IEA (2021), Recommendations of the Global Commission on People-Centred Clean Energy Transitions, IEA, Paris https://www.iea.org/reports/recommendations-of-the-global-commission-on-people-centred-clean-energy-transitions, License: CC BY 4.0
Clean energy transitions should retain a focus on energy security. A new IEA report for the G20 highlights emerging energy security considerations in the context of clean energy transitions, urging governments to boost energy system resilience as they pursue their clean energy strategies.
For many countries, a move from imported fossil fuels to local clean sources can enhance broader economic resilience. It can also generate economic opportunities for countries without fossil fuel resources to create industries around their clean energy resources.
Energy efficiency measures bolster energy security by reducing fossil fuel imports and exposure to global supply disruptions.
- Recent IEA analysis highlights how energy efficiency measures across the world have reduced fossil fuel import dependency and improved energy security. It finds that efficiency gains in major economies avoided the need for over 20% more fossil fuel imports in 2017.
- Japan’s long history of efficiency policies to reduce oil and gas import dependence brought oil savings of 20% of its imports in 2016 and improved energy security.
Lower energy bills from energy efficiency measures also make consumers less vulnerable to global price pressures. For instance, IEA analysis estimates that US energy efficiency savings and labelling programmes have cut average household fuel bills by USD 320 annually.
Active promotion of renewable energies also pays dividends in terms of reducing energy imports and improving energy security.
- Turkey’s renewable power buildout, including local manufacturing capacity, has helped bring down the country’s fuel import bill, notably by reducing gas imports.
- Brazil’s ethanol production programme has reduced its dependence on fossil fuel imports, improving energy security and creating new industries and jobs in the process.
Emissions abatement technologies can also help eliminate emissions from existing fossil fuel plants that are maintained to provide reliability and resilience services, such as the Boundary Dam CCUS plant in Canada.
Grids that are dominated by variable renewables sources will need to be supported by storage, flexibility and digital solutions, as well as modern, resilient grids. China, the EU and the United States have announced large investments in grid upgrades and expansions. Moreover, Italy and the IEA have launched the 3DEN initiative to support power system modernisation and effective utilisation of distributed resources for greater efficiency and reliability. As climate change drives more weather-related disruptions to energy infrastructure, enhancing the resilience of energy systems will be all the more important.
An important dimension of people’s experience of clean energy transitions is whether they are perceived to affect energy security and reliability. If, for example, electricity blackouts – which can have many varied causes – are mistakenly associated with clean energy policies, it can weaken public support for such policies. Communication relating to such issues merits careful management; unbiased assessments with reliable data can support this process.
As clean energy transitions drive increased demand for many critical minerals, countries with such resources will see opportunities to shift economic activity and jobs from traditional mining activities to this sector. Critical minerals development plans should guarantee that minerals are responsibly produced, employing all the requisite environmental and social protections. Countries such as Australia, Canada and the United States are already developing critical minerals action plans.
The Italian G20 presidency of 2021 placed a complementary concept of energy security and co-operation at the centre of clean energy transitions by prioritising energy efficiency and supporting development of all clean options, including consideration of just and inclusive transitions.
Japan’s history of energy efficiency policies
Japan was the fourth-largest crude oil importer, the largest importer of liquefied natural gas and the third-largest importer of coal in the world in 2019. In 2019, fossil fuels accounted for 88% of Japan’s total primary energy supply, the sixth-highest share among IEA countries. Among the IEA member countries with the highest share of oil and gas, Japan’s import savings from energy efficiency are the largest. This reflects Japan’s long history of rigorous efficiency policies. Oil savings in Japan were equivalent to more than 20% of its oil imports in 2016 and significantly improved the country’s energy security. More generally, between 2011 and 2018, Japan’s total final energy consumption decreased by 8%, while GDP increased by 8%, resulting in a 15% reduction in the energy intensity of the economy. Energy efficiency gains have been driven by successful policy, including efficiency standards for products and vehicles, as well as energy performance requirements for industry, based on benchmarking. Japan places strong emphasis on efficiency improvements to achieve its energy security and energy transition goals.
Turkey’s Renewable Energy Resource Areas
In 2016, the Turkish government introduced the Renewable Energy Resource Areas (YEKA) strategy, a tender process to procure the production of renewable energy in renewable energy zones, which are deemed most suitable for renewable energy generation. The first auctions were awarded for a solar PV plant in March 2017 (1 GW) and for an onshore wind plant in August 2017 (1 GW). In addition to these auctions, the second onshore wind auctions were awarded in 2019 (four auctions of 250 MW each). The third solar power auctions were held in 2021, covering 36 provinces, with a total power of 1 GW. Upcoming auctions in late 2021 and early 2022 include 2 GW of wind capacity, 1 GW of solar capacity and 1.5 W of geothermal capacity. Overall, tenders have helped Turkey increase the proportion of electricity sourced from renewable resources, which reached 42.3% in 2020. In line with this trend (as well as growth in coal-fired generation), Turkey’s share of natural gas in power generation fell by 40% in 2019 compared to 2009. Given its heavy dependence on imports for natural gas, Turkey’s overarching priority is to reduce the share of imported gas and increase the share of domestically produced energy resources, including renewables, especially in power generation.
Brazil’s ethanol production programme
Brazil’s ethanol production programme, “Proalcohol”, has helped reduce national dependence on fossil fuel imports, improving energy security and creating new industries and jobs in the process. Created in the context of the oil crisis of the 1970s and consequent spike in fuel prices, this policy aimed to boost the production of ethanol from sugarcane as a substitute for gasoline. The government provided subsidies to sugarcane producers and incentives for the purchase of cars fuelled with pure ethanol. Investments that were allocated to the local agricultural and industrial sectors generated significant productivity gains and cost reductions, and led to savings of around USD 52.1 billion in avoided oil imports from 1975 to 2002. By 2013, Brazil was one of the largest ethanol exporters, accounting for 4.5 million direct and indirect jobs and 72 000 independent farmers.
Boundary Dam carbon capture project in Canada
SaskPower’s Boundary Dam Power Station in Saskatchewan, Canada in 2014 became the world’s first power station to successfully apply CCUS technology at commercial scale in 2014. As the Canadian government has announced the phase-out of unabated coal generation by 2030, the CCUS-equipped Unit 3 of the Boundary Dam plant will be allowed to remain open as it complies with regulatory requirements. The power plant produces 115 MW of clean base load electricity, enough to power 100 000 homes, and is now expected to be in service for an additional three decades. The technologies applied will allow the project to reduce SO2 emissions by up to 100% and CO2 by up to 90%. The power plant has captured over 4 Mt CO2, with most of it used in enhanced oil recovery and stored, and a smaller portion injected and stored in Aquistore, a deep geological CO2 storage research site. The lessons learned from Boundary Dam also provide a foundation for capturing CO2 in a variety of sectors where CCUS deployment will be critical – including in cement, iron and steel, and natural gas power generation.
Australia’s Modern Manufacturing Strategy
Australia has significant reserves of critical minerals and metals, which are essential for the production of technologies required to support clean energy transitions. Under the country’s “Modern Manufacturing Strategy”, the government included a Resources Technology and Critical Minerals Processing National Manufacturing Priority road map. It consists of investing in technological innovation to improve the productivity of the critical minerals industry while reducing its environmental impacts. In particular, expanding opportunities for critical minerals processing is a goal of the roadmap. The government seeks to improve the environmental performance of the sector by reducing waste, promoting metal recovery, reducing the use of toxic substances in processing, and improving water use and emissions efficiency. Growing the resources and manufacturing industry is expected to capture significant economic growth and job opportunities in the process.
Canada’s critical minerals strategy
To fully unlock Canada’s minerals and metals potential, the government is taking a “mines to mobility” approach, leveraging Canada’s resource wealth and mining expertise to build the battery and critical mineral supply chains needed to supply the electric vehicle market and support the wider clean energy transition. The overall approach is grounded in the Canadian Minerals and Metals Plan, a policy framework co-developed with provincial and territorial governments, industry and Indigenous groups. The Canadian government is currently undertaking work across a number of policy areas to support this goal. As a first step, Canada released its Critical Minerals List in March 2021, to provide greater certainty and predictability to industry, investors, provinces and territories and Canada’s international partners on Canada’s mineral priorities. Other current areas of work include: research and analysis to identify where Canada’s competitive advantage lies in various critical mineral value chains; exploring ways to reduce risk and environmental liability, as well as create economic opportunities through mining value from waste; engaging provinces and territories through the newly-created Federal-Provincial-Territorial Task Team on Critical Minerals; and collaborating with international partners to promote greater policy alignment and strengthen global supply chains.
US Strategic and Critical Materials Review
In February 2021, the US president issued the Executive Order on America’s Supply Chains, which directed a comprehensive review of supply chain risks to inform the government’s strategy to rebuild resilient, diverse and secure domestic manufacturing capacities. As part of this effort, the US Department of Defense led an interagency effort to identify risks to the supply chains for critical minerals and materials, including rare earths, and provided policy recommendations to address these risks. To ensure the national supply of strategic and critical minerals, the interagency team recommended developing new sustainability standards for strategic and critical material intensive industries, expand domestic production and processing capacity, strengthen national stockpiles against short-term supply disruptions, and improve transparency of the global supply chain.