Paris, December 1, 2011 - Rising global energy demand and the need to drastically cut carbon dioxide (CO2) emissions require a transformation in the way we produce, deliver and consume energy, according to a new joint report from the OECD and IEA.  

Green Growth Studies: Energy says governments need to increase energy efficiency and lower the carbon-intensity of the sector.

As developed countries renew their energy infrastructure and developing countries build new power plants to meet growing energy demand, the time is right to make crucial choices for the future of the energy sector, the report says. 

With the energy sector responsible for the majority of CO2 emissions, green growth policies could halve worldwide energy-related emissions of CO2 by 2050 using a combination of existing and new technologies.

"The decisions made today in the energy sector will be critical to achieving greener growth in the future"-said OECD Secretary-General Angel Gurría.

"We have a window of opportunity for establishing a policy framework to enable transformational change in the energy sector. The environmental imperative to reduce CO2 emissions coincides with a looming new investment cycle in power generation in most OECD countries," he added.

In the emerging market economies, many power generation facilities are quite recent, but many more will be built in the coming years to meet growing energy demand. We must act together now to create the momentum for fundamental change, says the report.

Green Growth Policies for an Energy Revolution

A comprehensive green growth strategy for the energy sector will take into account the inter-relationships between economic sectors, transport systems, land-use patterns, social welfare and environmental integrity. A range of mutually reinforcing policies is required to address market failures and barriers, and create the enabling policy framework for large-scale private sector investment. 

To achieve an energy revolution we need improved energy efficiency, widespread introduction of carbon capture and storage (CCS), increased deployment of renewable energy, continued fuel switching, and support for new and enabling technologies.

All technology options are necessary. Restricting the choice of technologies would lead to increased costs. For example, the unavailability of CCS technology would need to be offset by more expensive alternatives, increasing costs by at least a third.

"We must avoid 'lock-in' of CO2 emissions by ensuring the latest clean technologies are used," said IEA Executive Director Maria van der Hoeven.

"If we do not manage to slow current rates of emissions growth, we will hit the ceiling by 2017, meaning that to keep the global increase in temperature to 2 degrees Celsius, all new infrastructure will have to be zero-emission."  

Energy sector reform will require new investment - some USD 46 trillion before 2050 - to improve energy efficiency, increase carbon capture and storage, deploy more renewable energy, and support new technologies.

Investments in low-carbon technologies reached nearly USD 250 billion in 2010, half way to the annual figure required by 2020 of approximately USD 500 billion.  

The key policies identified in the report include:

• Eliminating fossil fuel subsidies
• Putting a price on emissions and other environmental liabilities
• Making sure energy market rules and regulations encourage use of new technologies
• Radically improving energy efficiency
• Fostering innovation and green technology policy

The joint OECD-IEA report finds that the transition to a low-carbon energy system is likely to have a positive impact on employment in the energy sector because renewables tend to be more labour-intensive than fossil fuel-based energy.

Increased deployment of solar photovoltaic would yield the largest number of jobs, with strong growth also expected in the energy efficiency, geothermal and solar thermal sectors.

Transforming the energy sector presents substantial opportunities for innovation and economic growth, which governments can mobilize by creating the enabling policy framework.

The key messages of the report are available here