RenewableEnergyMarketUpdateOutlookfor2022and2023TheIEAexaminesthefullspectrumofenergyissuesincludingoil,gasandcoalsupplyanddemand,renewableenergytechnologies,electricitymarkets,energyefficiency,accesstoenergy,demandsidemanagementandmuchmore.Throughitswork,theIEAadvocatespoliciesthatwillenhancethereliability,affordabilityandsustainabilityofenergyinits31membercountries,10associationcountriesandbeyond.Pleasenotethatthispublicationissubjecttospecificrestrictionsthatlimititsuseanddistribution.Thetermsandconditionsareavailableonlineatwww.iea.org/t&c/Thispublicationandanymapincludedhereinarewithoutprejudicetothestatusoforsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersandboundariesandtothenameofanyterritory,cityorarea.Source:IEA.Allrightsreserved.InternationalEnergyAgencyWebsite:www.iea.orgIEAmembercountries:AustraliaAustriaBelgiumCanadaCzechRepublicDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIrelandItalyJapanKoreaLithuaniaLuxembourgMexicoNetherlandsNewZealandNorwayPolandPortugalSlovakRepublicSpainSwedenSwitzerlandTurkeyUnitedKingdomUnitedStatesTheEuropeanCommissionalsoparticipatesintheworkoftheIEAIEAassociationcountries:ArgentinaBrazilChinaEgyptIndiaIndonesiaMoroccoSingaporeSouthAfricaThailandINTERNATIONALENERGYAGENCYRenewableEnergyMarketUpdate2022Outlookfor2022and2023AbstractPAGE2IEA.Allrightsreserved.AbstractRenewableelectricitycapacityadditionsbrokeanotherrecordin2021andbiofuelsdemandalmostrecoveredtopre-Covidlevels,despitethecontinuationoflogisticalchallengesandincreasingprices.However,theRussianFederation’s(hereafter,“Russia”)invasionofUkraineissendingshockwavesthroughenergyandagriculturemarkets,resultinginanunprecedentedglobalenergycrisis.Inmanycountries,governmentsaretryingtoshelterconsumersfromhigherenergyprices,reducedependenceonRussiansuppliesandareproposingpoliciestoacceleratethetransitiontocleanenergytechnologies.Renewableenergyhasgreatpotentialtoreducepricesanddependenceonfossilfuelsinshortandlongterm.AlthoughcostsfornewsolarPVandwindinstallationshaveincreased,reversingadecade-longcostreductiontrend,naturalgas,oilandcoalpriceshaverisenmuchfaster,thereforeactuallyfurtherimprovingthecompetitivenessofrenewableelectricity.However,howrapidlyrenewablescansubstitutefossilfuelshingesonseveraluncertaintiesandwilldependonmanyfactors.Willrenewableelectricitysourcesdefythisglobalenergycrisisandcontinuetoexpandquicklydespiteemergingpoliticalandmacroeconomicchallenges?Atthesametime,growthinbiofuelsdemandfacessignificantheadwindsfrombothlowertransportdemandgrowthandhighbiofuelprices.Willdemandgrowthresumeathistoricalrates?InexploringthemostrecentmarketandpolicydevelopmentsasofApril2022,ourRenewableEnergyMarketUpdateforecastsnewglobalrenewablepowercapacityadditionsandbiofueldemandfor2022and2023.Italsodiscusseskeyuncertaintiesandpolicy-relatedimplicationsthatmayaffectprojectionsfor2023andbeyond.RenewableEnergyMarketUpdate2022AcknowledgementsOutlookfor2022and2023PAGE3IEA.Allrightsreserved.AcknowledgementsThisstudywaspreparedbytheRenewableEnergyDivisionintheDirectorateofEnergyMarketsandSecurity.ItwasdesignedanddirectedbyHeymiBahar,SeniorAnalyst.TheleadauthorsofthereportwereHeymiBahar(electricity)andJeremyMoorhouse(biofuels).Thereportbenefitedfromanalysisandinputfrommultiplecolleagues:YasminaAbdelilah,PiotrBojek,FrançoisBriens,TrevorCriswell,KazuhiroKurumi,KartikVeerakumarandGreciaRodríguezJiménez(alsoresponsiblefordatamanagement).PaoloFrankl,HeadoftheRenewableEnergyDivision,providedstrategicguidanceandinputtothisworkandcontributedtorelevantmessaging.ValuablecommentsandfeedbackwereprovidedbyKeisukeSadamori,DirectorofEnergyMarketsandSecurityDirectorate.ThanksgototheIEACommunicationandDigitalisationOffice(CDO)fortheirhelpinproducingthereportandwebsitematerials,particularlytoJadMouawad,HeadofCDO,andtoJonCuster,AstridDumond,MerveErdil,JethroMullen,IsabelleNonain-Semelin,JuliePuech,RobertStone,GregoryViscusiandThereseWalsh.DianeMunrocarriededitorialresponsibility.RenewableEnergyMarketUpdate2022HighlightsOutlookfor2022and2023PAGE4IEA.Allrightsreserved.HighlightsThecurrentglobalenergycrisishasaddednewurgencytoacceleratecleanenergytransitionsand,onceagain,highlightedthekeyroleofrenewableenergy.Forrenewableelectricity,pre-crisispoliciesleadtofastergrowthinourupdatedforecast.Notably,windandsolarPVhavethepotentialtoreducetheEuropeanUnion’spowersectordependenceonRussianFederation(hereafter,“Russia”)naturalgasby2023.Atthesametime,itistooearlytoassessthepotentialimpactonour2022and2023forecastofnewlyannouncedtargetsfollowingtheRussianinvasionofUkraine,intheabsenceofrapidpolicyimplementation.Annualrenewablecapacityadditionsbrokeanewrecordin2021,increasing6%toalmost295GW,despitethecontinuationofpandemic-drivensupplychainchallenges,constructiondelaysandrecord-levelcommoditypricesforrawmaterials.SolarPVandwindcostsareexpectedtoremainhigherin2022and2023thanpre-pandemiclevelsduetoelevatedcommodityandfreightprices.However,theircompetitivenessactuallyimproves,duetomuchsharperincreasesinnaturalgasandcoalprices.Renewablecapacityisexpectedtofurtherincreaseover8%in2022,reachingalmost320GW.However,unlessnewpoliciesareimplementedrapidly,growthremainsstablein2023becausesolarPVexpansioncannotfullycompensateforlowerhydropowerandsteadyyear-on-yearwindadditions.Globally,forecastadditionsfor2022and2023havebeenrevisedupwardsby8%fromDecemberlastyear,thankstostrongpolicysupportinthePeople’sRepublicofChina(hereafter,“China”),theEuropeanUnionandLatinAmerica,anddespitedownwardforecastrevisionsintheUnitedStates.Biofueldemandrecoveredin2021fromCovid-19lows,tonear2019levels,andweexpectgrowthtoexpandyear-on-yearby5%in2022andby3%in2023.Ontheotherhand,increasingfeedstockpricesandpolicyreactionfrommultiplecountriesslowsgrowthintheshortterm,leadingtoa20%downwardrevisionofourpreviousbiofueldemandgrowthforecast.Russia’sinvasionofUkraineisalsoputtingupwardpressureonanalreadyhigh-priceenvironmentforbiofuelfeedstocks,inparticularvegetableoils.Whileloomingmarketuncertaintiesincreasechallenges,thenewfocusonenergysecurity–especiallyintheEuropeanUnion–isalsotriggeringanunprecedentedpolicymomentumtowardsacceleratingenergyefficiencyandrenewables.Ultimately,theforecastofrenewablemarketsfor2023andbeyondwilldependonwhethernewandstrongerpolicieswillbeintroducedandimplementedinthenextsixmonths.RenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE5IEA.Allrightsreserved.RenewableelectricityAbrieflookbackat2021AnotherrecordyearofgrowthbutwithnewboomandbustdeploymentcyclesDespitethepersistentpandemic-inducedsupplychainchallenges,constructiondelays,andrecord-levelrawmaterialandcommodityprices,renewablecapacityadditionsin2021increased6%andbrokeanotherrecord,reachingalmost295GW.ThisgrowthisslightlyhigherthantheforecastlastyearintheIEA’sRenewables2021.Globally,the17%declineinannualwindcapacityadditionsin2021wasoffsetbyanincreaseinsolarPVandgrowthinhydropowerinstallations.Theexpansionofbioenergy,concentratedsolarpower(CSP)andgeothermalwasstablein2021comparedwith2020.Intermsofspeedofgrowth,renewablecapacity’syear-on-yearincreaselastyearwasslower,followinganexceptionaljumpin2020whenChinesedevelopersrushedtoconnectprojectsbeforethephaseoutofsubsidies,especiallyforonshorewind.Renewablenetcapacityadditions,2019-2021IEA.Allrightsreserved.050100150200250300350TotalPVWindHydroBioenergyGW201920202021PreviousRenewables2021forecastRenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE6IEA.Allrightsreserved.Chinalargelymaintaineditsmarketshareofdeploymentin2021,accountingfor46%ofworldwiderenewablecapacityadditions.However,newChinesecapacitydeclined2%year-on-year,withonshorewindandutility-scalesolarPVinstallations55%and22%lower,respectively,thantherecordboomcyclelevelsin2020whendevelopersrushedtocompleteprojectsbeforethesubsidyexpirationdeadline.Ontheotherhand,offshorewind,residentialsolarPVandbioenergyannualadditionsbrokenewrecordsthankstotheavailabilityofsubsidiesthrough2021.Forinstance,offshorewindnewinstallationsincreasedalmostsix-foldin2021comparedwith2020.Inaddition,thecommissioningofmultipleunitsattheChineseBaihetanhydropowerplantcontributedtotheglobalaccelerationofhydropowerexpansions.OutsideofChina,theEuropeanUnionwasthesecondlargestmarketintermsofincreasedcapacity,withtheregionsurpassingforthefirsttimetheall-time-recordin2011.SolarPValoneaccountedforthemajorityoftheEuropeanUnion’sexpansionlastyearduetoprojectaccelerationinSpain,France,PolandandGermany,whichwasdrivenbyacombinationofgovernment-ledauctionsanddistributedsolarPVincentives.IntheUnitedStates,lowerproductiontaxcredit(PTC)ratesledtoonshorewindadditionsdecliningbyone-quarter.SolarPVexpansioncontinuedtoincreasethankstotheinvestmenttaxcredits(ITC)availableuntil2023-2024providingarelativelystablepolicyenvironment,evenassupplychainandlogisticalchallengeshamperedmuchfastergrowth.Renewablenetcapacityadditionsbycountryandregion,2019-2021IEA.Allrightsreserved.020406080100120140160ChinaEuropeUSAIndiaASEANLatinAmericaMiddleEast&AfricaOthercountriesGW201920202021RenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE7IEA.Allrightsreserved.India’srenewableenergygrowthrecoveredin2021followingarecordslowdownin2020duetoprojectdelaysrelatedtoCovid-19challenges.Withthecommissioningofalreadyauctionedutility-scaleprojectsandtheaccelerationofthedistributedPVmarketduetopolicyimprovements,India’srenewablecapacityadditionsin2021morethandoubledcomparedto2020.InBrazil,generousnetmeteringincentivesfordistributedPVapplicationledtoarushininstallationswhileonshorewindadditionsacceleratedbecauseofsupportiveeconomicsfrombilateralcontractinginthefreemarket.InAfrica,renewablecapacityadditionsresumedgrowthwiththecommissioningofpreviouslyawardedwindandsolarPVprojectsinSouthAfrica.Thephaseoutofthegenerousfeed-intariff(FIT)schemeinVietNamresultedinabustinthedeploymentcycle,withthecountry’sadditionshalvingfrom2020to2021.Asaresult,ASEAN’sannualinstallationsdeclined40%year-on-year,althoughstillslightlyhigherthanin2019.2022and2023forecastsummaryRenewablecapacityadditionswillbreakanotherrecordin2022ledbysolarPVRenewablecapacityisexpectedtoincreaseover8%in2022comparedwithlastyear,pushingthroughthe300GWmarkforthefirsttime.SolarPVisforecasttoaccountfor60%oftheincreaseinglobalrenewablecapacitythisyearwiththecommissioningof190GW,a25%gainfromlastyear.Utility-scaleprojectsaccountforalmosttwo-thirdsofoverallPVexpansionin2022,mostlydrivenbyastrongpolicyenvironmentinChinaandtheEuropeanUniondrivingfasterdeployment.Followinga32%year-on-yeardeclinein2021,newglobalonshorewindinstallationsareexpectedtoslightlyrecoverandreachalmost80GW.Offshorewindgrowthworldwideisexpectedtodecline40%in2022followingtheexceptionalfour-foldjumplastyearinChinaduetothenationalsubsidyphase-outdeadline.Despitethisdecline,2022globaloffshorewindcapacityadditionswillstilldoublecomparedto2020,thankstothecontinuationofprovincialincentivesinChinaandtheexpansionintheEuropeanUnion.Asaresult,ChinaisexpectedtohavethelargestcumulativeinstalledoffshorewindcapacitygloballyandsurpasstheEuropeanUnionandUnitedKingdomcombinedbytheendofthisyear.RenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE8IEA.Allrightsreserved.Unlessnewandstrongerpoliciesareimplementedin2023,globalrenewablecapacityadditionsareexpectedtoremainstablecomparedwith2022.WhilesolarPVisforecasttobreakanotherrecordin2023,reachingalmost200GW,andwiththeexpansionofwindandbioenergyremainingstable,40%lowerhydropoweradditionsduetoareducedprojectpipelineinChinastymiescapacitygrowthintheglobalrenewableenergymarket.Netrenewablecapacityadditionsbytechnology,2017-2023IEA.Allrightsreserved.HighersolarPVandwindcostsareheretostayin2022and2023buttheydonotchallengecompetitivenessPricesformanyrawmaterialsandfreightcostshavebeenonanincreasingtrendsincethebeginningof2021.ByMarch2022,thepriceofPV-gradepolysiliconmorethanquadrupled,steelincreasedby50%,copperroseby70%,aluminiumdoubledandfreightcostsrosealmostfive-fold.Thereversalofthelong-termtrendofdecreasingcostsisreflectedinthehigherpricesofwindturbinesandPVmodulesasmanufacturerspassthroughincreasedequipmentcosts.Comparedwith2020,weestimatethattheoverallinvestmentcostsofnewutility-scalePVandonshorewindplantsarefrom15%to25%higherin2022.Surgingfreightcostsarethebiggestcontributortooverallpriceincreasesforonshorewind.ForsolarPV,theimpactismoreevenlydividedamongelevatedpricesforfreight,polysiliconandmetals.0%10%20%30%40%50%60%70%0501001502002503003502017201820192020202120222023GWOtherrenewablesBioenergyHydropowerDistributedPVUtility-scalePVOffshorewindOnshorewindPV'sshare(rightaxis)RenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE9IEA.Allrightsreserved.SolarPVandonshorewindinvestmentcostestimatesfornewcontractedprojectsunderhighcommoditypricesIEA.Allrightsreserved.Highpricesforoil,naturalgasandcoalalsocontributetorisingproductioncostsofmanufacturedmaterialsforrenewableelectricitytechnologiessincefossilfuelsareusedinbothindustrialprocessesandpowergeneration.Whilesignificantinabsoluteterms,theincreaseinrenewablescostshavenothamperedtheircompetitivenessbecausepricesoffossilfuelsandelectricityhaverisenatamuchfasterpacesincethelastquarterof2021.Globally,powerpricesarebreakinghistoricrecordsinmanypartsoftheworld,especiallywherenaturalgasisthemarginaltechnologysettingthefinalhourlyordailypriceinmanywholesaleelectricitymarkets.ThisisespeciallyprevalentinEuropeanUnioncountries,wherewholesalepowerpricesinGermany,France,ItalyandSpainhaveincreasedmorethansix-foldonaveragecomparedwithmeanvaluesfrom2016to2020.Historically,long-termcontractpricesfromsolarPVandwindauctionshavebeenhigherthanwholesalepricesinmanylargeEuropeanUnionmarkets.However,eventhehighest-pricedonshorewindandutilityscalecontractssignedoverthelastfiveyearsarehalfoftheaveragewholesalepricesseentodayintheEuropeanUnion.Fornewlycontractedprojects,despitecostincreases,onshorewindandsolarPVventuresareofferinglong-termcontractssignificantlylowerthanwholesalepriceaveragesoverthelastsixmonths.Forinstance,pricesforutility-scalesolarPVandonshorewindprojectsincreased15-25%intherecentSpanishauctionheldinDecember2021,toUSD37/MWhandUSD35/MWh,respectively.Today,theseresultsareone-tenthofaverageSpanishwholesaleelectricitypricesoverthelast14months.020406080100201520162017201820192020202120222023CAPEXindex(2015=100)Utility-scalesolarPVOnshorewindRenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE10IEA.Allrightsreserved.Utility-scalesolarPV(left)andonshorewind(right)auctioncontractandwholesalepowerpricesinselectedEuropeanUnioncountries,quarterlyaveragesfrom2016-2022IEA.Allrightsreserved.Forecastadditionsfor2022and2023havebeenrevisedupwardsby8%fromlastyearledbyChinaandtheEUChinaaccountsforthemajorityofupwardforecastrevisionsfor2022and2023sinceourlastreport,despitethephaseoutofincentivesforallrenewableslastyear.Theexpansionisduetomultiplegovernmentandmarketfactors.First,thegenerationcostsofsolarPVandonshorewindarelowerthancoalbenchmarkpricesinthemajorityofprovinces.Second,thegovernmentannounced450GWofadditionallarge-scaleonshorewindandsolarPVmegaprojectsintheXinjiangandInnerMongoliaprovinces,knownas“mega-hubs”,with100GWstartingdevelopmentatthebeginningof2022.Third,China’sMinistryofFinanceconfirmedthepaymentofoutstandingrenewableenergysubsidiesworthUSD60billiontobepaidthrough2022,improvingthebalancesheetofdevelopersandunlockingadditionalfundsfornewprojects.Fourth,intheabsenceofnationalsubsidies,provincialgovernmentsarestillprovidingtaxincentivesandlow-costfinancingtorenewableenergyprojects.IntheEuropeanUnion,solarPVaccountsforthemajorityofupwardrevisions,withfasterpolicyimplementationdrivinggrowthinGermany,theNetherlands,Poland,ItalyandFrance.However,theEuropeanUnion’sonshorewindgrowthwasreviseddownduetoongoingpermittingchallengesslowingdeploymentinGermany,PolandandItaly.Brazil’sgenerousnetmeteringschemeresultsinadistributedPVmarketboom,supportingupwardrevisionstotheLatinAmericaforecast.InIndia,delayedprojectsin2021leadstohighergrowthin2022,withincreaseddistributedsolarPVcapacitysupportingtheoverallupwardrevisions.153555759511513512341234123412341234123412016171819202122USD/MWhGermanyFranceSpainItalyFranceAuctionGermanyAuctionItalyAuctionSpainAuction153555759511513512341234123412341234123412016171819202122USD280/MWhUSD280/MWhRenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE11IEA.Allrightsreserved.Policyuncertaintiesandtrademeasureschallengeshort-termwindandsolarPVgrowthintheUnitedStatesAmonglargerenewableenergymarkets,theforecastisreviseddownintheUnitedStatesduetouncertaintyovernewincentivesforbothwindandsolarPV.Multiplepolicyproposals,includinglong-termtaxincentiveextensions,haveyettobeapprovedbytheHouseofRepresentativesandSenate.NewtradepoliciesonsolarPVhavealsoincreasedchallengesfordevelopersintheUnitedStates.InJune2021,thegovernmentbannedimportsfromseveralpolysiliconproducerslocatedinXinjiang,ChinafollowingtheindicationfromtheUSCustomsandBorderProtectionagencythatthesecompaniesuseforcedlabourintheirmanufacturing.Inaddition,attheendofMarch2022,theUSDepartmentofCommercelaunchedanewinvestigationtoassesswhethersolarcellsproducedinSoutheastAsiaaremadewithpartsmanufacturedinChinathataresubjecttoanimporttariffimposedin2018.Sincetheintroductionoftariffsin2018,SoutheastAsiancountriessuchasVietNam,Malaysia,andIndonesiareplacedimportsfromChina,supplyingover80%ofthecountry’scellandmoduleimports.Thenewinvestigationandthepossibilityofadditionaltariffscompoundingprocurementchallengesintheshortterm,reducingtheavailabilityofsolarPVmodules.Asaresult,wehaveloweredourforecastforsolarPVby17%in2022and9%in2023.Japan’srenewablecapacityadditionsin2022-2023arealsoreviseddownfromlastyear,mainlyduetolowerFITapprovalforsolarPV.Thenewfeed-inpremium(FIP)schemejuststartedinApril2022.ThiscouldleadtoadditionalcapacitygrowthforsolarPVandonshorewindinthelongerterm,butforecastuncertaintyremainsintheshortterm.2022and2023renewablecapacityforecastrevisions,December2021vsMay2022IEA.Allrightsreserved.-10%-5%0%5%10%15%20%UnitedStatesJapanASEANWorldEULatinAmericaChinaRenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE12IEA.Allrightsreserved.FasterimplementationofpoliciesexpeditedeploymentintheEuropeanUnionandIndia,whileChinamaintainsleadChinaaccountsfor45%ofglobalrenewablecapacityadditionsin2022-2023,withthecommissioningofover140GWonaverageperyeardrivenmostlybylarge-scalesolarPVdeployment.TheexpansiontrendinChinaisfullyin-linewiththegovernment’s1200GWwindandsolarPVtargetby2030.Annualadditionsareexpectedtoremainslightlyhighercomparedwith2020-2021,whenthecountrysawmultipledeploymentrushesduetoincentivephase-outschedulesforonshorewindandutility-scalePVin2020,andoffshorewindandresidentialPVin2021.AnnualaveragecapacityadditionsbycountryandregionIEA.Allrightsreserved.IntheEuropeanUnion,rapidimplementationofpreviouslyannouncedambitiouspolicytargetsandalreadyawardedauctions,combinedwithcontinuousincentivesfordistributedsolarPV,drivetheexpansion.InresponsetotheRussianinvasionofUkraine,manyEuropeanUnioncountriesannouncedplanstoacceleraterenewablesdeploymentaimedatreducingtheirdependenceonRussiannaturalgasimports.Germany,theNetherlandsandPortugaleitherincreasedtheirrenewableenergyambitionsormovedtheirinitialtargetstoanearlierdate.Weexpectthattheimpactofthesenewpolicieswillbelimitedby2023,especiallyforlarge-scaleprojectsthatrequiredevelopmenttimelinesofmorethan18months.However,ourforecastseessomeupsideondistributedPVasresidentialandcommercialinstallationsenableconsumerstoreducetheirelectricitybillsthroughself-consumption.0204060801001201401601802002016-172018-192020-212022-232016-172018-192020-212022-23ChinaBeyondChinaGWOthercountriesMiddleEast&AfricaLatinAmericaIndiaUnitedStatesEuropeRenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE13IEA.Allrightsreserved.RenewablecapacityadditionsinChina,EuropeanUnion,theUSandIndia,2019-2023IEA.Allrightsreserved.InIndia,newrecordsforrenewablecapacityexpansionareexpectedtobesetin2022and2023asdelayedprojectsfrompreviouscompetitiveauctionsarecommissioned,especiallyforsolarPV.Nonetheless,thefinancialhealthofdistributioncompanies(DISCOMs)remainstheprimarychallengetorenewableenergydeploymentinIndia,withpotentialprojectcancellationsandprotractedcontractrenegotiations.IntheUnitedStates,annualcapacityadditionsareexpectedtoslowover2022and2023.WindandsolarPVsectorsfacetwokeychallengestoachievefastergrowthintheshortterm.First,thelackoflong-termvisibilityonfutureincentiveschemeshasreducedtheprojectpipelineforonshorewinddevelopmentsandthePTCsphaseddownfromtheinitialrateofUSD19/MWhforprojectsbeginningconstructioninin2016toUSD10/MWhforconstructionstartingin2019,reducingeconomicattractiveness.WhilesubsequentextensionsofthePTCin2020and2021havebeenathigherrates,thoseyearsfalloutsideofourforecastperiodgivendevelopmenttimelines.Second,potentialsolarPVtrademeasuresagainstSoutheastAsiancountries,inadditiontoChina,arereducingtheavailabilityofsolarmodulesintheshorttermandleadingtohigherprices,whichwerealreadyinflatedduetoelevatedcommodityprices.CurrentproductionofmodulesintheUnitedStatescanonlymeetlessthan20%oflastyear’sannualdemandandtherearelimitedmanufacturersoutsideofVietNam,Indonesia,Cambodia,MalaysiaandChinathatcanprovidePVproductstotheUSmarket.02040608010012014020192020202120222023201920202021202220232019202020212022202320192020202120222023ChinaEUUnitedStatesIndiaGWSolarPVWindHydropowerOtherrenewablesRenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE14IEA.Allrightsreserved.RenewablecapacityadditionsinBrazil,ASEAN,MiddleEastandAfrica,2019-2023IEA.Allrightsreserved.Whilesmallerinabsoluteterms,significantgrowthoccursandacceleratesinotherworldregions,notablyLatinAmerica,theMiddleEastandNorthAfrica.InBrazil,weexpectrenewablecapacityadditionstobreakanotherrecordin2022duetothegenerousnetmeteringschemesupportingdistributedsolarPVexpansion.However,netmeteringincentivesbegintophasedownin2023,resultinginslightlylowercapacityadditionsin2023.ThevaryingcommissioningdeadlinesofcompetitiveauctionsandbilateralcontractsinASEANcanleadtofluctuatingutility-scalewindandPVcapacityexpansion.VietNam’spolicyboomandbustcycleshaveledtosignificantlylowercapacityadditionscomparedwith2020.FollowingthesolarPVboomin2020andonshorewindin2021,VietNam’srenewablecapacityadditionsareforecasttodeclinefrom17GWover2020-2021tojust6GWfor2022-2023.IntheMiddleEastandAfrica,thepushforsolarPVdrivesannualcapacityadditions.Fallingsystemcosts,goodresourcepotential,favourablefinancingconditionsandeconomiesofscalemakesolarPVprojectsintheMiddleEasteconomicallyattractive.Insub-SaharanAfrica,governmentguaranteesorbackingfromdevelopmentbanksforutility-scalesolarPV,windandhydropowerprojectsarefuellinggrowth.WindandsolarPVhavethepotentialtoreducetheEuropeanpowersectordependenceonRussiangasby2023Russiasuppliesaround45%oftheEuropeanUnion’sgasimportsforindustry,homesandelectricitygeneration.Forelectricitygeneration,naturalgasaccountsforaround16%ofthegroup’stotalpowerdemand.Overthelastdecade,natural0246810121416201920202021202220232019202020212022202320192020202120222023BrazilASEANMiddleEastandAfricaGWSolarPVWindHydropowerOtherrenewablesRenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE15IEA.Allrightsreserved.gas-fuelledelectricitygenerationannuallyrangedfrom340TWhto600TWh,dependingonthepriceenvironment,windandsolarPVpenetration,andwinterdemand.Consideringcountry-levelsupplydependencies,weestimatethatbetween100TWhto200TWhofEuropeanUnionnaturalgas-basedelectricityisprovidedbyRussia.Ontheotherhand,ourforecastsindicateincrementalgrowthofrenewableelectricitygenerationupto180TWhfrom2021-2023,almostequaltothehighestvalueofRussiadependentgas-firedgeneration.Withcurrentdeploymenttrends,windandsolarPVexpansionintheEuropeanUnionhasthepotentialtoreducethedependenceonRussiangasuseinelectricitysignificantly.However,thecontributionofvariablerenewableswillalsodependonpoliciesonenergyefficiencymeasureskeepingdemandincheckandthephase-outorphase-downpoliciesforcoalandnuclearenergyinseveralmemberstates.EuropeanUnionnaturalgas-firedelectricitygenerationfor2011-2021andrenewableelectricitygenerationgrowthfor2021-2023IEA.Allrightsreserved.EuropeanUnioncountrieshavevaryinglevelsofdependencyonRussiafortheirnaturalgassupply.Amongmemberstates,GermanyandItalyhavethehighestdependencyonRussiaintermsofabsoluteelectricitygeneration.However,thepotentialforrenewablestoreducedependencyinGermanyissignificantlyhigherthaninItalybasedonourwindandsolarexpectationsby2023–unlessnewandstrongerpoliciesareintroducedandthepaceofimplementationpicksup.FranceandtheNetherlands’dependencyonRussiagasisrelativelylow,enablingahigherpotentialforrenewablestodisplacenaturalgas.Conversely,inAustria,HungaryandGreecerenewablesexpansionremainslimitedtoreducethecountries’dependencyonRussia.050100150200250LowHighEUnaturalgaspowergenerationassociatedwithRussiangas(2011-2021)Renewablesgenerationgrowth(2021-2023)TWhSolarPVWindNaturalgasRenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE16IEA.Allrightsreserved.Averageannualnaturalgas-firedelectricitygenerationin2016-2021andrenewableelectricitygenerationgrowthfor2021-2023inselectedEUmemberstatesIEA.Allrightsreserved.TheglobalenergycrisishasintroducedmoreforecastuncertaintiesandistestingtheresilienceofrenewableelectricityTheRussianinvasionofUkrainehasaddednewurgencytoacceleratecleanenergytransitionsinordertoreducethedependencyofimportedfossilfuelsfromRussia,withdeploymentofmorerenewablesnowastrategicimperativeformanycountries,especiallyintheEuropeanUnion.Indeed,sinceRenewables2021waspublishedlastDecember,theglobalenergycrisishasmovedthegoalpostsforthedeploymentofsolar,windandotherrenewableenergysources,andwehaveupdatedourforecastsinthisnewreportinresponse.ManyEuropeanUnioncountrieshaveannouncedplanstoadvancedevelopmentofrenewables,withwindandsolarPVholdingthegreatestpotentialtoreducetheEuropeanUnion’spowersectordependenceonRussiaby2023.Thehighfossilfuelpriceenvironmenthasimprovedthecostcompetitivenessofrenewableelectricitytechnologiesagainstcoalandnaturalgas-fuelledpowerplants.Meanwhile,residentialandcommercialsolarPVapplicationsarehelpingconsumersreducetheirelectricitybills.However,despitetheirpotential,anaccelerationinnewrenewablescapacityishighlydependentuponastablepolicyenvironmentprovidinglong-termrevenuecertaintyandfasterpermitting.Inourforecast,government-ledcompetitivewindandsolarPVauctionsin2019and2020remainakeydriverforrenewablesexpansionthrough2023.Auctionvolumesslightlydeclinedin2021duetolowerawardedcapacityinChinaandIndiawhiletheyincreasedintheEuropeanUnionandLatinAmerica.010203040506070RestofEUPolandGreeceTheNetherlandsHungaryFranceFinlandAustriaItalyGermanyTWhAverageannualnaturalgaselectricitygenerationdependentonRussiangas,2016-2021Renewablegenerationgrowthover2021-2023RenewableEnergyMarketUpdate2022RenewableelectricityOutlookfor2022and2023PAGE17IEA.Allrightsreserved.However,geopoliticalandmacroeconomicchallengesincreaseuncertaintiesoverrenewableelectricityforecastsbeyond2023.HigherwindandsolarPVinvestmentcostsduetoelevatedcommoditypricesinthewakeofRussia’sinvasionandpermittingdelaysresultedinthelowestfirst-quarterauctionvolumesgloballyin2022since2016.Inaddition,volatilityinelectricitymarketsduetosharplyhighergaspriceshascomplicatedcontractnegotiationsforcorporatepowerpurchaseagreements(PPA),especiallyintheEuropeanUnion,whilerisinginterestratesarecompoundingchallengesforrenewabledevelopers.Utility-scalesolarPVandonshorewindauctioncapacityandcorporatePPAsforfirstquarters,2016to2022IEA.Allrightsreserved.Source:ForcorporatePPAs:BloombergNewEnergyFinance.Whilesomeofthesedifficultieswilllikelyremaininthecomingmonthsandintonextyear,causingloomingmarketuncertainties,thenewfocusonenergysecurity–inparticularintheEuropeanUnion–isalsotriggeringanunprecedentedpolicymomentumtowardsacceleratingenergyefficiencyandrenewables.Ultimately,theforecastofrenewablemarketsfor2023andbeyondwilldependonwhethernewandstrongerpolicieswillbeintroducedandimplementedinthenextsixmonths.01020304050607080900510152025Q12016Q12017Q12018Q12019Q12020Q12021Q12022GWOnshorewindUtility-scalePVCorporatePPAsAnnualauctionvolumes(rightaxis)TransportbiofuelsPAGE18IEA.Allrightsreserved.RenewableEnergyMarketUpdate2022Outlookfor2022and2023TransportbiofuelsAbrieflookbackat2021AnunevenrecoveryasexceptionallyhigherpricesandlowerGDPunderminepreviousgrowthprojectionsBiofueldemandrecoveredin2021fromCovidlows,tonear2019levels.However,in2022weexpecthigherpricesforoilandbiofuels,combinedwithlowerGDPexpectations,toslowdemandgrowthby20%comparedtoourpreviousforecast.Growthintransportationfuels,albeitatmoremodestlevels,andstrengtheningbiofuelpoliciesstilldriveyear-on-yearbiofueldemandhigherby5%in2022and3%in2023.Biofueldemandin2021reached155400millionlitres,returningtonear2019levels.Demandrose8700millionlitresyear-on-year,whichissimilartoourRenewables2021estimatefromDecember2021.Therecoveryacrossfueltypeswasuneven,however.Ethanoldemandrose6%year-on-yearin2021butremained7%below2019levels.Bycontrast,renewabledieseluseexpandedbyaround70%from2019andbiodieseldemandrose0.2%from2019.Biofueldemandin2019-2021byfueltypecomparedwithRenewables2021forecastIEA.Allrightsreserved.020000400006000080000100000120000140000160000180000TotalDemandEthanolBiodieselRenewableDieselVolume(millionlitres/year)201920202021Renewables2021TransportbiofuelsPAGE19IEA.Allrightsreserved.RenewableEnergyMarketUpdate2022Outlookfor2022and20232022and2023forecastsummaryHighpricesslowbiofuelsdemandgrowthRussia’sinvasionofUkraineissendingshocksthroughenergyandagriculturemarkets,worseningalreadyhighprices.Asaresult,biofueldemandgrowthisnowforecasttoslowby20%in2022,equivalentto2200millionlitres,comparedwithourpreviousforecastofahigherincreaseof11000millionlitres.Weakerdemandgrowthfortransportationfuelslargelyunderpinsourdownwardrevision.Asof4April2022,theIEAexpectsglobaloildemandgrowthwillbe1.2%lowerthisyearcomparedtoourJanuaryforecast.ThedownwardrevisionisduetoacombinationofCovid-relatedmobilityrestrictionsinChinaandweakerGDPgrowth.Sincebiofuelsareblendedwithgasolineanddiesel,slowergrowthintransportationdemanddirectlyimpactsbiofueldemand,withdeclinesdeepestinimportantbiofuelmarketssuchasEurope,theUnitedStatesandBrazil.Theagriculturalindustryisstrugglingwithitsownpriceshocks,whichinturnhavedrivenupbiofuelpricesinmostmarkets.Increasesvarybyregionandbyfuel.Forexample,Brazil’sethanolpricesareup20%whileintheUnitedStatestheyareup30%sinceJanuary2022.Globally,biodieselpriceshaverisenbetween20-30%thisyearalone.PriceincreasesareontopofalreadyloftylevelsreportedinDecember’sRenewables2021.Inresponse,severalgovernmentsarerelaxingordelayingpolicies,whichalsocontributetoslowingdemandgrowth.ToestimatetheimpactonbiofuelssinceRussiainvadedUkraine,wecomparedourcurrentforecastagainstapre-invasionJanuaryassessment.ThisforecastincorporatedchangingoildemandandpricedevelopmentssincetheannualRenewables2021waspublishedinDecember2021.Theupdateledtoaslight0.5%downwardrevisiontoournew2022forecast.Priceandpolicyimpactsonthe2022forecastIEA.Allrightsreserved.140000145000150000155000160000165000170000175000GlobalDemandRenewables2021ForecastJanuary2022UpdateDemandDeclinesCurrentForecastCurrentForecast202120222023Volume(Millionlitresperyear)RestofWorldAsia&PacificEuropeBrazilUnitedStatesTransportbiofuelsRenewableEnergyMarketUpdate2022Outlookfor2022and2023PAGE20IEA.Allrightsreserved.Brazilaccountsforthemajorityofthedeclineinglobalbiofueldemandgrowth.Demandhasbeenrevisedloweracrossalltransportfuelsfrompre-invasionJanuaryestimates,withgasolinenow-0.2%anddieselat-0.7%in2022versus2021levels.Lowertransportfueluseslows2022Brazilianbiofueldemandgrowthby40%comparedtoJanuaryprojections.IntheUnitedStates,wehavereviseddownour2022biofuelsgrowthby15%fromJanuary’sforecast.In2022,gasolineanddieseldemandareexpectedtobe1.5%and2%respectively,lowerthanforecastedinJanuaryofthisyear,whichinturndrivesdownethanol,biodieselandrenewabledieselblending.ItisunclearhowrapidlychangingmarketdynamicswillinfluencetheUSEnvironmentalProtectionAgency’s(EPA)decisiononrenewablevolumeobligations(RVO)settobereleasedinJune.TheEPAsharedproposedrequirementsearlierthisyear,butsincethentransportfueldemandhasdeclinedandbiofuelpriceshaveincreased,whichmayinfluencetheEPA’sfinalrecommendationOntheupside,theUSgovernmentexpandedtherighttoblend15%ethanolduringsummermonthstohelplowergasolinebills.However,only2%offuellingstationsprovide15%blendingandsoweexpectthispolicychangewillonlyslightlyincreaseethanoldemandin2022.InEurope,2022gasolineanddieseldemandareexpectedtobe1.5%and1.1%,respectively,lowerthanforecastedinJanuaryofthisyear.Severalgovernmentsarealsoproposing,orhavealready,reducedblendingobligationsbecauseofhighbiofuelprices.Atthetimeofwriting,Belgium,Croatia,theCzechRepublic,Finland,GermanyandSwedenhadallannouncedchangesthat,ifimplemented,willcontributetoreducedbiofueldemandin2022and2023.Forinstance,Finlandwilllowerblendingobligationsby7.5percentagepoints,onanenergybasis,in2022and2023.Theimpactofthesechangesinvariousregionsremainsunclear,however,asstateswillstillhavetocomplywithotherpoliciesliketheEU’sFuelQualityDirective(FQD),whichmandatesgreenhousegasreductiontargets.Inourforecast,weestimateFinlandandSweden’splansleadtolowerbiofueldemandequalto320millionlitresin2022.Combined,biofueldemandgrowthexpectationsarereducedby16%comparedtoJanuarylevels.IntheAsiaandPacificregionweestimatebiofueldemandgrowthisdown36%in2022comparedtoourJanuaryforecast.Indonesiaaccountsforalmostallofthisdecline.InJanuary,wehadexpectedIndonesiawouldbeginimplementingits40%blendingmandatethisyear.Givenhigherpricesanduncertaintysurroundingthestartingdateforitsnewblendingrequirements,wehavepushedincreasesinbiofueldemandwellinto2023.TransportbiofuelsPAGE21IEA.Allrightsreserved.RenewableEnergyMarketUpdate2022Outlookfor2022and2023Biofueldemandgrowsin2022and2023despitedisruptionsWhilegrowingmoreslowlythanpreviouslyforecastfor2022,globalbiofuelsdemandisstillexpectedtoincreaseyear-on-yearby5%,or8500millionlitres,andrisebyafurther3%,or5200millionlitres,in2023.Transportfueldemandgrowth,althoughataslowerpace,andgovernmentpoliciescontinuetodrivedemandhigherforglobalbiofuels.Year-on-yearbiofuelsdemandgrowthandpercentageofglobalmarketshareIEAallrightsreserved.TheUnitedStatesleadsglobalbiofuelsgrowth,withdemandexpectedtoincreaseby6%in2022comparedto2021despiteourdownwardrevisionfromJanuary.Therecoveryingasolineanddieselusetopre-Covidlevels,California’slowcarbonfuelstandards(LCFS),implementationofrenewablefuelstandards(RFS)andthefederalbiodieselblenders’taxcreditswillallcombinetodrivethisexpansion.WeexpectUSbiofueldemandin2023toremainnear2022levelsasethanoldemanddeclinesslightlyduetostableblendinglevelsandlowergasolinedemandgrowth.Lowerethanoluseisoffsetbycontinuedpolicydrivengrowthinrenewabledieseldemand.InBrazil,weforecast1%growthinbiofuelsdemandin2022relativeto2021.Ethanoluseexpandsslightly,despiteweakergasolinedemandoverthetimeperiod.Ethanolpricesremainmoreattractivethangasoline,whichshouldleadtoahigherblendingshare.Thisgrowthispartiallyoffsetbylowerbiodieseldemanddrivenbya0.7%declineindieselusein2022.Biofuelsdemandisexpectedtorisebyasharper8%in2023,ledhigherbystrongergasolineanddieselconsumptionandexpectationsthatBrazilwillreachits15%biodieselblendingtargetbytheendof2023.-10%0%10%20%30%40%50%-1000010002000300040005000USBrazilEuropeAsiaPacificRestofWorld2021-2022Volume(Millionlitresperyear)Demandgrowth2021-2022EthanolBiodieselRenewableDieselBiojet-30%-20%-10%0%10%20%30%40%50%-3000-2000-1000010002000300040005000USBrazilEuropeAsiaPacificRestofWorld2022-2023PercentshareofglobaldemandVolume(Millionlitresperyear)Demandgrowth2022-2023TransportbiofuelsRenewableEnergyMarketUpdate2022Outlookfor2022and2023PAGE22IEA.Allrightsreserved.Europebiofueldemandisexpectedtoexpandby6%or1600millionlitresin2022relativeto2021.Growthissupportedbystrongerstate-levelpoliciesandrisinggasolineanddieseldemandrecoveringfromCovidlows,albeitataslowerratethanforecastearlierintheyear.Biofueldemandgrowthslowsin2023,however,asgasolineanddieseldemandeaseonenergyefficiencygainsandexpandingelectricvehiclefleets,whichoutpacedemandgrowthfromstrengtheningpolicies.IntheAsiaandPacificregionbiofueldemandcontinuestogrow,at9%in2022and12%in2023,duetorobustgasolineanddieselgrowth,strengtheninggovernmentpoliciesinIndiaandhigherbiodieselblendingrequirementsinIndonesia.Indiacontinuestoraiseethanolblending,reportinga9.7%blendingrateforethanolingasolineinApril2022.Chinacontributeslittletodemandgrowthsincethereisnovisibilityonnewsupportpolicies.China’s14thFive-YearPlanprovidedlittleinsightonitsbiofuelplansotherthanreiteratingitsintentto“vigorouslysupportadvancedbiofuels”.Forcesofuncertainty–fuel,feedstocksandpoliciesOilandbiofuelprices,energyandfoodsecurity,andgreenhousegasobjectivesareallinflux,introducingmultipleuncertaintiesintoourforecast.Themainfactorsthatinfluencebiofueldemandinthecomingyearsareoilprices,biofuelpricesandhowgovernmentsevaluatetheroleofbiofuelsinnavigatingenergysecurity,foodsecurityandgreenhousegasobjectives.Oilprices,GDPgrowthanddemandInthewakeofRussia’sinvasionofUkraine,pricesforinternationalbenchmarkBrentcruderosetohighsofalmostUSD140bbl/dandrangedfromUSD100-120bbl/dfromMarchthroughApril.Inadditiontohighoilprices,theeconomicfalloutfromtheescalatedCovidcrisisinChinaisunderminingtheoutlookfortheglobaleconomy.Asaresult,GDPgrowthassumptionshavebeenloweredto3.4%inAprilcomparedto4.3%inJanuary.HigheroilpricesandweakerGDPgrowthhavecombinedtocurbtransportationdemandglobally,especiallyinkeybiofuelmarketsliketheUnitedStates,EuropeandBrazil.Ifthehigherpriceandlowereconomicenvironmentpersist,alreadymodestgrowthintransportdemandmayweakenfurther,whichinturnwouldreduceourcurrentbiofueldemandestimates.ThesedownwardpressuresmaypartiallybecounteredbyanincreaseindemandforbiofuelsstemmingfromitslowerpricesrelativetootherfuelssuchasethanolintheUnitedStatesandBrazil.TransportbiofuelsRenewableEnergyMarketUpdate2022Outlookfor2022and2023PAGE23IEA.Allrightsreserved.Biofuelandfossilfuelprices2019toApril2022Sources:BloombergandArgus.IEAallrightsreservedFeedstocksandbiofuelpricesBiofuelandfeedstockpricescontinuetoclimbaswell.Biofuelsareprimarilymadefromcorn,sugar,vegetableoilsandusedcookingoil,whichareallnearoratall-timehighs.However,somefeedstocksaremoreaffectedthanothers.Forinstance,vegetableoilsroseacrosstheboardandpricesasofApril2022,areup65-164%since2019,whichinturnhasfuelledhigherpricesforbiodieselandrenewablediesel.Cornpricesarealsoup,puttingupwardpressureonethanolprices.Ontheotherhand,sugar,usedprimarilyinBrazilandIndia,islessimpacted.AccordingtotheUSDA,anumberoffactorsarepropellingglobalagriculturalcommoditypricestonear-recordlevels,includingthepotentiallossofexportsfromUkraine,increasedglobaldemand,weather-relatedsupplydisruptions,loftyenergyprices,increasedfertilizercostsandcountriesimposingexportrestrictionsoncertainfoodcropswhichexacerbatetheimpactsonmarkets.Forexample,Indonesia’sdecisioninApriltotemporarilybansomecomponentsofpalmoilputfurtherupwardpressureonbiodieselfeedstocks.Itisunclearhoworwhencommoditypriceswillcomedown,especiallysincetheimpactonmarketsareinterrelatedandwidespread.Whilehigherpricesshouldencouragefarmerstogrowmorecrops,equallycostlyfertilizersuppliescouldlimitoverallyields,underminingthebenefitsofmoreplanting.Exportbarrierscouldalsolimitincreasedproductionfromthesecountriessincefarmerswouldbelessabletocaptureexportbenefits.PolicyreactionsBeyondmarketresponses,governmentsarealsoconsideringwhetherbiofuelshelporhindervolatilefuelprices,energyandfoodsecurity,andGHGreductionpolicies.0.00.51.01.5Price(USDperlitre)BrazilEthanolUSEthanolUSGasolineEuropeEthanolEuropeGasoline0.00.51.01.52.02.5Price(USDperlitre)USBiodieselUSDieselEuropeBiodieselEuropeDieselAsiaandPacificBiodieselTransportbiofuelsRenewableEnergyMarketUpdate2022Outlookfor2022and2023PAGE24IEA.Allrightsreserved.Theseforcesareplayingoutdifferentlyinvariouscountriesandregions,andbyindividualfuels.Forinstance,inIndia,ethanolpoliciesaremovingaheadasplannedsinceethanolhelpsreduceoildemand,decreasegreenhousegasemissionsandsugarpriceshaveincreasedlessthanothercrops.InBrazil,biodieselblendingrequirementsremainrelaxedbecauseofhighfeedstockprices,despitehigherGHGemissionsandtheneedformoreoiltomakeupforbiodieselreductions.Todate,tengovernmentshave,orareproposing,relaxed,delayedorpostponedbiofuelblendingrequirementsorGHGquotasthisyear,inadditiontoactionstakenin2021becauseofalreadyhighprices.Thestatedrationaleforthesepolicydecisionsistoreduceadditionalfuelcostsborneeitherbyconsumersorbygovernments.ThetwoexceptionsareaproposalinBelgiumwhichspecificallytargetscrop-basedfeedstocksandstatementsfromGermany’sMinisterofEnvironmentstatingherintentiontoreducecropbiofueluseinGermany.Shouldhighpricespersist,othergovernmentsmayalsopauseordelaymandates.Biodieselandrenewabledieselwilllikelybeunderthemostpressuresincepricesforthesefuelshaverisenfasterthanoilprices,andthevegetableoilmarket,whichmostofthesefuelsareproducedfrom,continuestoseehighpriceincreases.Whilesomeproductionmayshifttowasteslikeusedcookingoilandtallow,thesefeedstocksarealreadyathighpricesandinlimitedsupply.Ontheotherhand,theUnitedStateswilltemporarilyextendits15%ethanolblendingmandateoverthesummermonthswiththeaimofreducinggasolinepricesforconsumers.Foodsecurityisalsotopoftheagendaformanygovernments,buttodateonlyBelgiumandGermanyareconsideringrelaxingbiofuelmandatestoaddressthisissue.Thisisprimarilybecausetherearebetterandmoreeffectivetoolstoaddressfoodsecurityconcerns.TheFAOhasrecommendedtenactionstomanagecurrenthighprices,includingmaintainingtradepolicies,diversifyingfoodsuppliesandsupportingvulnerablegroups.Nevertheless,Chinahaswarnedethanolproducersthatitwill“strictlycontrolprocessingoffuelethanolfromcorn”andtheEuropeanUnionCommissionhasnoteditwillsupportmemberstatesthatreducemandatesinthenameoffoodsecurity.Governmentsareexpectedtotreadcarefullywhenconsideringreducingmandates,however.AnyreductioninbiofueldemandcomeswithanincreaseinbothoildeliveriesandGHGemissions,whichrunscountertoprioritiesformostgovernmentswithbiofuelrequirements.Thesepolicyprioritieswilllikelymakeanychangestemporaryinordertoaddressshort-termchallenges.Finlandforexamplerelaxeditstargetsfortwoyears,whilealsoincreasingitslong-termtargetblendingtargetfrom30%to34%by2030.TransportbiofuelsRenewableEnergyMarketUpdate2022Outlookfor2022and2023PAGE25IEA.Allrightsreserved.PolicyreactionstohighbiofuelandoilpricesCountryPolicyproposal,changeorcontinuationArgentinaArgentinapassedalawtoreducethebiodieselblendratefromtheoriginal10%to5%becauseofhighcropcosts.Thelawalsoauthorisesthegovernmenttolowerthebiodieselblendrateto3%,andtohalvetheethanolvolumeenteringthefuelsectorfromcornethanolifnecessary.BrazilBrazilwillmaintainitsbiodieselblendingmandateat10%forbiodiesel,fromanintended15%targetfor2022.Themoveto10%wasmadein2021andthencontinuedthisyeartoreducedieselprices.BelgiumBelgium’sgreencoalitionhassharedaproposaltoremovecurrentbiofuelmandatestemporarilytoreducefuelandfoodcostsandthenslowlyfadeoutcrop-basedfuelsby2030.ColombiaTheColombiangovernmentreduceditsethanolblendingmandatefrom10%to4%fromApril2021,withtheaimofreturningblendingto10%inSeptember2021.However,inAugust,Colombiaextendedthe10%increasetoJanuary2022butisnowproposinga6%targetuntilAugust2022.CzechRepublicTheCzechgovernmenthasproposedremovingblendingtargets,butthiswillnotbeconfirmeduntiltheendoftheyearandgreenhousegasreductionrequirementswouldstillapply.FinlandFinlandwillreduceitsrenewableenergyrequirementto12%from20%for2022.Itestimatesthiswillreducefuelpricesby12centsperlitre.GermanyGermany’sEnvironmentMinisterproposedto“furtherreducetheuseofagro-fuelsfromfoodandfeedcrops,"inresponsetohighfoodpricesresultingfromtheRussia/Ukrainewar.Thereisofyetnoproposal.SwedenSwedenisproposingapausetoitsGHGtargetsforthetransportsectorfor2022and2023levels.Increaseswillcontinuepost-2023.IndonesiaIndonesiastillplansonincreasingits40%blendingmandate,butthisisnownotlikelyuntil2023.CroatiaCroatiawillremovepenaltiesonblendersthatmisstheirtargets.UnitedStatesTheUnitedStatesisallowing15%ethanolblendingduringsummermonths.AnnexPAGE26IEA.Allrightsreserved.RenewableEnergyMarketUpdate2022Outlookfor2022and2023AnnexAbbreviationsandacronymsCSPconcentratedsolarpowerDISCOMdistributioncompanyFIPfeed-inpremiumFITfeed-intariffGHGgreenhousegasITCinvestmenttaxcreditPPApowerpurchaseagreementPTCproductiontaxcreditASEANAssociationofSoutheastAsianNationsUnitsofmeasurebblbarrelbbl/dbarrelsperdaybcmbillioncubicmetresbcm/yrbillioncubicmetresperyearcm/scentimetrespersecondgCO2grammeofcarbondioxidegCO2/kWhgrammesofcarbondioxideperkilowatthourGJgigajouleGt/yrgigatonnesperyearGtCO2gigatonneofcarbondioxideGtCO2/yrgigatonnesofcarbondioxideperyearGWgigawattGWhgigawatthourkWhkilowatthourMWhmegawatthourTWhterawatthourThispublicationreflectstheviewsoftheIEASecretariatbutdoesnotnecessarilyreflectthoseofindividualIEAmembercountries.TheIEAmakesnorepresentationorwarranty,expressorimplied,inrespectofthepublication’scontents(includingitscompletenessoraccuracy)andshallnotberesponsibleforanyuseof,orrelianceon,thepublication.Unlessotherwiseindicated,allmaterialpresentedinfiguresandtablesisderivedfromIEAdataandanalysis.Thispublicationandanymapincludedhereinarewithoutprejudicetothestatusoforsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersandboundariesandtothenameofanyterritory,cityorarea.IEA.Allrightsreserved.IEAPublicationsInternationalEnergyAgencyWebsite:www.iea.orgContactinformation:www.iea.org/about/contactTypesetinFrancebyIEA-May2022Coverdesign:IEAPhotocredits:©Unsplash