelling modern economies
G20 Summit

Fuelling modern economies

G20 member economies are central to the global energy transition. Together, they account for 85% of the global economy, three quarters of world trade and two-thirds of the global population. They also collectively account for more than 80% of energy-related carbon dioxide emissions and almost 80% of global energy consumption.

Yet no two G20 countries are completely alike, whether in terms of culture and history, economic structure, natural resources or political priorities. Likewise, no two will follow the same path towards a clean energy transition – which forms the basis of Argentina’s G20 theme of energy transitions.

Despite this diversity, the goals of the countries are the same: modernising and diversifying our economies, improving energy security, securing energy access, improving air quality and, of course, mitigating climate change. But the routes that each country takes to get there will vary considerably.

Some countries will rely heavily on hydropower, while others will look to modern renewables such as wind, bioenergy and solar photovoltaics. Others will focus on electric vehicle deployment, nuclear or abatement of fossil fuel power generation. No single clean energy technology or cleaner fuel has all the answers. Multiple solutions are required.

The International Energy Agency is working closely with G20 countries, helping to navigate their respective energy transitions, in part through providing the most up to date and reliable energy data available – and using it to track the transitions.

Missed targets

What we are seeing globally is not encouraging. Last year, of the 38 energy technologies and sectors that we are tracking, only four are on track to meet long-term goals for climate, energy access and air pollution. Energy efficiency improvements have slowed and progress on key technologies including carbon capture, utilisation and storage remains stalled. This lack of progress contributed to an increase in global energy-related emissions of 1.4% last year.

However, if we look at G20 economies specifically, there is reason for optimism. Energy efficiency in particular has been prioritised by G20 members and is a pillar of the 2030 Agenda for Sustainable Development, due to its contribution to energy security, industrial competitiveness, emissions reduction, economic growth, job creation and other social benefits. G20 economies are leading the way on this front: the energy intensity of G20 countries was 21% lower in 2015 than in 2000. Since 2010, G20 economies have improved their energy intensity at rate of 2.4% per year.

There is also good news in terms of renewable power, benefitting from innovation and in part from significant cost reductions – notably for solar and wind, which are now cost competitive in a growing number of cases. In the G20, although hydropower remains the largest source of renewable power capacity, wind and solar photovoltaics are catching up fast.

The need for global progress

But much more progress will be needed on renewables, not only in G20 countries, but worldwide. This will require continuing to address the issue of system integration – that is, how we best incorporate variable renewables such as wind and solar into our electricity systems. This is critically important. A large number of G20 countries are expected to reach double-digit shares of variable renewables in the next five years: Germany will see the largest at over 25% of total generation, followed by the United Kingdom, Italy, Mexico, Australia and the United States.

Successful system integration will include regional grid integration, flexible power plants, electricity storage, grid stabilisation through digital technologies and demand-side management. G20 economies are in a position to encourage market designs that can be used to adapt electricity markets, facilitating their ability to successfully integrate higher shares of variable renewables. There are many approaches to share as countries transition their power sectors to cleaner fuels.

The IEA is supporting G20 economies on both energy efficiency and renewables, along with a range of other key issues related to the energy transitions: natural gas and energy security, renewable heat and biofuels and electric mobility. In addition, the IEA is committed to ensuring that policies are developed on a foundation of good quality, reliable and timely data.

In support of these efforts, the IEA in collaboration with Argentina’s ministry of energy produced a pair of technical reports: Energy Transitions in G20 Countries: Energy Transitions towards Cleaner, More Flexible and Transparent Systems and Energy Transitions in G20 Countries: Energy data transparency and market digitalization. The IEA will continue to work closely with G20 economies – and of course all other countries around the world – to ensure that whatever path they choose, a successful energy transition can be realised for the good of us all.