Need urgent policy action and investments to triple renewable energy capacity by 2030 - IEA

Renewable power capacity off-track to meet COP28 goals

E-fuel bunker demand set to outpace production by 2030

E-fuels can become cost-competitive with biofuels by 2030

PHOTO: Solar panels and wind turbines. Getty Images

Renewable energy capacity will see “massive expansion” over the next five years, the IEA predicts in a recent report. Current policy landscape and market conditions suggest that global renewable energy capacity is on track to reach 7,800 gigawatts (GW) by 2028, according to IEA.

“But despite the unprecedented growth over the past 12 months, the world needs to go further to triple capacity by 2030, which countries agreed to do at COP28,” the report argues.

123 nations committed to tripling "the world's installed renewable energy generation capacity to at least 11,000 GW by 2030” at the COP28 summit in Dubai last year. However, a lack of grid infrastructure investments, policy uncertainties and excessive bureaucratic red tape impede this goal.

The IEA warns that renewable power capacity expansion will fall short of COP28's targets due to the lack of regulation and investments.

E-fuel production to lag behind rising bunker demand

The IEA forecasts marine e-fuel demand by 2030 at 1 billion litres/year based on offtake agreements committed for green ammonia and e-methanol. On the other hand, the production capacity currently under development for 2030 is projected to be slightly higher than 0.5 billion litres/year, roughly half as much as the demand.

A major contributing factor is that renewable energy capacity allocated to hydrogen-based fuels like green ammonia and e-methanol is projected to grow by only 45 GW between 2023 and 2028. IEA’s estimates indicate that it accounts for only 7% of the total capacity of the announced projects.

“The main reason is the slow pace of bringing planned projects to final investment decisions due to a lack of off-takers and the impact of higher prices on production costs,” it explains. It is also difficult to predict how fast a green hydrogen market will develop by 2030, especially in countries with limited green hydrogen demand.

“Forecast demand thus far exceeds firm project commitments to 2030,” the IEA writes, “However, since EU e-fuel mandates were just introduced in 2023, as were most offtake agreements, we assume there will be more final investment decisions in upcoming years.”

According to the report, feasibility assessments indicate that the planned capacity for marine e-fuels will increase by 30 billion litres/year by 2030, while early announcements indicate that an additional 40 billion litres/year will be added to this capacity.

The energy watchdog estimates e-fuels can become cost-competitive with biofuels by 2030 as production costs of green hydrogen and renewable electricity decline and fuel production increases. However, it notes that “this potential competitivity does not necessarily threaten biofuel production.”

It projects that biofuels will play a significant role in the marine fuel mix, making up around 8% of the sector's marine fuel mix by 2030.

By Konica Bhatt

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