CLIMATE CHANGE AND RENEWABLE ENERGY NATIONAL POLICIES AND THE ROLE OF COMMUNITIES, CITIES AND REGIONS JUNE 2019 A report from the International Renewable Energy Agency IRENA to the G20 Climate Sustainability Working Group CSWG IRENA 2019 Unless otherwise stated, material in this publication may be freely used, shared, copied, reproduced, printed and/or stored, provided that appropriate acknowledgement is given to IRENA as the source and copyright holder. Material in this publication that is attributed to third parties may be subject to separate terms of use and restrictions, and appropriate permissions from these third parties may need to be secured before any use of such material.ISBN 978-92-9260-136-2 Citation IRENA 2019, Climate Change and Renewable Energy National policies and the role of communities, cities and regions Report to the G20 Climate Sustainability Working Group CSWG, International Renewable Energy Agency, Abu Dhabi. About IRENA The International Renewable Energy Agency IRENA is an intergovernmental organisation that supports countries in their transition to a sustainable energy future and serves as the principal plat for international co-operation, a centre of excellence, and a repository of policy, technology, resource and financial knowledge on renewable energy. IRENA promotes the widespread adoption and sustainable use of all s of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity. www.irena.org Acknowledgements G20 Climate Sustainability Working Group members provided valuable comments and suggestions on this study. The report was prepared by Elisa Asmelash and Ricardo Gorini. IRENA colleagues Emma Aberg, Francisco Boshell, Yong Chen, Rabia Ferroukhi, Diala Hawila, Sandra Lozo, Divyam Nagpal, Habone Osman Moussa, Michael Renner, Costanza Strinati, Stephanie Weckend and Adrian Whiteman also provided valuable review and feedback. Available for download www.irena.org/publications For further ination or to provide feedback infoirena.org Disclaimer The designations employed and the presentation of materials featured herein are provided on an “as is” basis, for inational purposes only, without any conditions, warranties or undertakings, either express or implied, from IRENA, its officials and agents, including but not limited to warranties of accuracy, completeness and fitness for a particular purpose or use of such content. The ination contained herein does not necessarily represent the views of all Members of IRENA, nor is it an endorsement of any project, product or service provider. The designations employed and the presentation of material herein do not imply the expression of any opinion on the part of IRENA concerning the legal status of any region, country, territory, city or area or of its authorities, or concerning the delimitation of frontiers or boundaries. 3 CONTENTS Abbreviations 5 cutive summary 6 1. Introduction .8 2. Climate change, sustainability and renewable energy .12 2.1 SDGs and synergies with renewable energy 12 2.2 The risks of not meeting established climate goals and the opportunity for sustainable solutions . 13 2.3 Characterising the gap Setting NDCs in pursuit of the 2050 global energy transation 14 3. The next stage Unlocking further flexibility through innovation .17 3.1 Three pillars of action for closing the gap in the buildings, industry, power and transport sectors . 18 3.2 Distributed energy resources DERs changing the power-sector paradigm Electrification, decentralisation and digitalisation . 24 4. Decentralised solutions for renewable energy and energy efficiency deployment 27 4.1 s for utilising DERs 27 4.2 City and island/off-grid applications Different uses of DERs 33 5. Challenges and actions to further DER utilisation 45 Topic 1 Policy and regulatory enhancement . 47 RECOMMENDATION Adjust planning, markets and regulation to make them enablers of DERs . 47 RECOMMENDATION Co-ordinate policies – both vertically local/national and horizontally among ministries . 48 Topic 2 Finance innovation . 49 RECOMMENDATION Review finance schemes 49 Topic 3 Resources and capacity building 50 RECOMMENDATION Promote networks to facilitate and invest in capacity building and education for behaviour change 50 Topic 4 Products and services innovation .51 RECOMMENDATION Encourage innovations in DER products and services while facilitating technology accessibility . 51 References 524 FIGURES Figure 1 Linkages between SDG 7 and other SDGs . 12 Figure 2 How the level of global warming affects impacts and risks associated with the reasons for concern RFCs and selected natural, managed and human systems . 13 Figure 3 Cumulative energy-related CO 2emissions and emissions gap, 2015-2050 Gt CO 2 14 Figure 4 Annual energy-related CO 2emissions and reductions, 2015-2050 Gt/yr 15 Figure 5 TPES and renewable and non-renewable shares in the Reference and REmap cases, 2016-2050 19 Figure 6 Scaling up renewables not just for power, but also for heat, building uses and transport 20 Figure 7 Innovation trends . 25 Figure 8 The landscape of innovations for the power-sector transation . 26 Figure 9 Potential for corporate sourcing of renewable electricity 29 Figure 10 Aggregators Key facts and figures 36 Figure 11 Case for off-grid renewable energy solutions . 40 Figure 12 DERs G20 framework for action . 455 TABLES Table 1 Community ownership models Legal s and examples .31 Table 2 Concrete actions for G20 countries . 46 BOXES Box 1 Ongoing work The G20, IRENA and the Climate and Sustainability Working Group . 10 Box 2 NDCs Current status and trends 16 Box 3 Global Energy Transation A Roadmap to 2050 . 17 Box 4 Japan’s “Do it Ourselves” installation model for rooftop solar 32 Box 5 Energy transition strategy for Zhangjiakou City, China 396 CCA Community Choice Aggregation CO Community ownership CO 2Carbon dioxide CSWG Climate and Sustainability Working Group DER Distributed energy resources DG Distributed generation DHC District heating and cooling DIO Do it ourselves Japanese rooftop solar programme DIY Do-It-Yourself EAC Energy Attribute Certificate EEAP Energy Principles and Energy Efficiency Action Plan EJ Exajoule ESWG Energy Sustainability Working Group EV Electric vehicle FiT Feed-in tariff G20 Group of Twenty GDP Gross domestic product GHG Greenhouse gas Gt Gigatons GW Gigawatt GWh Gigawatt-hour IEA International Energy Agency IoT Internet of Things IPCC Intergovernmental Panel for Climate Change IRENA International Renewable Energy Agency ISEES Institute for Sustainable Energy and Environmental Solution IT Ination technology kWh Kilowatt-hour MW Megawatt NDCs Nationally Determined Contributions NGO Non-governmental organisation O finance innovation; resources and capacity building; and products and services innovation. Programmes must be shaped to raise awareness and understanding of the potential of DER solutions, not only for direct users but also for society as a whole. Through such discussions, policy makers can actively engage with communities on DER design, construction, operation and maintenance, in order to increase social acceptance. By encouraging technological innovations, they can also facilitate their accessibility through the development of so-called “plug and play” solutions. Moreover, by fostering various policies supporting DER equipment commercialisation, including the definition of adequate standards and quality control measures, policy makers can also help pave the way for the industry’s growth. To finance this transation, IRENA recommends the establishment of dedicated international funding and investment facilities, the promotion and support of “combo” loans and crowdfunding plats, and the development of additional innovative financing solutions in partnership with multilateral agencies. By enabling access to long-term, affordable financing for end-users of DER solutions, and by encouraging institutions to finance community energy projects, specifically in developing countries, governments have the ability to shape the development of alternative business models. Beyond financial resources, investing in capacity building and establishing training courses are also needed to ensure the successful incorporation of DER renewable power options in cities, islands and rural off-grid areas. Curricula should also include “do-it-yourself” approaches as well as specific certification programmes for off-grid skills development. Fostering the necessary production and services innovation enables the creation of dedicated plats and networks of experts who are then able to help customise the applied DER solutions and share best practices. 9 T o ensure fair access for all market participants, utilities must also be actively engaged, adjusting and simplifying different aspects related to energy distribution, including grid connections, licensing and permitting requirements. To facilitate this, G20 members should consider establishing authorities with the sole purpose of supporting community-energy projects, particularly by providing advisory as well as funding services and opportunities. G20 countries can provide a strong foundation for the development of off-grid solutions by supporting countries with energy-access issues to integrate them into their national energy-access strategies. The co ordination of policies on both vertical local and national and horizontal levels among ministries could in turn help stabilise and clarify policies and regulations crucial for the development of DER systems. Also, by linking sector-level policies, such as urban or transport policies for the application of DERs, policy makers can further accelerate both the adoption of renewable energy and the fulfilment of SDGs. Pursuit of these aims can be further enhanced by constructing DERs and increasing energy efficiency in public buildings, such as hospitals and schools. Based on these identified challenges, this report also explores how G20 countries, through their proven leadership, are able to foster the development and global spread of DERs and energy efficiency solutions. When aimed at developing effective market frameworks for investment and development, IRENA’s recommended, customisable policies and regulations could be applied broadly throughout G20 member countries or could be individually tailored to specific contexts and national priorities. 10 Climate change is already affecting regions around the world. Unabated, its future negative impacts will likely be vast, costing much more than preventing it. The recent IPCC Special Report on Global Warming of 1.5C has underlined the urgency of taking decisive steps to tackle climate change, including through the transation of global energy use. Considering that two thirds of greenhouse gas GHG emissions originate from the energy sector, the IPCC unequivocally calls for an immediate, large-scale shift to renewable energy and energy efficiency IPCC, 2018. Several forums around the world have been taking actions and negotiating the acceleration of the energy transation since the outcome of international climate change negotiations in 2015 that resulted in the adoption of the Paris Agreement and the 2030 Agenda for Sustainable Development, which included the Sustainable Development Goals SDGs. A report from the International Renewable Energy Agency IRENA, Global Energy Transation A Roadmap to 2050 IRENA, 2019a, estimates that meeting the objectives of the Paris Agreement would require reducing global energy demand through energy efficiency, increasing the electrification pathway for all end-use sectors, and increasing the share of renewables in the energy matrix, including biofuels. Thus, renewables would need to comprise at least two-thirds of the total final energy supply by 2050. At the same time, the share of renewable energy in the power sector would need to increase from 25 in 2017 to 86 in 2050. The good news is that there are technically feasible and economically attractive solutions at hand to achieve this goal. Indeed, there is a unique opportunity to accelerate transation towards digitalised, distributed and decarbonised energy systems. The envisioned global energy transation – itself a culmination of energy transitions that are already occurring in many countries – can create a world that is more prosperous and inclusive. Accelerated deployment of renewables promises multiple benefits, ranging from economic growth and job creation to the mitigation of climate change and the reduction of air pollution. IRENA analysis IRENA, 2019a shows that a combination of renewable energy, energy efficiency and electrification represent a safe, reliable, affordable and already deployable pathway capable of achieving over 90 of the energy-related CO 2emission reductions needed to meet pledged climate goals, and that such a transation constitutes the most effective strategy going forward. However, to really be impactful, this energy transation requires a global approach, engaging all levels of society – from communities, regions and governments to stakeholders from the public and private sectors. Beyond government action around climate change, communities rural and cities, non-governmental organisations NGOs and the private sector in general can also combine their knowledge, expertise and decision-making processes to take immediate action. In fact, the combination of energy and ination technology IT innovations and renewable energy’s growing competitiveness are transing the landscape of energy services. The role of distributed energy resources DER is increasing as a solution for sourcing buildings, lighting communities in cities and rural areas, as well powering companies. Several benefits are linked to DERs and society-wide engagement, and empowering all stakeholders constitutes an effective action to accelerate the energy transition. 1. INTRODUCTION