Renewable energy could supply half the world's electricity and halve greenhouse gas emissions by 2050 but governments urgently need to adopt effective policies to accelerate their deployment, the International Energy Agency said.
In 2005, renewables contributed 18% of global electricity generation, less than 3% of global heat consumption and 1% of global transport fuel consumption, the IEA said in a report on deploying renewables.
"This is a huge challenge...Meeting these very ambitious objectives will require unprecedented political commitment and effective policy design and implementation," the IEA said in the report.
Significant "non-economic" barriers, including obstacles to grid access and poor electricity market design, have been hampering the speedy expansion and integration of renewable energy into mainstream use, the IEA said.
Onshore wind is particularly hard hit by these non-economic barriers, the IEA said.
Despite the fact that Italy, Belgium and the U.K. have higher levels of remuneration per power unit generated from wind, they have lower levels of deployment than Germany, Spain, Denmark and Portugal where grid access is easier and there are fewer administrative and regulatory barriers.
Meanwhile, in the U.S., the lack of stability in the production tax credit regime has led to "substantial" boom and bust cycles in the last eight years..
The Paris-based energy watchdog added that policies also need to provide appropriate financial incentives to get less mature renewables off the ground so they can compete with other energy technologies on a level playing field.
Solar photovoltaics would benefit from more economic incentives to counter the high investment costs of installing PV systems, the report said.
Across the 35 countries assessed in the report, solar PV could generate 394 terawatt hours, or the same as the U.K.'s electricity generation in 2005, but currently only 1% of the potential has been exploited.
Germany, Japan and, in a distant third place, the U.S. dominate in solar PV due in part to generous feed-in tariffs, loans and easy grid access, the report said.
"Only a limited set of countries have implemented effective support policies for renewables and there is a large potential for improvement," IEA Executive Director Nobuo Tanaka said.
Renewable energy policies should be designed around a set of fundamental principles, inserted into predictable, transparent and stable policy frameworks and implemented in an integrated approach, he added.
An "appropriate" carbon price and help in developing the infrastructure to accommodate the integration of large-scale renewable energy technology is also needed, the IEA said.
The report assessed the effectiveness and efficiency of renewable energy policies in Organization of Economic Cooperation and Development countries as well as Brazil, Russia, India, China and South Africa.
In 2005, these 35 countries accounted for 80% of total global commercial renewable electricity generation and 98% of renewable transport fuel production.