2022年清洁能源转型安全报告(英)-IEAVIP专享VIP免费

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Security of Clean

Energy Transitions

The IEA examines the

full spectrum

of energy issues

including oil, gas and

coal supply and

demand, renewable

energy technologies,

electricity markets,

energy efficiency,

access to energy,

demand side

management and

much more. Through

its work, the IEA

advocates policies that

will enhance the

reliability, affordability

and sustainability of

energy in its

31 member countries,

11 association countries

and beyond.

Please note that this

publication is subject to

specific restrictions that limit

its use and distribution. The

terms and conditions are

available online at

www.iea.org/t&c/

This publication and any

map included herein are

without prejudice to the

status of or sovereignty over

any territory, to the

delimitation of international

frontiers and boundaries and

to the name of any territory,

city or area.

Source: IEA. All rights

reserved.

International Energy Agency

Website: www.iea.org

IEA member

countries:

Australia

Austria

Belgium

Canada

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Japan

Korea

Lithuania

Luxembourg

Mexico

Netherlands

New Zealand

Norway

Poland

Portugal

Slovak Republic

Spain

Sweden

Switzerland

Republic of Türkiye

United Kingdom

United States

The European

Commission also

participates in the

work of the IEA.

IEA association

countries:

Argentina

Brazil

China

Egypt

India

Indonesia

Morocco

Singapore

South Africa

Thailand

Ukraine

INTERNATIONAL ENERGY

AGENCY

Abstract

Security of Clean Energy Transitions

PAGE | 3

Abstract

This report examines the evolving challenges of maintaining energy security in the

context of clean energy transitions on the pathway to net zero emissions. The

report reflects on the security implications of the triple global crisis, the climate

emergency, the global energy crisis and the social and economic implications of

the Covid-19 pandemic.

The report highlights key energy security concerns during energy transitions and

provides governments, notably within the Group of Twenty (G20), with policy

recommendations for maintaining and improving energy security, while

accelerating clean energy transitions to address the triple crises.

In the context of Indonesia’s G20 Presidency, the Ministry of Energy and Mineral

Resources invited the International Energy Agency (IEA) to produce a second

edition of its Security of Clean Energy Transitions report, the first having been

published in 2021, building on the G20 Naples Principles.

In the run up to the Bali G20 Energy Transitions Ministerial in September 2022,

this report is intended to support discussions among the G20 countries and further

elaborate on the G20 Naples Principles, agreed at the G20 energy ministers’

meeting in Naples in 2021, by providing analysis, insights and recommendations.

/49

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SecurityofCleanEnergyTransitionsTheIEAexaminesthefullspectrumofenergyissuesincludingoil,gasandcoalsupplyanddemand,renewableenergytechnologies,electricitymarkets,energyefficiency,accesstoenergy,demandsidemanagementandmuchmore.Throughitswork,theIEAadvocatespoliciesthatwillenhancethereliability,affordabilityandsustainabilityofenergyinits31membercountries,11associationcountriesandbeyond.Pleasenotethatthispublicationissubjecttospecificrestrictionsthatlimititsuseanddistribution.Thetermsandconditionsareavailableonlineatwww.iea.org/t&c/Thispublicationandanymapincludedhereinarewithoutprejudicetothestatusoforsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersandboundariesandtothenameofanyterritory,cityorarea.Source:IEA.Allrightsreserved.InternationalEnergyAgencyWebsite:www.iea.orgIEAmembercountries:AustraliaAustriaBelgiumCanadaCzechRepublicDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIrelandItalyJapanKoreaLithuaniaLuxembourgMexicoNetherlandsNewZealandNorwayPolandPortugalSlovakRepublicSpainSwedenSwitzerlandRepublicofTürkiyeUnitedKingdomUnitedStatesTheEuropeanCommissionalsoparticipatesintheworkoftheIEA.IEAassociationcountries:ArgentinaBrazilChinaEgyptIndiaIndonesiaMoroccoSingaporeSouthAfricaThailandUkraineINTERNATIONALENERGYAGENCYAbstractSecurityofCleanEnergyTransitionsPAGE3IEA.Allrightsreserved.AbstractThisreportexaminestheevolvingchallengesofmaintainingenergysecurityinthecontextofcleanenergytransitionsonthepathwaytonetzeroemissions.Thereportreflectsonthesecurityimplicationsofthetripleglobalcrisis,theclimateemergency,theglobalenergycrisisandthesocialandeconomicimplicationsoftheCovid-19pandemic.Thereporthighlightskeyenergysecurityconcernsduringenergytransitionsandprovidesgovernments,notablywithintheGroupofTwenty(G20),withpolicyrecommendationsformaintainingandimprovingenergysecurity,whileacceleratingcleanenergytransitionstoaddressthetriplecrises.InthecontextofIndonesia’sG20Presidency,theMinistryofEnergyandMineralResourcesinvitedtheInternationalEnergyAgency(IEA)toproduceasecondeditionofitsSecurityofCleanEnergyTransitionsreport,thefirsthavingbeenpublishedin2021,buildingontheG20NaplesPrinciples.IntherunuptotheBaliG20EnergyTransitionsMinisterialinSeptember2022,thisreportisintendedtosupportdiscussionsamongtheG20countriesandfurtherelaborateontheG20NaplesPrinciples,agreedattheG20energyministers’meetinginNaplesin2021,byprovidinganalysis,insightsandrecommendations.SecurityofCleanEnergyTransitionsAcknowledgementsPAGE4IEA.Allrightsreserved.AcknowledgementsThisreportwaspreparedbytheDirectorateofEnergyMarketsandSecurity(EMS)oftheInternationalEnergyAgency(IEA).KeisukeSadamori,DirectorofEMS,providedstrategicdirection.AadvanBohemen,AdvisortotheEMSDirectorateandJasonElliott,ActingHeadoftheIEAEnergyPolicyandSecurityDivision,providedexpertguidanceandadvice.Thereportwasco-ordinatedbySylviaBeyerandKiyomiHyoe.Themaincontributors(inalphabeticalorder)were:TorilBosoni,JoseMiguelBermusezMenendez,Jean-BaptisteDubreuil,CarlosFernandezAlvarez,KeithEverhart,PaoloFrankl,RonanGraham,IlkkaHannula,MiloszKarpinski,Tae-YoonKim,KevinLane,GergelyMolnar,KristinePetrosyan,DivyaReddy,UweRemme,CorneliaSchenk,JenniferThomsonandJacquesWaritchet.ValuablestrategicadviceandcontributionswereprovidedbyIEAcolleagues:KieranClarke,AlejandroHernandezandMelanieSlade.Thereportco-ordinatorsthanktheIEACommunicationsandDigitalOffice(CDO)foritshelpinproducingthepublication,particularlyJadMouawad,HeadofCDO,AstridDumond,TanyaDyhin,IsabelleNonain-SemelinandThereseWalsh,andalsotheeditor,JustinFrench-Brooks.SecurityofCleanEnergyTransitionsTableofcontentsPAGE5IEA.Allrightsreserved.TableofcontentsIntroduction.......................................................................................................................61.Prioritisingenergyefficiencyinemergingeconomies............................................9Takingurgentactiononenergyefficiency.....................................................................11Mobilisingfinance..........................................................................................................13Recommendations.........................................................................................................162.Boostingaccesstoaffordableandreliableelectricity...........................................17Growingelectricitydemandandelectrification..............................................................17Renewables’contributiontosupplydiversification........................................................18Affordableandreliablesupply.......................................................................................21Recommendations.........................................................................................................243.Preparednessandresponsetoglobalenergycrises............................................25Oilandgasremainsignificantduringenergytransitions...............................................26Thecasefordevelopinganoilstockholdingregimeandintroducingorstrengtheninggasstoragesystems......................................................................................................27Implementationofbothsupplyanddemandmeasures................................................28Theneedforadequateinvestmentininfrastructure......................................................29Recommendations.........................................................................................................304.Theroleoflow-emissionfuels..................................................................................31Low-emissionhydrogen.................................................................................................31Biomethaneandbiofuels...............................................................................................34Recommendations.........................................................................................................365.Future-proofingexistingfossilfuelinfrastructure.................................................37Meetingenergysecurityanddecarbonisationneeds....................................................37Transitioningoilinfrastructure.......................................................................................38Repurposingnaturalgasinfrastructure.........................................................................39Repurposingcoalinfrastructure....................................................................................41Recommendations.........................................................................................................426.Establishingasecureanddiversesupplyofcriticalminerals.............................43Thecleanenergytransitionreliesoncriticalminerals..................................................43Productionofcriticalmineralsisnotadequate..............................................................44Ensuringsecurityofcriticalmineralsandpreparedness...............................................45Governmentsplayastrongroleinensuringcriticalmineralssecurity..........................46Recommendations.........................................................................................................47SecurityofCleanEnergyTransitionsIntroductionPAGE6IEA.Allrightsreserved.IntroductionUnprecedentedevents–theglobalcoronaviruspandemic(Covid-19),theclimateemergencyandtheturbulenceinglobalenergymarkets,resultingfromtheRussianFederation’s(hereafter,“Russia”)invasionofUkraine–haveshockedtheworldin2022.Unprecedentedchallenges,stemmingfromthetripleglobalcrisisrequireextraordinaryactionstofostersolidarityandfightthefirstandlargestglobalenergycrisis.In2022,theG20’sleadonenergysecurityandsolidarityismoreimportantthanever.Evenbeforetheseevents,theG20hasdiscussedandtackledavarietyofrelatedissues,proposingsolutionsandcallsforaction.In2021energyministersattheG20MinisterialinNaples,Italy,agreedontheG20NaplesPrinciples,whichgiveguidanceoncollaborationtowardsmaintainingandimprovingenergysecurityduringenergytransitions.Theobjectiveofthisreportistoupdateanddeepentheanalysis,basedontheG20NaplesPrinciplesandwithaspecificfocusonwaysofmaintainingandimprovingenergysecurityduringthecurrentglobalenergycrisis.ItprovidesaseriesofrecommendationstoallowG20countriestoachievesecurecleanenergytransitionsthroughimportantnear-termactionswhicharealignedwithlong-termgoals.Importantly,G20countrieshavepledgednetzeroemissionsbyoraroundmid-century(seefigurebelow).Inthelongterm,acceleratingcleanenergytransitionswillsupportenergysecurityasitwillreducetheneedforfossilfuelimportsandconsumption.ShareofG20emissionscoveredbynetzeroemissionspledges,bystatusandtargetdateIEA.Allrightsreserved.Source:IEA(2021),adaptedfromNumberofcountrieswithNDCs,long-termstrategiesandnetzeropledges,andtheirsharesofglobalCO2emissionsin2020–Charts–Data&Statistics-IEA,WhattoexpectfromthenewWEO-2021–Analysis-IEA.0%10%20%30%40%50%60%2045205020602070%ofG20emissionsOralpledgeInpolicydocumentInlawSecurityofCleanEnergyTransitionsIntroductionPAGE7IEA.Allrightsreserved.Intheshortterm,thereisaneedtomaintainenergysecurityandrebalancesupplyanddemandofenergybyreducingdemandandincreasingsupply,maximisingtheexistinginfrastructure,whileradicallyreducingemissionsofoil,gasandcoal.Thiswillhelpdecreasepressureonglobalenergymarketsandprices.InMarchandApril2022,IEAmembercountriesagreedtotakecollectiveactiontoreleaseoilfromtheirstrategicreserves;thelargestcollectiveactionsinthehistoryoftheIEA.IEAmembersunderscoredtheirstrongandunifiedcommitmenttostabilisingglobalenergymarkets,whichwaswelcomebymanyG20members.Asthesecollectiveactionsshow,internationalcollaborationandconcreteactionsarecriticalinensuringthestablesupplyofenergy,notablyfordevelopingeconomies.AsunderlinedbytheIEAreport,NetZeroby2050:ARoadmapfortheGlobalEnergySector,energysecuritybecomesevenmoreimportantonthewaytonetzero.Governmentsandindustrymustboostpreparednessandresilienceinthefaceofnewandmorefrequentthreatsbeyondtraditionalenergyinfrastructuredisruption,suchascyberattacksandextremeweatherevents,particularlywithregardtoelectricityinfrastructure.Theestablishmentofreliableandcost-effectivesupplychainsforcleanhydrogenandensuringtheadquacyoftheglobalsupplyofcriticalmineralstomeetthedemandfromrampingupcleanenergytechnologiesispartandparcelofachievingsecurecleanenergytransitions.Thisreportanalysestheimportanceofenergyefficiencyinemergingeconomiesinlightofthecostoflivingcrisis.Itthendiscussestheimportanceofenhancingaccesstoaffordableandreliableelectricity,touchingonelementsincludingfasterdeploymentofabroadportfolioofrenewableenergyandwaystosecuretheintegrationofhighersharesofvariablerenewableswhileboostingelectricitysecurity.Chapter3dealswithhowtostrengthenpreparedness,focusingonoilandgassecurity,theimportanceofwhichhasbeenevenmorewidelyrecognisedamidthecurrentcrisisandhighenergyprices.Thenextchaptertouchesontheroleoflow-carbonfuelswithaspecialfocusonhydrogen,bioenergyandammonia,whicharethedrivingforcebehindacceleratedcleanenergytransitions.Chapter5discussestheissueofexistingfossilfuelinfrastructureandtheroleofrepurposingtoday’ssitestomaintaindispatchablegeneration.Efficientandeconomiccleanenergytransitionsentailnotonlyoptimisingtheusageoffossilfuelinfrastructure,butalsoaddressingthepossibilityoftransformingexistingassetsforotheruses.Thefinalchapterevaluatestheroleofcriticalmineralsincleanenergytransitions.Thesecurityoftheirsupply,productionandavailabilitywillbefundamentalforacceleratingcleanenergytransitions.G20economiesarethedriversofglobaleconomicrecoveryaswellasfinanceandinvestment.Inthecurrenthighfuelpriceenvironment,governmentsneedtorelyonwhatworkedwell,quicklyscaleupsuchbestpracticepolicies,andavoidlockinginnewhigh-carboninfrastructure.SecurityofCleanEnergyTransitionsIntroductionPAGE8IEA.Allrightsreserved.Thefocusofthisyear’sIndonesiaG20Presidencyisonthenear-termactionsupto2030,withthreecorepriorities.Indonesialookstomakeprogressinreachinguniversalenergyaccessby2030,scalingthedeploymentofcleanenergytechnologiesandincreasingfinanceandinvestment,whileemployinganinclusiveapproachforthesocietyatlargeanddevelopingeconomiesinparticular.Theelementsdiscussedinthisreportaddressanumberoftheissuescreatedbytheglobalenergycrisis,butcannotaddressallofthem.Morewillemergeandneedtobesolvedascleanenergytransitionsaccelerate,andtheinternationalcommunity,includingtheG20,willcontinuetotacklethemtoachievethegoalofanetzeroenergysystem.Enhancedinternationalcollaborationonenergysecurityaspartofcleanenergytransitionsis,andcontinuestobe,attheheartoftheG20.SecurityofCleanEnergyTransitions1.PrioritisingenergyefficiencyinemergingeconomiesPAGE9IEA.Allrightsreserved.1.PrioritisingenergyefficiencyinemergingeconomiesEnergyefficiencyiscentraltoachievingaffordablecleanenergytransitionsthatensureequitablesocialdevelopmentandeconomicgrowth.Decisive,ambitiousandtransformativeactiononenergyefficiencyisneededtoimprovetheresilience,securityandreliabilityofourenergysystems,andimproveaccesstosustainableandaffordableenergyservices.Withouttheefficiencyimprovementsmadesince2000,theworldwouldbeusing13%moreenergytodayandenergy-relatedcarbonemissionswouldbe14%higher.Overhalfoftheenergysavingsachievedcanbeattributedtoefficiencymeasuresintheindustrialsector,aboutathirdtoefficiencyinbuildingsandappliances,andatenthtotransportefficiency.Theseefficiencyimprovementshaveloweredenergybillsforhouseholdsandbusinesses,enhancedcompetitivenessandsupportedjobcreation.Efficiencyprogressisalsoenhancingenergysecurityandaccesstoaffordable,reliableenergy.Bycuttingdownoverallenergydemand,efficiencycansignificantlyreduceoverallrelianceonfossilfuelimports,improvethebalanceofpaymentsandreducethelikelihoodofsupplydisruption.Efficiencygainssince2000avoidedtheneedforover11EJoffossilfuelimportsintoIEAcountriesandothermajoreconomies1in2017,equivalentto20%more.AvoidedoilimportsintoIEAcountriesalonewereworthmorethanUSD30billion.Lookingtowardsanetzeroemissionsfutureby2050,thereisstillsignificantuntappedpotential:doublingthecurrentrateofenergyintensityimprovementfrom2%to4%peryearuntil2030hasthepotentialtoavoid95EJperyearoffinalenergyconsumption–equivalenttothePeople’sRepublicofChina’s(hereafter,“China”)currentfinalenergydemand.Achieving95EJofannualenergysavingsby2030wouldalsotranslateintosignificantlystrengthenedenergysecurity,avoidingthedemandforalmost30millionbarrelsofoilperday,abouttripleRussia’saverageproductionin2021,and650bcmofnaturalgasperyear,aroundfourtimesEUimportsfromRussiain2021.TheactionsoutlinedintheIEA10-PointPlantoReducetheEuropeanUnion’sRelianceonRussianNaturalGas,the10-PointPlantoCutOilUseandPlayingmypart:Howtosavemoney,reducerelianceonRussianenergy,supportUkraineandhelptheplanetshowthepowerofenergyefficiencytoreducerelianceonfossilfuelimportsthroughbehaviourchanges.IfallEUcitizenswere1IEAcountriesplusChina,India,Brazil,Indonesia,RussianFederation,SouthAfricaandArgentina.SecurityofCleanEnergyTransitions1.PrioritisingenergyefficiencyinemergingeconomiesPAGE10IEA.Allrightsreserved.tofollowtherecommendationsathomeandintheirworkplace,itwouldsave220millionbarrelsofoilayearandaround17bcmofnaturalgas.Reductionsinelectricitydemandcanalsoavoidtheneedforinvestmentinnewgeneratingcapacity,aswellasintherequiredtransmissionanddistributioninfrastructureandstoragefacilities.Inemergingeconomies,efficiencygainsareparticularlyimportanttoensurethereliabilityandqualityofenergysupplyservices,toallowcurrentlysuppresseddemandtocomeonlinewithoutoverstrainingexistingelectricitynetworks,andtoalloweconomicdevelopment.Achievingmultiplebenefitsfromactiononenergyefficiencyisparticularlyimportantinthecontextofrisingandfluctuatingenergyprices,whichdisproportionallyhurtthemostvulnerablesegmentsofthepopulation,andtheeconomiesofdevelopingandemergingeconomies.People-centredandinclusiveapproachesandtheprioritisationofenergyefficiencyaremeanstoboostaffordabilityandensurethatwearenotreversingprogresstowardsuniversalaccesstoelectricity(seealsoIEA(2021),RecommendationsoftheGlobalCommissiononPeople-CentredCleanEnergyTransitions).TheCovid-19crisisputanendtoseveralyearsofcontinuedprogressandworsenedthealreadylowenergypurchasingpowerofhouseholdsindevelopingcountries.Insub-SaharanAfrica,thenumberofpeoplewithoutaccessincreasedin2020forthefirsttimesince2013.Theregion’sshareoftheglobalpopulationwithoutaccesstoelectricityroseto77%,from74%beforethepandemic.FollowingthepathwaysetoutintheIEANetZeroEmissionsby2050Scenario(NetZeroScenario),theglobaleconomycouldgrowby40%by2030andsupportaround800millionmorepeoplewithaccesstoelectricity,allwitha5%lowerfinalenergydemand.ComparedtotheIEAStatedPoliciesScenario,energyefficiencyandrelatedmeasuresintheNetZeroScenariowouldreduceannualCO2emissionsby5Gtin2030.Over80%oftheseadditionalefficiencygainsresultinoverallnetcostsavingstoconsumers,helpingtolowerenergybillsandcushiontheeffectsofpricevolatility.Achieving95EJofannualenergysavingscouldcontributetoloweringhouseholdenergybillsbyatleastUSD650billionperyearby2030.Thiscallsforstrongandearlyactiononenergyefficiencyby2030.Governmentsplayanessentialroleinensuringthenecessaryfront-loadingandprioritisationofenergyefficiencyaction.Recognisingthevalueofearlyactiononenergyefficiencyasameansofcost-effectivelyacceleratingprogresstowardsnetzeroenergytargets,andincreasingenergysecurityandresilience,over20governmentsatthe7thIEAAnnualGlobalConferenceonEnergyEfficiencysignedajointstatementcallingonallgovernmentsandotheractorstostrengthentheiraction.SecurityofCleanEnergyTransitions1.PrioritisingenergyefficiencyinemergingeconomiesPAGE11IEA.Allrightsreserved.TakingurgentactiononenergyefficiencyRecommendationsfromtheGlobalCommissionforUrgentActiononEnergyEfficiencycallforwell-designedandcomprehensivepolicypackageswithambitioustargets,clearimplementationstrategiesandstrongmonitoringframeworks.Thesepolicyrecommendationscanbeimplementedquicklyandindifferentcontextstoboostefficiencyimprovementsglobally,improveenergysecurity,offsetincreasingenergydemandandcurtailCO2emissionsgrowth.Tomaximiseimpactinboththeshortandlongterm,existingbestpracticepolicies,cost-effectivetechnologiesandsustainablebusinessmodelsneedtobescaledupquickly,drawingonknowledgeofwhathasworkedandwhathasnot.Governmentshaveasignificantroletoplayinthistransition,notonlyinleadingbyexamplebutalsoassignificantfinalconsumersofenergyservices.Governmentscanleadthisprocessbyimplementingwhole-of-governmentapproachesthatalignprioritiesandactions,therebycapturingallthebenefitsofenergyefficiencyandachievinggreaterimpacts.Forexample,duetoitshighimportanceforoverallenergyconsumptionandqualityoflife,energy-efficientcoolingisdrivenbywhole-of-governmentnationalactionplansinIndiaandChina.Thegreatestefficiencygainsareachievedbycomprehensivepolicypackagesthatincludeamixofregulation,informationandincentives,whileenablinginnovation,investmentanddigitalisation.Usingregulationsuchasminimumenergyperformancestandardstoexcludetheworst-performingappliances,equipment,vehiclesandbuildingsfromthemarketandtodriveupaverageefficiencylevelshasledtothegreatestimprovementsinefficiencyhistorically.Thisconcernscoolingandlightinginparticular.By2050aroundtwo-thirdsoftheworld’shouseholdscouldhaveanairconditioner,andChina,IndiaandIndonesiatogetheraccountforhalfofthetotalnumber.Regulationcanbesupportedbybulkprocurementprogrammes,suchastheUJALA(UnnatJyotibyAffordableLEDsforAll)programmefor350millionLEDbulbsinIndia,helpingtechnologiesbecomemoreaffordableandaccessible.Theseinitiativesspeedupthereplacementofoldinefficienttechnologies.GovernmentscanleadbyexamplethroughgreenprocurementrulesandspecificationslikethoseimplementedintheEuropeanUnion,whichsetminimumenergyandenvironmentalstandardsforbuildingsandgovernmentprocurement.TheUSFederalEnergyManagementProgram,asafurtherexample,setsenergyandwater-reductiongoalsforfederalagencies,andsupportsimplementationbyprovidingguidance,trainingandtechnicalassistance.InIndonesia,governmentregulation70/2009requiresallcompanieswithanannualenergyconsumptionexceeding6000tonnesofoilequivalenttoappointanenergymanager,developanenergyconservationplan,performanenergyauditandreportenergyconsumptiontothegovernment.DiscussionsaboutloweringSecurityofCleanEnergyTransitions1.PrioritisingenergyefficiencyinemergingeconomiesPAGE12IEA.Allrightsreserved.theindustrythresholdto4000tonnesofoilequivalentandintroducingsector-specificthresholdsareunderway.Conductingcomprehensivestakeholderengagementandleveragingbehaviouralinsightscanensurethatefficiencyprogrammesarebasedontheactualneedsandbehavioursofendusers,andalsoappropriatelyconsidervulnerablegroups.Energyefficiencypoliciesthatincorporatebehaviouralinsightsinboththedesignandimplementationstageshaveproventobemoreeffective,asseeninthestrengtheningoftheEUapplianceenergylabels.Puttingpeopleatthecoreofthesepolicyactionsandmakingbetterinformationavailablewiththerightnarrativescanhavefar-reachingimpactsonthepublicattitudesandbeliefsthatdriveconsumptionandmobilitypatterns–andcancatalysethemuch-neededbehaviourchange.Furthermore,redesigningpoliciesandproductstomakeenergysavingsthedefaultoptionsimplifiesconsumerchoices.Indiahasmandatedthatthedefaultset-pointtemperatureofroomairconditionersbesetat24°C,whichstillleavesconsumerswiththefreechoiceoftemperaturebutachievessavingsbydefault–throughmanyconsumerssimplyneverchangingthesettings.Governmentscanalsoincentiviseefficiencyimprovementsthroughfinancialmechanismssuchasdirectstimulusfunding,investmentinpublicbuildings,facilitiesandinfrastructure,preferentialfinance,publicprocurementwithminimumrequirementsandmarket-basedmechanisms.Efficiencyactioncanberapidlyscaledupbyboostingdemandforefficientproductsandservicesthrougharangeoffinancialandnon-financialincentives,andbyenablinggreaterlevelsofmarketactivitythroughsupply-sideincentivessuchasfinanceortaxbenefitsformanufacturers.Standardsandlabelling,anddedicatedend-userincentivesforequipmentreplacementareeffectiveexamples.Thereplacementof1millioninefficientrefrigeratorsinColombia,forinstance,loweredenergybillsforconsumers,reducedtheneedforsubsidiestolow-incomehouseholdsandcreated12000jobs.Otheroptionsincludeenhancingindustrialefficiencythroughtargetedfiscalincentivesorlarge-scaleprogrammesthatcancombinearangeofpolicymeasures.India’sPerform,Achieve,Trade(PAT)Schemeoffersamarket-basedapproachtodrivingenergyefficiencyinvestment.PATisamulti-cycleprogrammetoreducespecificenergyconsumptioninthemostenergy-intensiveindustriesbysettingconsumptiontargetsandenablingbusinesseswhobeattheirtargettotradetheEnergySavingCertificates(ESCerts)thattheyareissuedwith.Implementationofenergyefficiencypoliciesandprogrammesneedstotakeplaceatalllevelsofsociety,andatnationalandsub-nationallevels,tomaximiseimpact.Forexample,toenhanceenergyefficiencyinbuildings,localgovernmentsinMexicoandIndiadevelopedtheimplementationactionrequiredtoachieveSecurityofCleanEnergyTransitions1.PrioritisingenergyefficiencyinemergingeconomiesPAGE13IEA.Allrightsreserved.nationalstandards.Policypackagesneedtoensurethatresourcesareavailabletoturnpoliciesintoaction,addresstherequirementsforeffectiveimplementation(suchascapacitybuilding,enforcementandmonitoring),andcontinuallyreviewandupdatepoliciesandprogrammestokeepupwithtechnologicaldevelopmentsandinnovation.Energyefficiencycanrapidlycreatesustainableemploymentandsupporteconomicgrowthforthelongterm.TheIEASustainableRecoveryTrackerhighlightshoweconomicstimulusprogrammes(inresponsetotheCovid-19pandemic)inkeysectorsquicklyboostedeconomicactivity,supportedtheexistingworkforcethroughupskillingandreskillinginitiatives,andcreatednewjobstosupporteconomicrecovery.Highjobcreationpotentialsexistinconstructionandmanufacturing,withkeyopportunitiesinbuildingretrofitsandtechnologyreplacementprogrammes.Drawingfrominternationalexperience,theMakeinIndiaandMadeinChinaprogrammesfocusoncreatinghigh-qualitymanufacturingjobsthroughtrainingandcapacitybuilding,whileatthesametimeimprovingapplianceefficiencyandthereforemakingthemmoreaffordableforendusers.Internationalcollaborationcanassistgovernmentstoimplementenergyefficiencypolicymorerapidlyandeffectively.Thebroadexchangeofbestpracticesallowscountriestoshareandlearnaboutsuccessfulandunsuccessfulapproachestoinstillingenergyefficiencyintheireconomies.OfnoteistheEnergyEfficiencyHub,aplatformforglobalcollaborationonenergyefficiency.MobilisingfinanceMobilisingfinanceisessentialtoscaleupefficiencyaction,andinvestinginenergyefficiencyisoneofthecheapestwaystoensureenergysecurityandaffordability.Whileenergyefficiencypoliciesandtechnologiesarewellunderstood,currentlevelsofinvestmentarestilltoolow.TheIEAWorldEnergyInvestment2022reportestimatesthatcleanenergyinvestment,standingatUSD1.3trillionin2021,hastomorethantripleby2030toaroundUSD4.5trilliongloballytoputusonanetzeroemissionspathway.AnnualcapitalspendinginemerginganddevelopingeconomieshastoincreasesevenfoldfromcurrentlevelsofaboutUSD200billiontoaboveUSD1.4trillion.Globally,totalenergyefficiencyinvestmentstoodataboutUSD330billionin2021,upbymorethan25%fromthepreviousyearastheworldemergedfromtheCovid-19pandemic.Theupscalingofexistinggovernmentefficiencyprogrammesandperformancestandards,combinedwithstrongeconomicrecovery,supportedenergyefficiencyinvestmentinthebuildingsandtransportsectorsinparticular.However,risingcosts,interestratesandsupplychainshortagesrepresentloomingriskstotheworld’sabilitytomaintainsimilarinvestmentlevelsin2022.SecurityofCleanEnergyTransitions1.PrioritisingenergyefficiencyinemergingeconomiesPAGE14IEA.Allrightsreserved.AsofOctober2021,efficiency-relatedspendingmadeuptwo-thirdsofnewcleanenergyrecoveryspending,allocating55%totransport,30%tobuildingsand10%toindustrymeasures.Nonetheless,economicrecoveryspendingisconcentratedinafewadvancedeconomies,andmuchofthedevelopingworldfacesasignificantfinancinggaptomeetthelevelsoffundingoutlinedintheIEASustainableRecoveryPlan.Policiestounlockfinancinghaveproventobemosteffectivewhentheycombinemeasuresinacoherentpolicypackagethatcentresondrivinglarger-scaleactivity.Theybringtogetherpoliciestoincreasedemandforefficientproductsandserviceswithactionsthatreducebarrierstoinvestmentandenableappropriateandaccessiblefinanceandbusinessmodels.Instrumentstomitigateprojectrisksandstrengtheninvestorconfidenceincludestandardiseddocumentation,productlists,third-partyvalidationofachievedsavings,capacitybuildingandinformationcampaigns,energysavingsinsuranceandthesupportofenergyservicecompaniesinthemobilisationoffinance.Directpublicfinancingthroughgrantsandloansisparticularlyimportanttocreateshort-termimpactsandtosupportenergyefficiencyincriticalareaslikehealthcare,vulnerablecommunitiesandsocialhousing.Short-termfinancingcouldbemosteffectivelyappliedbyoptimisingandexpandingexistingfinancingmechanismstoreduceadministrativecostsandshortenleadtimes.Manyemerginganddevelopingeconomiesaremorereliantonpublicsourcestofinanceenergyefficiencyandenergyaccess.ToscaleupfinancinginlinewiththeNetZeroScenario,specialattentionneedstobegiventoovercomingbarrierstoinvestmentintheseeconomiesandtoleveragingprivateinvestment.TheIEAreportFinancingCleanEnergyTransitionsinEmergingandDevelopingEconomieshighlightsthatover70%ofcleanenergyinvestmentisfinancedbyprivatecapitalintheNetZeroScenario,complementedandleveragedbythesmartuseofpublicfunds.Investmentinenergyefficiencymeasuresistypicallydoneonalocallevel,andrefinancingcanbedifficultinemerginganddevelopingeconomies,whichtendtohavelessmaturedomesticbankinginfrastructureandhighercostofcapitalthanadvancedmarkets.Thiscanbeabarrierforaggregatorsseekingtoraisedebtfinance,particularlyforsmallandmedium-sizedenterprisesthatformanimportantcomponentoftheseeconomies.Localpublicorprivategreenbankscanactasaggregatorsofenergyefficiencyloanportfoliosandseekcheaprefinancingoncapitalmarketstofreeupcapitaltoinvestinnewprojects.Thepriorityistoensuretheaffordabilityofnewandefficientequipment,appliancesandvehicles,aswellastheavailabilityandaccessibilityofappropriatefinancingandpaymentoptions.Stricterperformancestandards,buildingcertificationschemesandwiderdeploymentoffinancingsolutionswithpreferentialratescansupportinvestmentingreenbuildingsandconstruction.TaxincentivesSecurityofCleanEnergyTransitions1.PrioritisingenergyefficiencyinemergingeconomiesPAGE15IEA.Allrightsreserved.andsubsidiescanencourageboththemanufactureanduptakeofefficientvehicles,whilestrategicplanningframeworksandgovernmentgrantsforcharginginfrastructureandpurchaseincentivescanenhancetheuptakeofelectricmobility.TheEUEnergyEfficientMortgages(EEM)initiative,forinstance,aimstocreateastandardisedenergyefficiencymortgagethatgivesbuildingownerstheincentivetorefurbishtheirbuildingsorbuyerstheincentivetoacquireanefficientbuildingthroughpreferentialfinancingconditions.TheinitiativeintroducestheEEMlabelasaqualitybenchmarktocreatetrust.Medium-tolong-termfinancingapproachesrequiregovernmentsupportintheformoftechnicalandcommercialde-risking,suchascreditguaranteesorenergysavingsinsuranceschemes,toattractprivate-sectorinvestment.Lessonscanalsobedrawnfromsuccessfulguaranteeschemesdeployedforrenewableenergy,suchastheWorldBank’sguaranteeschemesorArgentina’sRENOVARauctions.Governmentscanfurtherincentiviseefficiencyinvestmentbyremovingadministrativebarriersandsupportingtheexpansionofexistingprivate-sectorfinancinginstruments,suchason-billfinancinglinkedtoutilitybills.SeveralgovernmentsinEuropehavestartedtoallowretrofitcoststobeincludedinrentalservicechargestoremovetheclassicsplitincentivebetweenlandlordsandtenants–wherethelandlordpaysforthecapitalinvestmentandthetenantbenefitsfromlowerfuelbills.Market-basedinstruments,includingutilityobligationschemesandenergyandcarbonpricingmechanisms,canalsostimulatedemandandbehaviourchange.Energyservicecompanies(ESCOs)canreduceupfrontcostbarrierstoenergyefficiencyinvestmentandactasprojectaggregators,thusachievingscaleandloweringtransactioncosts.Technicalandfinancialsupportfrominternationalorganisationsandfinancialinstitutionscanhelpemerginganddevelopingeconomiesmakethenecessaryreformstotheirfinancialandenergysystems.TheWorldBankhasplayedanimportantroleinpromotingChina’sESCOmarketsince1998byprovidingfundingandtechnicalassistance,includingtheestablishmentofaloanguaranteeprogramme.In2015,theMexicangovernmentworkedwiththeInter-AmericanDevelopmentBankandtheCleanTechnologyFundtolaunchtheEnergySavingsInsurance(ESI)scheme,whichusedinsurancemechanisms,standardisedcontractsandasimplifiedvalidationprocesstoaddressenergyefficiencyprojectrisksforthefirsttime.TheESIprogrammewasextendedtosevenotherLatinAmericancountries,includingArgentina,BrazilandColombia,andwasfeaturedintheG20EnergyEfficiencyInvestmentToolkitof2017.SecurityofCleanEnergyTransitions1.PrioritisingenergyefficiencyinemergingeconomiesPAGE16IEA.Allrightsreserved.RecommendationsThefollowingaretherecommendationsfortheG20countriestoconsiderintheirdecision-makingandpolicyimplementation:Rapidlyscaleupexistingbestpracticepolicies,cost-effectivetechnologiesandsustainablebusinessmodels,ledbygovernment.Maximiseimpactbydevelopingcomprehensivepolicypackagesthatencompassamixofregulation,informationandincentives,whilefacilitatinginnovation,investmentanddigitalisation.Adaptregularlystandardsandregulationtopreventtheleastenergy-efficientappliances,equipment,vehiclesandbuildingsfrombeingputonthemarket.Ensurethatefficiencyprogrammesarebasedontheactualneedsandbehavioursofendusersandincludevulnerablegroupsbyconductingcomprehensivestakeholderengagementandleveragingbehaviouralinsights.Developtheunderlyingconditionstoenableeffectiveimplementationofenergyefficiencypoliciesandprogrammesatalllevels.Ensurethatresourcesareavailabletoturnpolicypackagesintoaction,toenableeffectiveimplementationthroughcapacitybuilding,enforcementandmonitoring,andtocontinuallyreviewandupdatepolicypackagessotheykeepupwithtechnologicaldevelopmentsandinnovation.Createpolicypackagestounlockfinancing,encompassingmeasurestoincreasedemandforefficientproductsandservices,reducebarrierstoinvestmentandenableinnovativebusinessmodelsandaccessiblefinancingmechanisms.Graduallyshiftthefocusfromprovidingdirectpublicfinancingforshort-termimpactstoleveragingandde-riskingprivate-sectorfinancingforenergyefficiency.Scaleupinternationalcollaborationonenergyefficiencytoassistgovernmentstoimplementmorerapidandeffectiveenergyefficiencypolicies.SecurityofCleanEnergyTransitions2.BoostingaccesstoaffordableandreliableelectricityPAGE17IEA.Allrightsreserved.2.BoostingaccesstoaffordableandreliableelectricityGrowingelectricitydemandandelectrificationElectricityplaysagrowingroleinalleconomiesanditsshareoftotalenergydemandisexpectedtogrowuniversallyundertheimpetusofimprovinglivingstandardsandelectrificationofenduses.Theneedtoexpandaccesstoaffordableandcleanenergytoallcitizens,inlinewiththeUnitedNations’SustainableDevelopmentGoal7(SDG7),continuestobeacriticaldriverofelectricitydemandgrowth.Ashouseholdincomesincrease,moreappliancesareconnectedandelectricitydemandrises.Whileemergingeconomiesareontracktoachieveuniversalaccessby2030,developingeconomiesinsub-SaharanAfricaanddevelopingAsiaareatriskofnotmeetingthetarget(figurebelow).Globalpopulationwithoutaccesstoelectricitybyregion,2020-2021IEA.Allrightsreserved.Source:IEA(2021),Thepandemiccontinuestoslowprogresstowardsuniversalenergyaccess.Asawhole,theworldisthereforenotontracktomeetthegoalofuniversalaccesstoelectricityby2030,astheCovid-19pandemicandtheenergycrisisprovokedbytheRussianinvasionofUkrainehaveslowedprogress.Atcurrentrates,theworldwillreachonly92%electrificationby2030.Theworldmustaccelerateprogress,as770millionpeoplegloballystilllackaccesstoelectricity,mostofthemSecurityofCleanEnergyTransitions2.BoostingaccesstoaffordableandreliableelectricityPAGE18IEA.Allrightsreserved.insub-SaharanAfrica,asillustratedinthefigureabove,basedonthelatestIEATrackingSDG7:TheEnergyProgressReport2022.Inadvancedeconomies,afteryearsofstagnation,electricitydemandisrisingagain,withroadtransportandheatingpreparingthemajorshiftawayfromfossilfuelstoelectricity.IntheIEANetZeroEmissionsby2050Scenario(NetZeroScenario),energyintensityisimprovedinallenduses,particularlyinbuildings,thankstoenergyefficiency,behaviourchangeandelectrification.Incontrast,electricitygeneratedgrowsbynearly40%between2020and2030.KeyenergyandeconomictrendsintheNetZeroScenariopathway,2020-2030IEAAllrightsreservedNotes:GDP=grossdomesticproduct;NZE=NetZeroEmissionsby2050Scenario;STEPS=StatedPoliciesScenario;TES=totalenergysupply.Renewables’contributiontosupplydiversificationThecentralroleofelectricityinmoderneconomiesmeansthatthetransformationofthepowersystemrequiresmoreattentionfrompolicymakerstosustainenergysecurity,notablymaintainingandimprovingthequalityandaffordabilityofsupplyduringthetransition.Electrificationandthedeploymentofrenewableshelpreducetheenergysystem’scarbonfootprintanddependencyon–oftenimported–oilproducts,naturalgasandcoal.Forelectrificationtobecomethebackboneofcleanenergytransitions,effortstomovetonetzeroemissionsinelectricitygenerationshouldbeakeypriority.-40%-30%-20%-10%0%10%20%30%40%50%GDP2020-2030FinalenergydemandIndustrialenergyuseTransportenergyuseBuildingsenergyuseTotalenergysupplyEnergyintensity(TES/GDP)CO2ElectricitygenerationNZEchange,2020to2030(%)Expected2020-2030changewithoutNZEenergyintensityimprovements(STEPS)SecurityofCleanEnergyTransitions2.BoostingaccesstoaffordableandreliableelectricityPAGE19IEA.Allrightsreserved.Aswedecarboniseourelectricitysystems,theshareofvariablerenewableenergy(VRE),particularlywindandsolar,willincreaseastheybecomeincreasinglycompetitivewithothergenerationtechnologies.TheIEAshowedinitsrecentSoutheastAsiaOutlookthattheshareofVREintheregion’selectricitycouldincreasefrom2%in2020to18%in2030.IntheIEANetZeroScenario,nearlytwo-thirdsofglobalelectricityisprovidedbywindorsolarin2050.Thecurrentglobalenergycrisishasaddednewurgencytoacceleratingcleanenergytransitionsand,onceagain,highlightedthevitalroleofrenewableenergy.Theworldaddedarecord295GWofrenewablepowercapacityin2021.Furthermore,despitetheincreasedcostofinstallingsolarPVandwindturbinesduetohighcommoditypricesandcontinuingsupplychainandlogisticalchallenges,renewablecapacityadditionsaresettomarkanotherrecordthisyear–320GWofnewinstallations–drivenbytheunprecedentedexpansionofsolarPV.Thistotalfor2022comesclosetobeingtheequivalentneededtomeettheentireelectricitydemandofGermanyormatchtheEuropeanUnion’stotalelectricitygenerationfromnaturalgas.Thisprovesnotonlytheessentialroleofrenewablesinreducingemissions,butalsotheircapabilitytocontributetoenergysecuritybysubstitutinggasuseinthepowersector.Asaresultoftheirstronggrowth,renewablesarecontributingtothediversificationoftheenergysupplyinmanyworldregions,whichisanimportantelementofenergysecurity.InadditiontoChinamaintainingitsgloballead,recordgrowthisalsobeingdrivenbystrongrenewableenergytargetsandconsistentpoliciesinEurope,India,LatinAmericaandtheMiddleEastandNorthAfrica.Renewablesincreaseenergysecuritynotonlybyavoidingtheuseoffossilfuelsandbydiversifyingsupply,butalsobyloweringcostsandtherebyincreasingaffordability.AlthoughthecostofinstallingsolarPVandwindturbinesisexpectedtoremainhigherin2022and2023thanbeforethepandemic,duetoelevatedcommodityandfreightprices,theircompetitivenessisactuallyimprovingduetomuchsharperincreasesinnaturalgasandcoalprices.Nonetheless,strongerpoliciesarestillneededtosupportthegrowthofrenewables.Acceleratingthepermittingprocessandprovidingtherightincentivesformorerapiddeployment–forallrenewablesincludingflexiblehydropower–aresomeofthemostimportantactionsgovernmentscantaketoaddresstoday’senergysecurityandfutureclimategoals.SecurityofCleanEnergyTransitions2.BoostingaccesstoaffordableandreliableelectricityPAGE20IEA.Allrightsreserved.Thestronggrowthofvariablerenewablesinelectricitysystemscallsforadiversifiedmixofresourcestofulfiltheneedforessentialsystemservices,suchasflexibility,2whichoutpacestheincreaseinelectricitydemand.MarketframeworksshouldvalueservicesneededforsecuresystemoperationInlightofincreasedpenetrationofresourcesthatarenotflexibleordispatchable,particularlyVRE,governmentsneedtoadjustenergymarketframeworksinordertoprocureallsystemservicesneededforsecurepowersystemoperation,includingadequacy,flexibilityandstabilityatlowestcost.Therightmarketframeworkcanactivateresourceswhenandwheretheyareneeded,fromlow-carbondispatchablecapacity(suchashydropowerandgeothermal),demandresponse,batteries,gridsandgreaterinterconnectionsacrossisolatedelectricitysystems.Inaddition,zeroemissionthermalgenerationrunningonlower-carbonfuelssuchashydrogenandammonia,provideskeyflexibilityforexpandingrenewableenergy.Tomaintainadequatecapacity,particularlyfromresourcesthatmightonlyberequiredtoruninfrequently,regulatorsshouldconsiderscarcitypricinginenergymarketsandcapacityremunerationmechanisms.Thesemeasures,togetherwiththelifetimeextensionofnuclearpowerplants,shouldpreventtheprematureretirementofresourcesthatcouldbeusedtosupportthesecureoperationofthepowersector,aswasseeninsomemarkets,particularlyJapanbutalsoTexas.Electricitysecurityisacross-sectoralmatterandbenefitsfromdiversificationSecurepowersystemsalsorequiresecurefuelsuppliestobeabletofeedthegenerationfleet.Inmanycountries,gas-firedpowerplantsareplayingthecriticalroleincoveringpeakdemandperiodsandprovidingtheflexibilitytoaccommodatelargersharesofwindandsolargeneration.AstheworldrecoversfromtheCovid-19pandemicandhastodealwiththeimpactsoftheRussianinvasionofUkraine,globalgasmarketshavebecomeverytight.Thishashadsignificantspillovereffectsonelectricitysystemsdependentongas.Inmanyemergingeconomies,notablyinAsiaPacificandLatinAmerica,liquefiednaturalgas(LNG)suppliesarethemainsourceofflexiblegassupplyintheabsenceofpipelinesandundergroundgasstorage,whichbringsadditionalcostsandsupplyrisks.Coal-firedpowergenerationisstillthebackboneofpowersupplyinmanyAsiancountries.However,inflexiblefuelcontractsandchanginggenerationeconomicscouldleave2Powersystemflexibilityrefersbroadlytoalltheattributesofapowersystemthatallowthesystemoperatortoreliablyandcost-effectivelybalancedemandandgenerationinresponsetovariabilityanduncertainty.SecurityofCleanEnergyTransitions2.BoostingaccesstoaffordableandreliableelectricityPAGE21IEA.Allrightsreserved.coal-firedgenerationastheonlysourceofsystemflexibility,whichthreatensclimategoalsunlessrelatedemissionsaremitigated(seeChapter3).ThewarinUkrainefurtherstressedthedependencyoftheglobaleconomyonimportedfossilfuelsandthelackofdiversityinsupplychains,givingurgencytotheneedforanacceleratedenergytransitionandacommitmenttoamorediverseportfolioofcleanelectricity.Despitetheuniquecharacteristicsofthecurrentcrisis,itisawarningofthehigherriskinvolvedwheneconomiesheavilyrelyonadominantfueltypeorsupplychannel.Energysystemintegrationrequiresstrongerco-ordinationacrosssectorsandamongstakeholders,bothinplanningandoperations.Powersystemplanningneedstoidentifytheinvestmentrequiredtoensuresecurityofsupplyinthedecadesahead.Integratedandco-ordinatedplanningframeworks–whichshouldcovergeneration,transmissionanddistributionnetworks,demand,theelectrificationofendusesanddependenciesonothersectors–becomeessentialtoidentifyappropriateoptionsforthefuturepowersystem,inthelightofdemandandtechnologyuncertainty.Suchintegratedplanningcanhelpidentifytheneedforinterconnectionsatthenational,regionalandinternationallevel.Anddespitethetrendtowardsdecentralisation,secureinterconnectedpowersystemsarethebackboneofoursocieties.RegionaltradeisakeysourceofflexibilityinEuropeandtheUnitedStates,whiletheAssociationofSoutheastAsianNations(ASEAN)countriesareworkingongreaterinterconnectivityandtrade.Indeed,theIEAisworkingwithASEANtoboostmultilateralpowertradeintheregion(seeEstablishingmultilateralpowertradeinASEAN–IEAAnalysisandSoutheastAsiaEnergyOutlook2022–IEAAnalysis).AffordableandreliablesupplyTheextentandqualityofpeople’sengagementincleanenergytransitionswilldeterminetheirsupportforthemeasuresanddeploymentofinfrastructurerequiredtoachieveclimategoals.Tostart,greaterrelianceoncleanelectricitysystemscannotcomeattheexpenseofaffordability.Assuch,governmentsneedtoconsiderthecostofpowersystemtransformationandensureafairdistributionofthiscosttoensurethatlow-incomeorvulnerablecustomersdonotbearoutsizedburdensasaresultoftheenergytransition.Energyefficiencycanplayacrucialroleinthisregard,inconcertwithelectrificationstrategies,toaffordablyachieveemissionreductions,asdescribedinChapter1.Transformationoftheelectricitysystemwillnotonlyhaveimplicationsforreliabilityandaffordability,butcanalsoleadtomajorchangesinthesitingofacountry’selectricitygenerationfacilitiesandassociatedeconomicandemploymentconfigurations.WindandsolarresourcesarenotalwayslocatedwheretraditionalSecurityofCleanEnergyTransitions2.BoostingaccesstoaffordableandreliableelectricityPAGE22IEA.Allrightsreserved.minesorcoal-firedunitshavesuppliedelectricitytoregionsfordecades.Whentraditionalfossilassetsarephasedout,governmentsshouldalsoensurethatworkersandcommunitiesthatarenegativelyimpactedbyclosureshaveopportunitiestoparticipateineconomicrevitalisationplansandareofferednecessaryretrainingandupskillingtofindnewjobs,withsufficientfundingmadeavailabletoensureasmoothtransition.Anotherwaytoengagecitizensistoenablethemtoplayanactiveroleintheenergytransition.Thedecliningcostofsmallrenewablesupplyunitsanddigitaltechnologiescanfosteractiveconsumersandlocalenergycommunities.Thisdecentralisationtrendempowerscitizens,raisingawarenessofthetimeandlocationalvalueofenergyresources,andisanopportunityforpeopletoplayamoreactiverolenotjustinenergytransitions,butalsoinprovidingelectricitysecurity.Demandelasticityisexpectedtoincreaseasconsumerbehaviourschangeanddemand-sideresponsebecomesaresource,valuedequallytogeneration,ifnotmoresothankstoitsfastreactiontoprices.Therecentrecord-highpricesonglobalenergymarketsacrossallfuels,however,alsohighlightstheneedtoprotectvulnerableconsumersandtoensureproperregulatoryoversightofmarketparticipantsandtariffstoensureafairdistributionofcostsandgainsbetweenstakeholders,includingbetweenthoseuserswhocaninvestinthemeanstocapturemarketbenefitsandthosewhocannot.Despitegrowingaccesstoelectricity,thequalityofsupplyoftenremainsunreliableorofpoorqualityformanyhouseholdsandbusinesses.Thisisabarriertoliftingpeopleoutofpovertyandenablingeconomicdevelopment.Governmentsmustleadeffortstoprovideaccesstoasecure,affordableandcleanelectricitysupply.Theycanstartbymakingsoundplansinco-ordinationwithallstakeholdersandallocatingappropriateresponsibilitiesandincentivestoallrelevantorganisationsintheirjurisdictions.Universalaccesswillbemadepossiblethroughthesubtlecombinationofconventionalconnectionstolargegrids,partiallyautonomouslocalgrids,andisolatedsystems.Plansmustthereforespanthecompleterangeofsolutions,frommasterplansforruralelectrificationtointegratedplanstoexpandandreinforcelargegridinfrastructure.Inturn,theseplanswillprovideclearsignalsforfinancingthenecessaryinvestment,whichiscurrentlylaggingbehindwhatisneededtostayonthepathwaysetoutintheIEANetZeroScenario.Goodalignmentbetweencleanenergytransitionsandelectricityaccesspoliciescanenhancethesuccessofboth.Anumberofprogrammeshavesuccessfullyreducedenergybillsforlow-incomehouseholdswhilealsoexpandingaccesstocleanenergy.SeveralcountriesaremovingclosertouniversalelectricityaccessSecurityofCleanEnergyTransitions2.BoostingaccesstoaffordableandreliableelectricityPAGE23IEA.Allrightsreserved.byinstallingsolarhomesystemsinthemostremote,hardest-to-reachsystems,thereby“leapfrogging”tooff-gridsolutions.Electricitysecurityismoreimportantthaneverandrequiresrisk-based,integratedapproachesElectricitysecurityisoftendefinedasthesystem’sabilitytoensureuninterruptedavailabilityofelectricity;simplysaid,itis“keepingthelightson”,andentailsensuringadequacyunderawiderangeofconditions.Pastpracticesfocusedonensuringtheadequacyofthesupplysystem(generationandgrids)tomeetanuncertainandvariabledemandandtheflexibilitytocopewitharelevantsetofoutages.Withthegrowthofwindandsolargeneration,theparadigmisshiftingasgenerationbecomesmorevariableanddemandcanbecomepartofthesolution.Thenumberofunknownshasgrownandadequacystudiesneedtoacknowledgegrowinguncertainties.Probabilisticadequacyassessmentsgivegreaterinsightforsystemswithahighshareofrenewablesastheyallowmanyuncertaintiestobeevaluatedtogether.Recentextremeweathereventsacrosstheglobehighlighttheenergysecurityrisksthatclimatechangebrings.Inparticular,rareeventswithpotentiallylargeconsequences(“tailrisks”)mustbeconsidered.Adequacymustbeensuredunderawiderrangeofconditions.Inplanningstudies,“stresstests”mustbeincludedthatassumeextremeweathereventsorfailuresduetogrowingcybersecuritythreats.Thesestudiesshouldalsobedesignedtoaiddecisionsonwhetherassetsmeanttoberetiredshouldbekeptoninordertomitigateriskin“low-probabilityhigh-impact”scenarios.Policymakersmustrequireregularadequacystudiesandreviewthecriteriausedinthemtoensureallrelevantoutagerisksarecaptured.Powersystemsaredigitalising,bringingbenefitsatalllevels,fromthemanagementofgenerationandgridstotheriseofnewcapabilitiesandservicesfromawidersetofresources,includingthedemandside.Digitalisation,however,comeswithincreasedcybersecurityrisks.Asuccessfulcyberattackcouldtriggerthelossofcontroloverdevicesandprocesses,inturncausingphysicaldamageandwidespreadservicedisruptiontoelectricitysystems.Awealthofcyber-riskmanagementtoolsandframeworkshavebeendeployedandpolicymakersplayacentralroleinselectingandimplementingthem.Whetherphysicalorcyber,notalleventscanbepreventedatreasonablecost,requiringarisk-basedapproach.Policysettingandplanningcanbeseenasaniterativeprocess:thepolicygoalsarekeyinputstoplanningand,inturn,theplanningexercisesprovideessentialinformationontheoptionsandcorrespondingcoststomeetthepolicyobjectives.Theselectedtrajectorymuststrikeabalancebetweenthedeploymentof(costly)preventivemeasuresandtheconsequencesofvariousincidentsoccurring,rangingfromexpectedoutagestorareevents.InSecurityofCleanEnergyTransitions2.BoostingaccesstoaffordableandreliableelectricityPAGE24IEA.Allrightsreserved.theirefforttostriveforaffordableandsecurepower,policymakersshouldaimforahigherresilience,thatistheabilityofthesystemtoabsorb,accommodateandrecoverfromshort-termshocks(supplycrisis,cyberattackorextremeweatherevents)andlong-term,moregradualchanges(adaptationtoevolvingneedsandweatherpatterns).Risk-preparednessplanshelpidentifycost-effectiveresiliencemeasures:forinstance,greaterdiversityintheresourcemixcanensureresilienceagainstsocial,geopolitical,market,technicalandenvironmentalrisks.Formostcountries,theshiftawayfromimportedfuelssupportstheresilienceandthesustainabilityofthepowersystem.Withadeeperunderstandingoftherisks,governmentsandregulatorsareequippedtodesignappropriateincentivesforutilitiestoinvestinaresilientpowersysteminatimelymanner.RecommendationsThefollowingaretherecommendationsfortheG20countriestoconsiderintheirdecision-makingandpolicyimplementation:Providelonger-termvisibilityofpoliciesaffectingthepowersector,includingvisibilityforenergysystemintegrationneedsandallocateresponsibilitiesandincentivestoallrelevantorganisationstoensureproperco-ordinationacrossalltimeranges,fromsystemplanningtooperations.Ensurerobustandinclusiveplanningapproaches,suchasintegratedandco-ordinatedplanningframeworks.Engenderapeople-centredmindset:ensureafairredistributionofcostsandbenefitssothatvulnerableconsumersaresupported,safeguarduniversalaccessandsupportlocaltransitionplansforworkersandcommunitiesimpactedbypowerplantclosures.Adoptarisk-basedapproachtosystemsecurity:understandallthedependenciesofthepowersectornowandinthefuture,assesstherelatedrisksanddeployrisk-preparednessplanswithappropriateindicatorsthataremonitoredandperiodicallyreviewed.Supporttheresilienceofpowersystemsbyshiftingawayfromimportedfossilfuelsand–startingwithenergyefficiency–bypromotingdiverse,cleanpowersolutionsthatareadaptedtolocalcircumstanceswhilepayingattentiontogrowingthreatssuchasclimatechangeandcybersecurity.SecurityofCleanEnergyTransitions3.PreparednessandresponsetoglobalenergycrisesPAGE25IEA.Allrightsreserved.3.PreparednessandresponsetoglobalenergycrisesTraditionalenergysecurityrisksrelatedtooilandgassupplyhavebeenbackinthespotlightduetorapideconomicrecoveryaftertheCovid-19pandemicandRussia’sinvasionofUkraine.Whileenergytransitionsraisenewchallengestoenergysecurity,traditionalsupplysecurityriskslinkedtofossilfueluse,notablyoilandgas,continuetoplayanimportantroleinensuringsufficientenergysupply.Itshouldbenotedthatdemandforoilandgasisrecoveringrobustlyandthistrendisexpectedtocontinue,evenduringcleanenergytransitions,farabovethepathrequiredtoachievenetzero.Butenergysecurityisevolving,andtheextentandtypeofriskstoenergysuppliesarebroadening,requiringcountriestoanticipateandmanagebothexistingandnewlyemergingenergysecuritychallenges.Acceleratedtransitionsarelikelytoamplifybotholdandnewsecurityfactors,requiringthebolsteringofresilienceandemergencyresponsecapacitiestoensuretheuninterruptedflowofaffordableenergy.Emerginganddevelopingeconomies,workingjointlyundertheG20andinotherregionalforasuchastheASEANandtheAsiaPacificEnergyResearchCentre(APERC),canshareexperienceandworktogetheroneffectivepreparedness,includingatregionallevelsandcollectively,involvingconsumersandproducers.Animportantdimensionofcleanenergytransitionsishowtheyareperceivedbyconsumersintermsofsecurity,reliabilityandaffordability.Priceincreasescanhaveadisproportionateimpactonthemostvulnerableconsumers,potentiallyexacerbatingpovertyandinequality(seefigurebelow).Cleanenergytransitionscancushionconsumersfromtheshockofspikesinoilandgaspricesifhouseholdscangethelptomanagetheupfrontcostsofenergyefficiencyimprovementsandelectrification.Therefore,itisimperativethatcleanenergytransitionsareundertakeninwaysthatensurestabilityinenergysupplyandprices.SecurityofCleanEnergyTransitions3.PreparednessandresponsetoglobalenergycrisesPAGE26IEA.Allrightsreserved.Impactofapriceshockonaveragehouseholdenergybills,2016-2020and2030IEA.Allrightsreserved.Source:IEA(2021),adaptedfromWorldEnergyOutlook2021.OilandgasremainsignificantduringenergytransitionsOilandgasconsumptionwillremainimportantduringthetransition.EvenundertheIEANetZeroScenario,thedependencyofdevelopingAsiaonoilandgasimportsremainshigh,notablyonOPEC+supplies.ImportdependencyindevelopingAsianeconomiesandsupplyconcentrationforoilandnaturalgasbyscenario,2020-2050IEA.Allrightsreserved.Notes:APS=AnnouncedPledgesScenario;STEPS=StatedPoliciesScenario;NZE=NetZeroEmissionsby2050Scenario.Source:IEA(2021),WorldEnergyOutlook2021.500100015002000USD(2020)2016-2020StatedPoliciesScenarioNetZeroScenario2030Impactofapriceshock(oil,naturalgasandcoal)SecurityofCleanEnergyTransitions3.PreparednessandresponsetoglobalenergycrisesPAGE27IEA.Allrightsreserved.AshighlightedintheIEAreportNetZeroby2050:ARoadmapfortheGlobalEnergySector,crudeoilproductionislikelytobecomeincreasinglyconcentratedinasmallernumberofoilproducingcountries,mainlyintheOrganizationofthePetroleumExportingCountries(OPEC)members,whileglobalrefiningcapacityadditionswillbeconcentratedintheMiddleEastandAsia.Asglobaloildemanddeclines,theIEAexpectsOPECtoincreaseitsmarketshareofglobaloilproductionto52%by2050,comparedwith37%inrecentyears.Thisconcentrationofproductioncouldpotentiallylimitoilimportingcountries’effortstodiversifysupply,whichinturncouldhaveanegativeimpactonenergysecurity.Similarly,theIEASoutheastAsiaEnergyOutlook2022illustratestheincreasingoilandgastradevolumesbetweentheMiddleEastandSoutheastAsia.CrudeoilandnaturalgassalestoSoutheastAsiainSTEPSbyorigin,andinSDSintotal,2020-2050IEA.Allrightsreserved.Notes:SDS=SustainableDevelopmentScenario;STEPS=StatedPoliciesScenario.Source:IEA(2022),adaptedfromSoutheastAsiaOutlook2022.ThecasefordevelopinganoilstockholdingregimeandintroducingorstrengtheninggasstoragesystemsOilwillremainrelevantduringtheenergytransitionsandoilsupplysecurityconcernswillnotfadeawayevenasitsuseisphasedout.Onthecontrary,thereisapotentialforheightenedmarketvolatility,particularlyifreductionsindemandareoutpacedbydecreasesinsupplyduetolackofinvestment,orifremainingsupplyisconcentratedinfewercountries.TheIEAhasanoilstockholdingrequirementwhichobligatesitsmembercountriestoensureoilstocksofatleast90daysofnetimportsandhasamechanismtotakecollectiveactionincaseofoilsupplydisruption.TheIEAcollectiveactions2468202020302050millionbarrelsperdayCrudeoilTotalSTEPSSDS4080120160202020302050billioncubicmetresNaturalgasMiddleEastAfricaNorthAmericaCentralandSouthAmericaRussiaAustraliaOtherSecurityofCleanEnergyTransitions3.PreparednessandresponsetoglobalenergycrisesPAGE28IEA.Allrightsreserved.thattookplaceinMarchandApril2022areexamplesofco-ordinatedinternationalmeasurestoaddressoilsupplydisruptionagainstthebackdropofRussia’swaronUkraine,bywhichthe31membercountriesoftheIEAagreedtoreleasewellover180millionbarrelsofoilfromtheiremergencyreserves.TheseactionshavesentastrongunifiedmessagetoglobaloilmarketsthatIEAmembercountriesareunitedintheirsupportofUkraineandwilldoalltheycantoprovidestabilitytothemarket.Theseactionshavealsoshowntotheworldthatoilstockholdingduringenergytransitionsremainscriticallyimportanttoensureastablesupplyofoil,andisaninvaluabletooltomaintainoilsecurityincaseofoilsupplydisruption.Anevaluationofthecurrentmechanismisvitaltomakesurethatcountriescontinuetobereadytorespondtodisruptionduringtheirenergytransitionsandwithagreaterconcentrationofoilconsumptioninemergingeconomies.Itshouldbenotedthatemergencyoilstocksareasrelevanttonon-IEAmembercountriesastheyaretoIEAmembercountries,particularlywhereoilconsumptionisgrowing.Oilstorageoranymechanismtoprepareforunexpectedoilsupplydisruptionwouldcontributetotheenhancementofoilsecurityatvariouslevels–local,nationalandglobal.Emergingeconomies,includingChina,India,IndonesiaandcertainotherASEANcountries,havestartedtoputoilstocksinplacetomitigaterisksstemmingsupplydisruption.Aswithoilstocks,gasstoragecouldbeausefulmeanstoenhancesecurityofgassupplytoovercomeunexpectedgassupplydisruption.Withtheincreasingimportanceofgasasatransitionfuelinmanycountries,andtoaddressparticularissuesincertaincountries(e.g.seasonalvariationsindemand),itisworthwhileforeverycountrytoconsiderintroducingorstrengtheningmeasuresandpoliciesregardinggasstorage.Onepolicyoptionistoimposeaminimumlevelofgasstorageortoestablishcompulsorygasstocks.EUcountriesareimplementingpoliciestoimposeminimumstocklevels.ManyemergingeconomiesdonothaveundergroundstorageandrelyonLNGstorageforpeakshaving.Variousmeasurescouldbeimplementedaccordingtothecountry’ssituation,suchasgasdemandandweatherconditionforecasting(includingseasonaltrends).Thesemeasuresneedtobeimplementedwithclearguidancefromgovernmentwithmedium-orlong-termstrategies.Inadditiontomeasurestakenbyindividualcountries,regionalco-operationcouldbepursued,whereappropriate,tostrengthengassecurity.ImplementationofbothsupplyanddemandmeasuresTheenhancementofenergysecuritycanbeaccomplishedthroughvariouspolicymeasuresandactions.Governmentstendtofocusonsupply-sidemeasures.However,theaccelerationofenergytransitionscannotbeachievedwithsupply-SecurityofCleanEnergyTransitions3.PreparednessandresponsetoglobalenergycrisesPAGE29IEA.Allrightsreserved.sidemeasuresalone,andgovernmentsalsoneedtopursuedemand-sidemeasurestoscaleandspeedupthetransformationoftheirenergysystems.Giventhenotablebehaviouralaspectsofdemand-sidemeasuresandpossiblecostimpacts,governmentsshouldexplaincarefullythenecessityandimportanceofthemeasurestothepublic,raisingpublicawarenessofenergytransitions.Inthisregard,inMarch2022theIEAreleaseda10-pointactionplanwiththeEuropeanUnion,containingaseriesofmeasuresthatcouldreduceRussiannaturalgasimportsintotheEuropeanUnionby50bcm,orathird,withinayear.Examplesofsupply-sidemeasuresarenotsigninganynewgascontractswithRussia,maximisinggassuppliesfromothersources,ensuringgasstoragesitesarefilledaheadofthenextwinter,andliftingbarriersinpermittingproceduresforthedeploymentofsolarandwind.Energyefficiencymeasures,includinginsulation,applianceupgrades,smartmeteringandreducingtheroomtemperature,canleveragehugeenergysavings,thusenablinglowernaturalgasconsumptionandimports.Forexample,heatingthermostatsinbuildingsacrosstheEuropeanUnionarecurrentlysetatanaverageofover22°C.Loweringthethermostatbyjust1°Cwoulddeliverimmediateannualenergysavingsofaround10bcm,whilealsobringingdownenergybills.TheIEA10-pointplanonreducingoildemandinadvancedeconomiesalsoofferspracticaladviceonhowlowerlevelsofdemandcanreducemarketuncertaintyandvolatility.Actionsincludelessbusinesstravel,workingfromhome,usingpublictransport,car-feeSundaysandseveralothermeasures.WhiletheIEAactionsfocusonadvancedeconomies,potentiallyleadingtoanestimateddropinoildemandofupto2.7millionbarrelsaday,thisamountcouldbeevengreaterifadoptedinemergingeconomiesintheG20.TheneedforadequateinvestmentininfrastructureTheplanninganddevelopmentofadequateinfrastructure,foroilimportsandstorage,forLNGimports,andfornaturalgasstorageanddistribution,areindispensabletoensurestablesupply,particularlyinenergyimportingcountries,wheredemandforoilandgascontinuestogrowduringenergytransitions.Maintainingsustainablesuppliesandmeetinggrowingdemandduringenergytransitionsrequireadequatelevelsofinvestmentininfrastructure,andplanningshouldbesupportedbymedium-andlong-termnationalstrategiestoavoidnewinfrastructurebecomingstrandedassetsinthefuture.SecurityofCleanEnergyTransitions3.PreparednessandresponsetoglobalenergycrisesPAGE30IEA.Allrightsreserved.RecommendationsThefollowingaretherecommendationsfortheG20countriestoconsiderintheirdecision-makingandpolicyimplementation:Developanoilstockholdingregimeandconsidertheenhancementofgasstoragesystemsthattakeaccountofchangingsupplyanddemandtrends,accompaniedbyadequateinvestmentininfrastructure,particularlyinregionsthatwillcontinuetoexperiencedemandgrowth.Encouragethewidespreadimplementationofsupply-anddemand-sidemeasuresidentifiedintheIEA10-pointplansacrosstheG20toaddresspricevolatility,fuelcostsandsupplyshortages.SecurityofCleanEnergyTransitions4.Theroleoflow-emissionsfuelsPAGE31IEA.Allrightsreserved.4.Theroleoflow-emissionfuelsLow-emissionhydrogenLow-emissionhydrogenisexpectedtohaveamajorroleincleanenergytransitions,notablyin“hard-to-abate”industries.Itslarge-scaleadoptionwillrequireasecureandaffordablesupply,whichwillnecessitatethedevelopmentofanefficientglobalmarketandresilientsupplychains.Notallindustriescanbesuccessfullyelectrified;thismakesthewidespreadadoptionoflow-emissionhydrogenacrucialelementofanysuccessfulcleanenergytransition.Theprojectedgrowthinlow-emissionhydrogenproductioninthecomingyearsalsoprovidesanimportantopportunitytocreatenewjobsandtoreskillexistingworkforces.Low-emissionhydrogen,andderivatives(includingsyntheticfuels)canalsosupportmitigationofCO2emissionsfromshipping,aviation,andheavy-dutylandtransport.Thechallengessurroundingthetransitioningofexistingnaturalgasinfrastructuretohandlelow-emissionhydrogensupplyarediscussedlaterinthisreport(seeChapter5).Thissectiondiscussesthechallengeofdevelopinginterregionaltradeinlow-emissionhydrogen(andammonia)toenableitsglobaluptakeatscale.Tradeinlow-emissionhydrogenissettogrowandsupplychainsarelikelytodevelop,butforasecure,affordableandcleansupplyoflow-emissionhydrogenandtoensurethatthesupplychainsareresilient,greaterinternationalco-operationisneeded.ArecentpilotprojectbetweenAustraliaandJapanservesasagoodexample,inwhichAustraliashippedliquidhydrogentoJapanviaaspeciallybuiltcarrier.InSoutheastAsia,BruneiDarussalamhasstartedexportingsmallquantitiesofhydrogentoJapan.Intheregion,Indonesia,Malaysia,thePhilippinesandThailandarepilotinggreenhydrogenandfuelcellsystemsfordomesticpowerprovision.MalaysiaIndonesiaandIndiaareconductingfeasibilitystudiestoco-fireammoniaincoalpowerplants,andthereareplanstodosoinSingapore,ThailandandVietNam.Currently,morethan100projectsaimingtotradehydrogen(oritsderivatives,suchasammoniaandsyntheticfuels)areunderdevelopmentaroundtheglobe,withabouthalfofthembasedintheSouthEastAsiaregion.Ifalltheseprojectsarerealised,theequivalent3ofnearly5MtofH2couldbebeingtradedby2030.Adequateexportandimportinfrastructureisneededtoestablishagloballow-emissionhydrogenmarket.3Someoftheseprojectsarelookingtotransporthydrogenintheformofammonia,synthetichydrocarbonfuelsorliquidorganichydrogencarriers.SecurityofCleanEnergyTransitions4.Theroleoflow-emissionsfuelsPAGE32IEA.Allrightsreserved.SelectedinternationalhydrogenandammoniatradeprojectsNote:Thismapiswithoutprejudicetothestatusoforsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersandboundariesandtothenameofanyterritory,cityorarea.IEA.Allrightsreserved.Source:IEA(2021),GlobalHydrogenReview2021.SelectedinternationalhydrogentradeprojectsProjectExportcountryImportcountryVolumeCarrierExpectedfirstshippingyearMapReferenceHydrogenEnergySupplyChainAustraliaJapan225540tpaLH220301H2SinesPortugalNetherlandsTBDTBDTBD2Stanwell-IwataniGladstoneprojectAustraliaJapan280000tpaLH220263HeliosGreenFuelsSaudiArabiaTBD650tpdAmmonia20254H2GateTBDNetherlands1000000tpaLOHCTBD5ADNOC-TA’ZIZindustrialhubUnitedArabEmiratesTBD175000tpaAmmonia20256AsianRenewableEnergyHubAustraliaJapanorKoreaTBDLH2orammonia20287MurchisonAustraliaTBDTBDTBDTBD8CrystalBrookEnergyParkAustraliaTBD25tpdTBDTBD9PacificSolarHydrogenAustraliaTBD200000tpaTBDTBD10SecurityofCleanEnergyTransitions4.Theroleoflow-emissionsfuelsPAGE33IEA.Allrightsreserved.ProjectExportcountryImportcountryVolumeCarrierExpectedfirstshippingyearMapReferenceOriginEnergy-KawasakiHeavyIndustriesTownsvilleprojectAustraliaJapan36000tpaLH2202511KBRSEAsiafeasibilitystudySoutheastAsiaTBDTBDTBDTBD12EyreGatewayAustraliaJapanorAsia7000tpaAmmoniaTBD13UnnamedTBDSingaporeTBDLH2TBD14UnnamedTBDSingaporeTBDLOHCTBD15ProjectGeriAustraliaTBD175000tpaAmmoniaTBD16GreenMegaFuelsProjectOmanTBD175000tpaAmmonia203217WesternGreenEnergyHubAustraliaTBD34000tpaAmmoniaTBC18Notes:LH2=liquefiedhydrogen.LOHC=liquidorganichydrogencarrier.SEAsia=SoutheastAsia.TBD=tobedetermined.tpa=tonnesperannum.tpd=tonnesperday.Source:IEA(2021),GlobalHydrogenReview2021.Thesupplychainforlow-emissionhydrogeniscomplexandstillevolving,asseveraloftherequiredtechnologiesarenotyetcommerciallyavailable.Therefore,thedevelopmentofaresilientsupplychainwillrequireambitiousactionsonseveralfronts.Significantinvestmentisrequiredacrossthewholevaluechain,includingupstreamrenewableenergycapacity,infrastructureforthetransportandstorageofhydrogen,andmanufacturingcapacityforkeytechnologiessuchaselectrolysersandfuelcells.Realisingtheseinvestmentsrequiresanunderstandingoffuturelow-emissionhydrogendemandandthescaleofproductiontode-riskthem.Forhydrogenproduction,low-carbontechnologiesarereadytobedeployedatscaletoproducehydrogenfromelectricityviawaterelectrolysisorfromfossilfuelsincombinationwithcarboncapture,utilisationandstorage(CCUS).Thenecessaryinvestment,however,isunlikelytooccurunlessprojectdeveloperscanrelyonlong-termofftakeagreements.This,inturn,willrequiregovernmentstoadoptsupportingpoliciestocreatedemandforlow-emissionhydrogen,eithertoreplacehydrogenproducedfromunabatedfossilfuelsinexistinguses,suchasfertiliserproductionandoilrefining,ortoreplacefossilfuelsinnewapplications,suchassteelmaking,shippingandaviation.Manyofthetechnologiesrequiredforthesenewhydrogenapplicationsarestillatthedemonstrationstagetoday.Astrongfocusoninnovationisneededtoensurethatthesenewtechnologiesreachcommercialisationsoon.Scalingupthedeploymentofhydrogentechnologies,suchasfuelcellsandelectrolysers,triggerstheneedtoexpandthesupplychainsforexistingtechnologiesandtodevelopsupplychainsforemergingtechnologies.Challengesassociatedwiththesupplyofcriticalmineralsarediscussedinthefollowingsectionindetail.Butanotherimportantsupplychainconsiderationistheexpansionofmanufacturingcapacityforelectrolysers,whichiscurrentlyverySecurityofCleanEnergyTransitions4.Theroleoflow-emissionsfuelsPAGE34IEA.Allrightsreserved.limitedandlargelyconcentratedinasmallnumberofcompanies,mainlylocatedinEuropeandChina.Electrolysermanufacturersarerespondingquicklytothegrowingdemand,withmanufacturingcapacityexpandingfasterthanever.However,practicallyallannouncementsfornewmanufacturingplantsarestillbasedinEuropeandChina,withsomenewactorsinAustralia,IndiaandtheUnitedStatesgainingsmallmarketshares.Supplierdiversification(bothgeographicallyandinthenumberofcompaniesinvolved)canimprovetheresilienceofsupplychainsbyavoidingpotentialdisruptionandbottleneckswhilerampinguptechnologydeployment.Thedevelopmentofinfrastructuretoconvert,transportandstorehydrogenisanothercriticalstepforthedevelopmentofresilienthydrogensupplychains.Short-distancehydrogentransportislikelytobedominatedbypipelines.Thetransportofhydrogenviapipelineisamaturetechnology,butitiscapital-intensive,requiringhighupfrontinvestment.Convertingexistingnaturalgaspipelinestohydrogencansubstantiallyreducethecost,butthetechnicalfeasibilityneedstobeassessedindividuallyforeachpipelineornetwork,whileregulationsandtechnicalstandardsmayneedtobeadaptedtoallowforsuchaconversion.Alternativeoptionsexistforlong-distancetransport,someatanearlystageofdevelopment,whichcancreateuncertaintyinthechoiceofinfrastructuretype.Oneoptionistotransporthydrogeninliquefiedform.However,hydrogenliquefactionoccursatamuchlowertemperaturethanforLNGandisanenergy-intensiveprocess,requiringfurthertechnologicaldevelopmenttoreducetheenergyneedandmovetheprocessfromthesmallerunitsdeployedsofartolarge-scaledesigns.Usingammoniaasahydrogencarrierisanotheroption,benefitingfromexistingexperienceinthefertiliserindustryofshippingammoniaandhandlingitatports.Regardingthetoxicityofammonia,thisincludesexperienceinhandlingitinasafeway.Wherethereconversionofammoniaintohydrogenisneededatthefinaldestination,thiscrackingprocesscomeswithadditionalenergyneedsandsofarhasnotbeendemonstratedatthescaleanticipatedforhydrogentrade.Thetoxicityofammoniaalsomeansthatitshandlingrequirescareandwouldlikelybelimitedtoprofessionallytrainedoperators.Finally,hydrogencanbetransportedusingliquidorganichydrogencarriers(LOHCs),whichhavepropertiessimilartocrudeoilandcanmakeuseofexistingoilinfrastructure.ButtheconversionofhydrogenintoanLOHCandreconversionbackintohydrogencomewithadditionalenergyneedsandcosts.Furthermore,afterbeingusedtotransporthydrogentoitsdestination,thecarrierneedstobeshippedback,increasingthecostofthistransportoption.BiomethaneandbiofuelsThemainfactorsthatareexpectedtoinfluencebiofueldemandinthecomingyearsareoilprices,biofuelpricesandhowgovernmentsevaluatetheroleofSecurityofCleanEnergyTransitions4.Theroleoflow-emissionsfuelsPAGE35IEA.Allrightsreserved.biofuelsinnavigatingenergysecurity,foodsecurityandgreenhousegasobjectives.BiofueldemandhasrecoveredfromCovid-19lows,butincreasingfeedstockpricesandpolicyreactionfrommultiplecountriesisslowinggrowthintheshortterm.Bioenergyalreadymakesimportantcontributionstoensuringenergysecurityandtheresilienceoftheglobalenergysystem.Withoutit,thecurrentsituationwouldbemuchmoredifficult.Astheworld’slargestrenewableenergysource,bioenergyaddstodiversification,providesenergysecurityandreducesmarketpricesatthemargin.Bioenergyisalsothemostversatileformofrenewableenergy.Itcandeliverheatandpower,supplyfuelsfortransportordeliverrenewablegas.Oneofitskeyadvantagesisthatitcanuseexistinginfrastructure,whichmakespossiblearapidincreaseinmultiplebioenergyenduses.Forexample,biomethanecanuseexistingnaturalgaspipelinesandend-userequipment,whilemanydrop-inliquidbiofuelscanuseexistingoildistributionnetworksandbeusedinvehicleswithonlyminorornoalterations.Thisiscriticallyimportant,forexample,toreduceemissionsfromexistingvehiclefleetsindevelopingcountries.Thereisroomtofurtherexpandtheuseofbioenergy,butitcanandmustbesuppliedinasustainablemanner,avoidingtheriskofnegativeimpactsonbiodiversity,freshwatersystems,andfoodpricesandavailability.Sustainabilityofbioenergyhasnotonlytheenvironmentalimpacts,butalsothepotentiallybeneficialeconomicandsocialeffects,forexampleintermsofjobcreation,incomeforruralcommunities,healthbenefitsfromreducedairpollutionandsustainblewastemanagement.Systemsthatintegratefoodandbiofuelswellalsofunctionasabufferforagriculturalpriceoscillations,whichhavenegativeimpactsinparticularonthepoorestsegmentsofthepopulation.Thecriticalissueisproperinvestmentinlandproductivitythroughsustainableintensification,whichwillresultinbothmorefuelandmorefoodwithoutaddingtopressureonnaturalresourcesandecosystems.Governmentsneedtoinvestmoreininnovationtounlockthebenefitsofnewsustainablefeedstocks,suchaslignocellulosicresidues.Furtherwideningthefeedstockbasewouldalsomakebioenergysupplymoreresponsiveandresilienttosuddenchangesindemand.Inaddition,weneedtoexpandtheuseofexistingtechnologieslikebiomethaneproductiontoreplacefossilgaswhilewecommercialisenewtechnologiessuchasbiomassgasificationorintegratedbiorefineriestoco-producebiochemicals,biofuelsandheat.SecurityofCleanEnergyTransitions4.Theroleoflow-emissionsfuelsPAGE36IEA.Allrightsreserved.RecommendationsThefollowingaretherecommendationsfortheG20countriestoconsiderintheirdecision-makingandpolicyimplementation:Boostinvestmentintheimportandexportinfrastructureneededtoscaleupthedeploymentofhydrogen,synthetichydrocarbonfuelsandammoniaforcleanenergytechnologiessuchasammoniaco-firingandsingle-fuelfiring,andpromotethedevelopmentofresilientglobalhydrogenandammoniasupplychainsbyconsolidatingandincreasinginternationalco-operationandpartnerships.Expandtheuseofbioenergyinasustainablemanner,consideringnotonlytheenvironmentalaspects,buttheeconomicandsocialaswell.Increaseinvestmentininnovationtounlocktheutilisationofnewsustainablefeedstocksandexpandtheuseofexistingtechnologieslikebiomethanetoreplacefossilgaswhilewecommercialisenewtechnologiessuchasbiomassgasificationorintegratedbiorefineriestoco-producebiochemicals,biofuelsandheat.SecurityofCleanEnergyTransitions5.Future-proofingexistingfossilfuelinfrastructurePAGE37IEA.Allrightsreserved.5.Future-proofingexistingfossilfuelinfrastructureMeetingenergysecurityanddecarbonisationneedsInthecurrentcontextofhighpricevolatilityinglobalenergymarkets,governmentsarereducingtheirexposuretoanddependencyonfossilfuelsbydiversifyingsupplyroutesandsources,andbyenablingtheuseoflow-carbonfuelsinexistingenergyinfrastructure.Sourcinglow-carbonfuelsfromseverallocationsandfromvarioustechnologiesincreasessecurityofsupplyandprotectsagainstshocksindemandandsupply.Creatingnewinfrastructurerequireshighlevelsofinvestmentandbringstheriskofdelayfromtheneedtoobtaindifferentpermitsandapprovals.Therepurposingofexistinginfrastructureofferstheprospectofacceleratingthetransition.Forinstance,existingthermalassetscanprovidetheflexibilitythatvariablerenewableenergysourcescallfor,complementingothersources,suchastransmission,storageanddemandresponse,whilesecuringemissionreductionbenefitsiftheyarerunonlower-carbonfuels.Thedecommissioningofexistinginfrastructurecancauseeconomicdisruptionforlocalcommunitiesthataredependentonitforemploymentandrevenues.Leveragingexistingstrengthstoidentitynewusesforexistinginfrastructureduringthetransitioncanbringmanybenefits.Notably,repurposingorconvertingexistinginfrastructureallowsforthepreservationoflargepartsofthevalueoftheinfrastructure,whileretainingjobsandtaxbasesincommunitieswheretheinfrastructureislocated.Forinstance,anumberofcurrentoilandgasproducingcountriesarecurrentlydevelopingorlookingtodevelopCCUS,hydrogenandoffshorewindenergyindustries,usingexistingskillsetsandknowledgebasesfromoil/gasproduction,includingoffshore.Policymakersshouldassesstheopportunitiesforscalingupthedeploymentoflow-carbonfuelsusingtoday’senergyinfrastructurebeforegivingtheownerconsenttoreclaimordemolishexistinginfrastructurealongtheentirevaluechain.Suchaforward-lookingandpeople-centredapproachtoexistingenergyinfrastructurecouldleadtosubstantialcostsavingsandimprovetheresilienceoftheenergysystem.SecurityofCleanEnergyTransitions5.Future-proofingexistingfossilfuelinfrastructurePAGE38IEA.Allrightsreserved.TransitioningoilinfrastructureAswithotherfossilfuels,theoilindustrywillbeaffectedbybothdecreasingdemandforitsproductsandtheneedtodecarboniseitsactivities.Asoverallinvestmentfallsbackandmarketsbecomeincreasinglycompetitive,onlythosewithlow-costresourcesandtightcontrolofcostsandenvironmentalperformancewouldbeinapositiontosurvive.Onshoreoilproductioninfrastructure,encompassingwells,gatheringpipelinesandprocessinginfrastructure,haslittleroomforconversiontootheruses.Offshoreoilproductionfacilities,inparticulartheplatforms,havethepotentialtoberepurposedasbasesforoffshorewindoraquaculture.CrudeoilandproductpipelinescouldpotentiallybeconvertedtoCO2orhydrogentransitinfrastructure.Thereisalsosomeroomforseabornetransportinfrastructure,suchasports,jetties,storagefacilitiesandvessels,totransitiontowardsdealingwithhydrogen,biofuelsandammonia.Forinstance,tanksforliquefiedpetroleumgas(LPG)areeasytodiverttoammoniastorage.Theriseofelectricallypoweredboatsandvesselswillalsorequirecharginginfrastructureatports.Refinerieshavealreadystartedthetransition,withsome483kb/dofglobalrefiningcapacityalreadyconvertedtobiorefineriesandplansfor702kb/dmoreinthemediumterm.Repurposingexistingrefinerycapacityforupgradingbiofuelintermediates,suchasbio-oilsandFischer-Tropschwax,couldreducetheinvestmentneedsassociatedwithincreasingbiofueldeployment.Highersharesofbiofuelsinthetransportfuelpoolwillalsorequiremorecomplexblendingandstorageoperations.Besidescompletesiteconversion,refineriesarealsoincreasinglyengagedinco-processingrenewablefeedstocktogetherwithpetroleum.Therefiners’entryintobiofuelsproductionalsoinvolvesmidstream,marketingandblendingactivities,withtheconversionorconstructionoftherequiredinfrastructure.However,notallrefineriescanbeconvertedtobiofuelsproductiongiventhepracticalimpossibilityofprocuringsufficientfeedstocksforallofthem.Anotherpathwayforrefinersisthecirculareconomy.Asacomplexindustrialsectorwithsuitableequipment,highlyskilledworkers,researchersandengineers,refinerscandevelopanddemonstratetechnologiesforthechemicalrecyclingofplasticwasteandwasteoilalongplastics-to-plasticsorplastics-to-fuelpaths.Toenabletheproductionoflow-carbonfuels,existingrefineriesneedtomakesignificantinvestment.Intheproductionofe-fuels,thetechnologycombineselectrolyticallygeneratedhydrogenwithcarbonmonoxide(fromsequesteredcarbon)tocreatesyngas.SyngasisthenconvertedtosyntheticoilviaFischer-Tropschprocesses,andbecomesfeedstockforrenewabletransportfuelsorSecurityofCleanEnergyTransitions5.Future-proofingexistingfossilfuelinfrastructurePAGE39IEA.Allrightsreserved.petrochemicalfeedstocks.Thispathwaycouldbeinterestinginregionswhereoptionsforgeologicalcarbonstoragearelimitedornon-existent.Refiningistheworld’slargesthydrogen-consumingsector.Itsourcesitshydrogenneedsalmostentirelyfromoil(naphthareforming)ornaturalgas(steamreforming).By2026,morethan500MWofelectrolysisprojects,associatedwithrefineries,areexpectedtohavecomeonlineinEurope,producingsome37000tperyearofgreenhydrogen,representingonly0.1%oftotalhydrogendemandfromtherefiningsector.Another1200MWworthofprojectshavenotreachedthefinalinvestmentdecision(FID)stageyet,butmaycomeonlineinthesametimeframeiffavourablepoliciesareadopted.Theretailsegment,oroilmarketinganddistribution,isalsosettoundergosignificantchangeduringenergytransitions.Manyofthemalreadyofferchargingfacilitiesforelectricvehicles.Inthefuture,dependingontransportelectrificationpaths,theycouldalsohostbatteryswappingoperationsandofferhydrogenrefuelling.RepurposingnaturalgasinfrastructureLow-carbongases(includingbiomethane,low-emissionhydrogen,syntheticmethaneandmethanesubjecttoCCUS)aresettoplayakeyroleindecarbonisationpathways.IntheIEANetZeroScenario,low-carbongasesaccountforcloseto75%oftotalgaseousfuelsintotalfinalenergyconsumptionin2050,andforthemajorityofgaseousfuelsconsumedinthepowersector.Inturn,low-carbongaseskeeptheshareofgaseousfuelsintotalfinalenergyconsumptionclosetotoday’slevelsandplayakeyroleinthehard-to-abatesectors,includingindustry,long-haultransportandseasonalenergystorage.Inthepowersector,low-carbongasesaresettoprovideflexibleback-upsupplyinasystemdominatedbyvariablerenewablesourcesofelectricitysupply.Theexistinggasinfrastructurecanfast-trackthedeploymentoflow-carbongases,byprovidingnetworkaccess,reducingtransportcostsandultimatelyfacilitatingtheirintegrationintothebroaderenergysystem.Attheupstreamlevel,naturalgasandcondensatefields,depletedgasreservoirsandtheirrelatedabove-groundinfrastructurecouldbeusedforCO2storage,enablingthedeploymentofCCUS-basedsolutionsasintheproductionofhydrogenfrommethane.Thevastsystemofgastransmissionanddistributionpipelinescanberepurposedtocarrylow-carbongases.BiomethaneandsyntheticmethaneareperfectlyinterchangeablewithconventionalmethaneduetotheiralmostidenticalchemicalSecurityofCleanEnergyTransitions5.Future-proofingexistingfossilfuelinfrastructurePAGE40IEA.Allrightsreserved.andphysicalproperties.Nevertheless,theywillrequirethedevelopmentofstandardstoensureuniformgasqualityacrossinterconnectedgassystemsanddiminishanyriskofdeviatingfromthem.Biomethaneismainlyfedintodistributionnetworksduetothedecentralisednatureofitsproduction.Inthelongerterm,thehighpenetrationofbiomethaneatthedistributionlevelwillnecessitatecloserintegrationbetweentransmissionanddistributionnetworks.Bidirectionalcompressorstationswouldenablereverseflowsfromdistributiontothetransmissionnetwork,facilitatedailybalancingandprovideaccesstobiomethaneforseasonalgasstoragesites(whicharemostoftenconnectedtothetransmissionsystem).Inthecaseoflow-emissionhydrogen,blendingcanprovideatemporarysolutionuntildedicatedhydrogentransportsystemsaredeveloped.Dependingonthecharacteristicsofthegastransmissionsystem,hydrogencanbeblendedatratesof2–10%H2byvolumewithoutsubstantialretrofittingofthepipelinesystem.Thehydrogentoleranceofpolymer-baseddistributionnetworksistypicallygreater,potentiallyallowingblendingofupto20%withminimalorpossiblynomodificationstothegridinfrastructure.Naturalgaspipelinescanalsoberepurposedtoserveashydrogendistribution.Pipelinerepurposingcanbesubstantiallylesscostlyandtheleadtimesmuchshortercomparedtonew-buildhydrogennetworks.CostofrepurposingnaturalgaspipelinesasapercentageofbuildingnewhydrogenpipelinesIEA.Allrightsreserved.IncludingcompressorstationCAPEXcosts.Note:FNB=VereinigungderFernleitungsnetzbetreiber(TransmissionSystemOperatorsAssociationofGermany).Sources:BasedonFNB(2020),Netzentwicklungsplan2020;GasForClimate(2021),EuropeanHydrogenBackbone2021;Gasunie-Energinet(2021),Pre-feasibilityStudyforaDanish-GermanHydrogenNetwork.SecurityofCleanEnergyTransitions5.Future-proofingexistingfossilfuelinfrastructurePAGE41IEA.Allrightsreserved.Certainstudiessuggestthatpipelineconversioncostsare21–33%ofthecostofanewhydrogenpipeline(figureabove).Ultimately,thesecostsavingscouldtranslateintolowertransporttariffsandimprovethecost-competitivenessofhydrogen.Theseasonalandshort-termsupplyflexibilityoflow-carbongasescanbeenhancedviatheutilisationofexistingundergroundgasstoragesites.Globalstoragecapacityiscloseto430bcm(orabout10%ofglobalgasdemand),withporousformations(depletedfieldsandaquifers)accountingforover90%ofstoragecapacityandsaltcavernsfortheremaining10%.Biomethaneandsyntheticmethanearewell-suitedtobeingstoredinundergroundfacilitiesastheyhaveidenticalphysicalandchemicalcharacteristicstonaturalgas.Storinghydrogenundergroundinsaltcavernsisaproventechnologyandexistingsaltcavernscouldbepotentiallyconvertedtostorehydrogen(althoughthisremainstobedemonstrated).Thereisnopracticalexperienceinstoringpurehydrogeninporousreservoirsandfurtherresearchisrequired.RepurposingcoalinfrastructureRepurposingcoalinfrastructurecanacceleratejustandsecureenergytransitions.Themostinterestingassetinthecoalvaluechainisgenerallythecoalpowerplantanditsassociateinfrastructure,inparticulartheconnectionwiththeelectricitytransmissiongrid.Thereiscurrentlyover2000GWofcoalpowergenerationcapacitythatcouldbeconvertedintolow-carbonassetsindifferentways,providingadequacy,flexibilityandstabilitytotheelectricitygrid.ThefirstoptionistoretrofittheplantswithCCUS.Anotheroptionistouselow-carbonfuels,suchassustainablebiomass,orammoniaproducedfromrenewablehydrogenorfossilfuelsincombinationwithCCUS.Conversiontobiomasshasalreadybeendoneinsomeplantsaroundtheworld,andtheprojectofammoniaco-firingismakinggoodprogresssuchasGresikThermalpowerplantinIndonesia.Inaddition,technologicaldevelopmentofco-firinghighsharesofammoniaandammoniasingle-fuelfiringisprogressingaswell.Biomasshasanadditionaladvantageinthat,whencombinedwithCCUS,itcanturncoalpowerplants,currentlythelargestsourceofCO2emissions,intoasourceofnegativeemissions.Otherpossibilitieslikeconversiontoanuclearfacility,thermalstorageoracombinationofthetwoshouldnotbeoverlooked.Theconversionorretrofittingofexistingcoalpowerplantsoffersmanyadvantages,inparticulartheprospectoffasterpermittingprocessesanduseofanexistingelectricitygridconnection,twoimportantbottlenecksidentifiedincleanenergytransitions.SecurityofCleanEnergyTransitions5.Future-proofingexistingfossilfuelinfrastructurePAGE42IEA.Allrightsreserved.RecommendationsThefollowingaretherecommendationsfortheG20countriestoconsiderintheirdecision-makingandpolicyimplementation:Evaluatethepotentialtorepurposeredundantoil,gasandcoalinfrastructuretoproduceortransportoruselow-carbonfuels(suchashydrogenandhydrogen-derivedfuels)beforesuchinfrastructureisdecommissioned.Assessthepossibilityofusingdepletedreservoirsandassociatedabove-groundinfrastructureforCO2storage,aswellasrepurposingoffshoreproductionplatformsintooffshorewindgenerationsites.Considertheconversionofredundantoilandgasstoragefacilitiesintostorageforlow-carbonfuels,aswellasutilisinggaspipelineinfrastructurefortransportinglow-carbongasesandhydrogen.Assessthepossibilityofconvertingexcessrefiningcapacityintobiofuelsproductionfacilitiesandensurethatadequatesupportisgiventoretailerstofacilitatethesaleoflow-carbontransportfuelsandintegrationofcharginginfrastructure.Toavoidcreatingstrandedassets,ensurethatfullconsiderationisgiventofuture-proofinganynewoilandgasinfrastructureprojectsbeforeinvestmentsarefinalisedbytakingintoaccountthepotentialtousetheinfrastructureforlow-carbonfuelsatsomepointinthefuture.Assesshowtheoperationofexistingoilandgasinfrastructurecanbedecarbonised,includingusingrenewableenergytopoweroffshoreplatformsandrefineries,andseekingtointegrategreenhydrogenproductionfacilitieswithrefiningoperations.SecurityofCleanEnergyTransitions6.EstablishingasecureanddiversesupplyofcriticalmineralsPAGE43IEA.Allrightsreserved.6.EstablishingasecureanddiversesupplyofcriticalmineralsAchievingwidespreadtransitionstocleanenergydependsonthepaceofdeploymentofnewcleantechnologiesacrosstheworld.AndasdemonstratedbythereducedenergysuppliestosomecountriesintheaftermathofRussia’sinvasionofUkraine,maximisingdomesticrenewableenergyproductioncanaddgreatlytoenergysecurityandenergyindependence.However,thesedependentirelyonthecontinuousavailabilityofcriticalminerals.Therefore,itisessentialtoensuresecurityanddiversityofsupplyofcriticalmineralswhilerecognisingtherangeofpathwaystoapproachcarbonneautralitybyoraroundmid-century.ThecleanenergytransitionreliesoncriticalmineralsBuildingsolarphotovoltaic(PV)plants,windfarmsandelectricvehicles(EVs)generallyrequiresmuchmoremineralsthantheirfossilfuel-basedcounterparts.Atypicalelectriccarrequiressixtimesthemineralinputsofaconventionalcar,andanonshorewindplantrequiresninetimesmoremineralresourcesthanagas-firedpowerplantpermegawatt.Lithium,nickel,cobalt,manganeseandgraphitearecrucialtobatteryperformance,longevityandenergydensity.RareearthelementsareessentialforpermanentmagnetsthatarevitalforwindturbinesandEVmotors.Electricitynetworksneedahugeamountofcopperandaluminium,withcopperalsobeingacornerstoneforallelectricity-relatedtechnologies.AccordingtotheIEAreportTheRoleofCriticalMineralsinCleanEnergyTransitions,thereisaloomingmismatchbetweentheworld’sstrengthenedclimateambitionsandtheavailabilityofcriticalmineralsthatareessentialtorealisingthoseambitions.Globalcleanenergytransitionswillhavefar-reachingconsequencesformineraldemandoverthenext20years.By2040totalmineraldemandfromcleanenergytechnologiesquadruplesiftheworldfollowsapathwaylimitingglobaltemperaturerisetobelow2°C.EVsandbatterystorageaccountforabouthalfofthemineraldemandgrowthfromcleanenergytechnologiesoverthenexttwodecades,spurredbysurgingdemandforbatterymaterials,whichgrowsover30timesintheperiodto2040.Byweight,mineraldemandin2040isdominatedbygraphite,copperandnickel.Lithiumseesthefastestgrowthrate,withdemandgrowingbyover40timestoachievetheclimatetarget.TheshifttowardslowercobaltchemistriesforbatterieshelpstolimitSecurityofCleanEnergyTransitions6.EstablishingasecureanddiversesupplyofcriticalmineralsPAGE44IEA.Allrightsreserved.growthincobaltdemand,butitisdisplacedbygrowthinnickel.Windpowerplaysaleadingroleindrivingdemandgrowthduetoacombinationoflarge-scalecapacityadditionsandhighermineralintensity(especiallywithgrowingcontributionsfrommineral-intensiveoffshorewind).SolarPVfollowsclosely,withitsunmatchedscaleofcapacityadditionsamongthelow-carbonpowergenerationtechnologies.Hydropower,biomassandnuclearmakeonlyminorcontributionsgiventheircomparativelylowmineralrequirementsandmodestcapacityadditions.Pricemayalsoheavilyinfluencetheuptakeofcriticalminerals.Thepriceofmanymineralsandmetalsthatareessentialforcleanenergytechnologieshaverecentlysoaredduetoacombinationofrisingdemand,disruptedsupplychainsandconcernsaroundtighteningsupply.Thepricesoflithiumandcobaltmorethandoubledin2021,andthoseforcopper,nickelandaluminiumallrosebyaround25%to40%.Thepricetrendshavecontinuedinto2022.Thepriceoflithiumhasincreasedbyanastonishingtwoandahalftimessincethestartoftheyear.Thepriceofnickelandaluminium–forwhichRussiaisakeysupplier–hasalsokeptrising,driveninpartbyRussia’sinvasionofUkraine.Formostmineralsandmetalsthatarevitaltothecleanenergytransition,thepriceincreasessince2021exceedbyawidemarginthelargestannualincreasesseeninthe2010s.WhileinnovationandeconomiesofscalerapidlyreducedthecostofkeycleanenergytechnologiessuchassolarPVandbatteries,surgingrawmaterialpricescouldnowreversethesegains,withamajorimpactonthefinancingneedsforcleanenergytransitionsaroundtheworld.Rawmaterialsnowaccountforasignificantandgrowingshareofthetotalcostofcleanenergytechnologies.ProductionofcriticalmineralsisnotadequateLimitedavailabilityofcriticalmineralsatthisstage,andalsointhecomingdecades,wouldnotonlyslowthetransformationtocleanenergyandmakeatransitiontonetzeroimpossible,butwouldalsoplaceadditionaldemandsoncurrentenergysystems,strainedtothelimitalready.Thismayhaveverysignificantsecurityofsupplyconsequences.Inaddition,ifobsoleteandinefficientgenerationcapacity,carfleetsandgridscannotbesubstitutedwithnewcleantechnologiesinatimelymanner,theclimatechallengewouldnolongerbesolvable,puttingatriskglobaleconomiesandhumanwellbeing.Anenergysystempoweredbycleanenergytechnologiesdiffersprofoundlyfromtheonefuelledbytraditionalhydrocarbonresources.Productionofmanycriticalmineralsindispensableforthetransformationofenergysystemsismoreconcentratedthanthatofoilornaturalgas.Forlithium,cobaltandrareearthelements,theworld’stopthreeproducingcountriescontrolwelloverthree-quartersofglobaloutput.Insomecases,asinglecountryisresponsibleforaroundSecurityofCleanEnergyTransitions6.EstablishingasecureanddiversesupplyofcriticalmineralsPAGE45IEA.Allrightsreserved.halfofworldwideproduction.SoutheastAsiaisakeyplayerinsupplyingarangeofcriticalminerals.Forexample,accordingtotheIEASoutheastAsiaEnergyOutlook2022,IndonesiaandthePhilippinesarethetwolargestnickelproducersintheworld;IndonesiaandMyanmararethesecondandthethirdlargesttinproducers;Myanmaraccountsfor13%ofglobalrareearthelementproduction;andSoutheastAsiaprovides6%ofglobalbauxiteproduction.Thereisyetanotherverysignificantriskfactorforthedevelopmentofcleantechnologiesbasedoncriticalminerals,namelysocietalsupport.Thereisnodoubtthattherapidexpansionofactivitynecessarytoextracttheminerals,andthenprocessandrefinethem,readyforuseinhigh-technologyproducts,needswidebackingfromsociety,especiallywithinproducingcountries.Wehavealreadyseenanumberofinstanceswheresocialoppositiontominingprojectsandseverelabourconditionshavecreatedoperationalchallenges.Itisthereforecrucialtowinsuchsupportfromtheverybeginningofdevelopingnewprojects,especiallybycreatingaddedvalueinlocalcommunitiesasanelementofpeople-centredenergytransitions.EnsuringsecurityofcriticalmineralsandpreparednessThesecurityofcriticalmineralsalsorequiresanewsystemicapproachtoemergencypreparednessinthefaceofsupplydisruptions,includinggreatertransparencyofmarketsthattodayareoftenopaqueandattimesspeculative.Establishingnewtradepatterns,includingthroughintergovernmentalarrangements,diversifiedandmoredispersedproductionandthecreationofstrategicstocks,mayallensureundisruptedsupplies.Settinghighstandardsofresilienceagainstclimate,technologicalandcyberthreatsmayinturnaddgreatlytostabilisingsupplychains.Strategicmanagementofresourcesmustalsoincludeenhancedrecyclingandreuse,strongersupplychainresilienceandsustainability,andgreaterRD&Dintosubstitutesforcleanenergysystems.Theobjectiveshouldbetosupportinvestmentinnewsourcesofsupplyandthedevelopmentofacirculareconomythatacceleratescleanenergytransitionsandensuresaffordablesecurityofsupply.Environmental,socialandgovernance(ESG)standardsareallthemoreimportantasmeetingtheexponentialgrowthindemandforcriticalmineralswillrequireasignificantincreaseinminingandmineralprocessing,whereastodaysomesupplychainelementslackanystandards.Ifnotmanagedappropriately,thedeficiencyofESGregulationscouldnotonlyleadtothedisruptionofcriticalmineralsupply,butalsosignificantlyerodethehealthandsafetyofworkersandunderminelocalcommunities.SecurityofCleanEnergyTransitions6.EstablishingasecureanddiversesupplyofcriticalmineralsPAGE46IEA.Allrightsreserved.Theshifttoacleanenergysystemissettodriveadramaticincreaseintheneedforcriticalminerals,meaningthattheenergysectorisemergingasamajorforceinmineralmarkets.Themineral-intensiveeconomyisbecominganirreversiblefactanditisthetaskforgovernmentsandstakeholderstocreateamarketforcriticalmineralsthatistransparentandcompetitive,andhashighenvironmentalstandards.Asstatedabove,thesupplysideofcriticalmineralsfaceshugechallengesindeliveringsufficientvolumes,andwithoutclearsignalsfor“goinggreen”fromgovernments,investorsarelesslikelytoriskinvestinginnewminingandprocessingprojectstoincreasesupply.Governmentsholdthekeystoallpolicyaspectsofsecurityofsupplyofcriticalminerals.Theyrangefromprovidingclearsignalsofactionondecarbonisationtoremoveuncertaintyofdemandasthegreatestriskfactor;throughmeasurestostrengthenadequacyofsupply;tousingpublicfundingandsupportforresearchcapacitytoadvancetechnologicalresponsesthathaveapotentialtofillthegapscreatingexistingimbalances.Eventhoughmanygovernmentsandregionshavealreadyattemptedtodrawupcriticalmineralstrategies,theyneedco-ordinatedpolicyactionfortheireffectiveimplementationgiventhesectoralinterdependenciesandtheglobalscaleofmineralsmarkets.Andearlyengagementofmarketoperatorsindesigningpoliciesandmarketsupportmeasuresisessentialbeforetakinganyaction.Providingconditionsconducivetomarketstakeholdersmakingsufficientinvestmentistheultimategoalofpolicyaction.GovernmentsplayastrongroleinensuringcriticalmineralssecurityAmongthemoretargetedmeasuresthatgovernmentsmayemploytohelpaccelerateincreasedsuppliesare:Lesseningandshorteningtheadministrativeburdenrelatedtoextendingexistingandopeningnewproductionprojects,includingpermittingproceduresandtaxobligations.Publicfundingofpre-commercialmappingdataandgeologicalsurveys.Grantstoearly-tomid-stageprojectstoallowthemtosurvivethroughthepre-profitstage.Loansthroughdedicatedinvestmentfacilitiesandinvestmentattractionthroughmeasuressuchasbindingmineralofftakearrangements.Securityofcriticalmineralsupplyisachallengethatcanonlybemetjointly,guidedbyproducerandconsumergovernments.Untilnowthismarkethastosomeextentbeengovernedbyarbitraryrules,withproducersusingallavailablemethodsofSecurityofCleanEnergyTransitions6.EstablishingasecureanddiversesupplyofcriticalmineralsPAGE47IEA.Allrightsreserved.productionatscaleandconsumerssearchingforproductswithouthavingmuchchoice.Nocountryintheworldcanassureitsownsecuresuppliesaloneandclosethesupplychainwithinitsboundaries.Theneedtoco-ordinatepolicysecurityeffortsisthereforepressing.Anydelayinthisregardcouldhamperpropermarketorganisation,atatimewhentheworldcanleastafforditinviewofexpecteddemandgrowth.Formalisedco-operationshouldbeparticularlybeaimedatknowledgesharingandcapacitytransfertoensuresustainableandresponsibledevelopmentofcriticalmineralmarkets.Facilitatingenhancedcollaborationbetweenproducersandconsumers,bothatthecountryandcompanylevel,wouldresultinabettermatchofexpectationsandlarge-scaleproblem-solving.Directandopencollaborationmaybeparticularlysoughtbyincumbentproducersstrivingtomaketheircapacitymoreresilientandbetterpreparedformarketexpansion.AttheIEAMinisterialMeetinginMarch2022,IEAmembercountriesvotedtoendorseanddeepentheIEA’sworkoncriticalmineralsaspartoftheagency’snewmandatetostrengthenandbroadenitsworkonenergysecurity.Sincethattime,theIEAhascreatedtheCriticalMineralsWorkingParty,aforumthatcanplayavitalroleinbringingtogetherallstakeholders,includinggovernmentsandbusinesscommunities,todelivertangiblesolutionstothecriticalmineralsmarket.RecommendationsThefollowingaretherecommendationsfortheG20countriestoconsiderintheirdecision-makingandpolicyimplementation:Sendclear,unconditionedsignalstomarketsthatcleanenergytransitionsareirreversiblepolicyprinciples,toensurethatcleantechnologiesbasedoncriticalmineralsdevelopaccordingtothebeststandardsandaredeployedmorequickly.Createanenvironmentthatisconducivetolarge-scaleinvestmentinnewprojectstoincreasethesupplyofcriticalmineralsalongvaluechains,includingbyreducingandshorteningpermittingprocedures,offeringpublicassistanceandfinancing,andcommittingtobindingofftakewhereverappropriatetosupportnewcapacity.Applyanewsystemicapproach,includingthestockholdingofcriticalminerals,toensuresecurityofsupply.ESGstandardsareallthemoreimportantasmeetingtheexponentialgrowthindemandforcriticalmineralswillrequireasignificantincreaseinminingandmineralprocessing.EnsurethatG20countriesparticipateintheinternationaleffortsaimedatdevelopingawellorganised,standardisedandstablemarketforcriticalmineralsglobally,includingthroughtheIEACriticalMineralsWorkingParty.ThispublicationreflectstheviewsoftheIEASecretariatbutdoesnotnecessarilyreflectthoseofindividualIEAmembercountries.TheIEAmakesnorepresentationorwarranty,expressorimplied,inrespectofthepublication’scontents(includingitscompletenessoraccuracy)andshallnotberesponsibleforanyuseof,orrelianceon,thepublication.Unlessotherwiseindicated,allmaterialpresentedinfiguresandtableisderivedfromIEAdataandanalysis.Thispublicationandanymapincludedhereinarewithoutprejudicetothestatusoforsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersandboundariesandtothenameofanyterritory,cityorarea.IEApublicationsInternationalEnergyAgencyWebsite:www.iea.orgContactinformation:www.iea.org/about/contactIEA.Allrightsreserved.TypesetinFrancebyIEA-September2022Coverdesign:IEAPhotocredits:GettyImages

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