A host of new technologies is ready to transform the energy system, offering the potential to drastically reduce carbon emissions, enhance energy security and generate a huge investment return, the International Energy Agency (IEA) said in its flagship energy technology publication launched today.

The report, Energy Technology Perspectives 2012 (ETP 2012), explains how to enable and encourage technologies and behaviours that together will revolutionise the entire energy system and unlock tremendous economic benefits between now and 2050.

ETP 2012 builds on the IEA’s Tracking Clean Energy Progress report, issued in April, which said that despite some recent progress in deploying renewable energy, most clean energy technologies are not on track to make their required contribution to reducing carbon dioxide (CO2) emissions and thereby provide a more secure energy system.

“Now that we have identified the solution and the host of related benefits, and with the window of opportunity closing fast, when will governments wake up to the dangers of complacency and adopt the bold policies that radically transform our energy system? To do anything less is to deny our societies the welfare they deserve,” said IEA Executive Director Maria van der Hoeven.

The technological revolution will not be cheap, but the long-term benefits far outweigh the costs. ETP 2012 presents an investment plan that more than pays for itself through fuel savings by 2025. And the savings would triple by 2050: An additional USD 36 trillion of investment would be required to overhaul the world’s current energy system by the middle of the century, but this would be offset by USD 100 trillion in savings through reduced use of fossil fuels.

ETP 2012 presents a 2°C Scenario, which lists the energy technology choices that can ensure an 80% chance of limiting long-term global temperature increase to 2°C.

The plan leads to a sustainable energy system featuring diverse sources, low-carbon electricity and an expanded infrastructure. The system would be smarter, more unified and more integrated than today’s, and ETP 2012 assesses the increasingly sophisticated low-carbon technologies that get the most out of energy options, showing how the world can effectively and efficiently adopt solutions ranging from energy storage to flexible generation.

Improved energy efficiency offers the greatest potential for boosting energy security and reduced carbon emissions, and ETP 2012 includes a variety of technological and policy options that would cut the global economy’s per-unit use of energy by two-thirds before 2050.

Fossil fuels would not disappear, but their roles would change. ETP 2012 explains how higher steam temperatures can cut coal-fired power plants’ emissions by 30% even as natural gas increasingly complements so-called variable renewable sources (primarily wind and solar), providing the flexibility that energy systems would need to balance generation and demand fluctuations.

The report makes clear that low-carbon fuels and technologies depend on immediate infrastructure change to build in the flexibility the new approaches require.

Key Observations
•Technologies can and must play an integral role in transforming the energy system.
•Investing in clean energy makes economic sense - every additional dollar invested can generate three dollars in future fuel savings by 2050
•Energy security and climate change mitigation are allies.
•Nine out of ten technologies that hold potential for energy and CO2 emissions savings are failing to meet the deployment objectives needed to achieve the necessary transition to a low-carbon future. Some of the technologies with the largest potential are showing the least progress.
•The share of energy-related investment in public research, development and demonstration (RD&D) has fallen by two-thirds since the 1980s
•Fossil fuels remain dominant and demand continues to grow, locking in high-carbon infrastructure.
•Energy technologies interact and must be developed and deployed together
•Investment in stronger and smarter infrastructure is needed.
•Low-carbon electricity is at the core of a sustainable energy system.
•Energy efficiency must achieve its potential.
•Reducing coal use and improving the efficiency of coal-fired generation are important first steps
•Natural gas and oil will remain important to the global energy system for decades.
•Carbon capture and storage remains critical in the long term.
•Strong government policy action can help key technologies become truly competitive and widely used.
•But governments alone cannot achieve the transition - clear incentives are needed for consumers, companies and investors.
•Real-world examples demonstrate that decisive policy action is a catalyst for progress.
•Governments need to act early to stimulate development of new, breakthrough technologies. Strategic and substantial support for RD&D will be essential.

Recommendations to energy ministers
1.Create an investment climate that builds confidence in the long-term potential of clean energy technologies.
2.Level the playing field for clean energy technologies
3.Scale up efforts to unlock the potential of energy efficiency.
4.Accelerate energy innovation and public research, development and demonstration