Fossil fuel subsidies worth $312 billion should be realigned to ensure the growth of renewable energy and curb the world's reliance on carbon-intensive fuels, the International Energy Agency said in a report.
Demand for fossil fuels is outstripping the deployment of cleaner technologies. Renewable energy has seen growth rates of 30 percent to 40 percent over recent years but coal has met 47 percent of global new electricity demand over the past decade, the IEA said in its "Clean Energy Progress Report" (PDF) today.
To change this, the IEA suggests realigning fossil fuel subsidies to support clean energy, providing more incentives for private sector investment and market mechanisms.
Fossil fuels received $312 billion in subsidies as of 2009 compared to $57 billion for renewable energy, the report said.
"A number of countries have shown that achieving rapid transition to cleaner technologies is possible and can be done from the bottom up," said IEA deputy executive director Richard Jones. "We must see more ambitious, effective policies that respond to market signals while providing long-term, predictable support."
To halve global carbon emissions by 2050 from 2005 levels, power from renewables will have to reach 7,000 terrawatt hours (TWh) by 2020 from 3,700 TWh. Wind power must experience an annual growth rate of 17 percent and solar 22 percent.
"While these levels have been exceeded in the past few years, this level of high growth must be sustained for the long term," the report said.
Global wind power capacity grew 24 percent last year, the Global Wind Energy Council said on Wednesday.
To make coal a cleaner fuel source, carbon capture and storage will be critical. Around 100 large-scale plants are needed by 2020 and over 3,000 by 2050. Currently, there are five large-scale demonstration projects operating, the report said.
"The currently available public funding for large-scale demonstration projects ($25 billion) is not enough," it said.
Nuclear expansion is likely to be slower than planned after the Japanese tsunami led to a review of new nuclear plans by some countries, most notably Germany.
Electric vehicles are poised to take off but governments need to commit to building sustained markets which last for at least the next 10 years.
This would require price incentives for customers, support for recharging infrastructure, cooperation on systems, research funding and consumer education campaigns, the report said.
Biofuels only account for 3 percent of global road transport fuel consumption, but biofuel production will have to increase tenfold to meet climate targets for 2050, the IEA said.
Advanced biofuels will have to be commercialized and production capacity significantly expanded.