By Kari Williamson

The rise in renewable energy would be underpinned by subsidies rising from US$64 billion in 2010 to US$250bn in 2035, in the New Policies Scenario. In comparison, the fossil fuel subsidies in 2010 amounted to US$409bn.

The share of non-hydro renewables in power generation is to increase from 3% in 2009 to 15% in 2035 with annual subsidies rising almost five time to US$180bn. The growth will be drive by the EU and China. The share of hydropower will remain at around 15%, led by China, India and Brazil accounting for almost half of the 680 GW of new capacity.

“Growth, prosperity and rising population will inevitably push up energy needs over the coming decades. But we cannot continue to rely on insecure and environmentally unsustainable uses of energy,” says IEA Executive Director Maria van der Hoeven.

“Governments need to introduce stronger measures to drive investment in efficient and low-carbon technologies. The Fukushima nuclear accident, the turmoil in parts of the Middle East and North Africa and a sharper rebound in energy demand in 2011 which pushed CO2 emissions to a record high, highlight the urgency and the scale of the challenge.”

Accommodating the increase in renewable energy requires additional transmission network investments, however, the cost would make up 10% of total transmission investment. In the EU, 25% of the investment in transmission network would be needed for this purpose.

Energy demand is expected to increase by a third between 2010 and 2035, with 90% of this growth in non-OECD countries. Furthermore, China is expected to consume 70% more energy than the USA by 2035.

Cumulative CO2 emissions could amount to three quarters of the total from the last 110 years over the 25-year period – and a long term temperature rise of 3.5°C.

At the same time, the oil price in 2010 dollars is expected to average at US$120/barrel.

“As each year passes without clear signals to drive investment in clean energy, the 'lock-in' of high-carbon infrastructure is making it harder and more expensive to meet our energy security and climate goals,” adds Faith Birol, IEA Chief Economist.

Increased access

The year 2009 saw US$9bn being spent globally to provide first access to modern energy, but to achieve universal access by 2030 would require annual investment of US$48bn.

The United Nations has named 2012 the International Year of Sustainable Energy for All.