NEW YORK — Renewable energy is growing fast around the world and will edge out natural gas as the second biggest source of electricity, after coal, by 2016, according to a five-year outlook published Wednesday by the International Energy Agency.

Developing countries are building more wind, solar and hydro-electric power plants to meet rising power demand and combat local pollution problems. And the costs of renewables are falling below the cost of traditional power sources such as coal, natural gas and oil in some markets with high-priced power.

Renewable power, including hydropower, is the fastest-growing power generation sector and it is expected to increase by 40 percent in the next five years. By 2018 it will make up a quarter of the world's energy mix, according to the report, up from 20 percent in 2011.

Eighty percent of the renewable power generated in the world, however, is hydropower, a technology frowned upon by environmental groups and sustainability experts because it requires the construction of dams that can damage river ecosystems.

Non-hydroelectric sources such as wind, solar, geothermal and energy derived from plants are also expected to grow quickly, but they contribute a far smaller amount of energy to the global mix. These technologies will supply 8 percent of the world's energy by 2018, up from 4 percent in 2011 and 2 percent in 2006.

Still, renewable power is facing uncertain times as subsidies in developed countries wane. Investment in renewable projects fell in 2012, according to the IEA, an energy security and research organization based in Paris that serves 28 oil-importing countries, including the U.S.

In a report published in April, the IEA said the world's energy is no cleaner than it was 20 years ago because of rising reliance on coal-fired generation in China, India, and parts of Europe that are phasing out nuclear power and facing high natural gas prices.

"The rapid growth of renewables continues to beat expectations and is a bright spot in an otherwise bleak assessment of global progress toward a cleaner and more diversified energy mix," the report concludes.

The use of biofuels is expected to grow, though at a slower rate than renewable electricity, in part because companies haven't succeeded in developing technology that can squeeze fuels from plant waste or dedicated biofuel crops such as grasses at commercial scale. The vast majority of biofuel used today is alcohol – called ethanol – made from sugar cane or corn.

Biofuels use is projected to increase 25 percent by 2018 to 2.4 million barrels per day. By comparison, the world consumes 90 million barrels per day of petroleum.

Developing countries, led by China, will account for two-thirds of the global increase in renewable generation. Growth in Europe and the U.S. is expected to slow, though President Barack Obama outlined a sweeping plan Tuesday that would encourage renewed investment in renewable sources.

Renewable sources were used to generate 12 percent of the electricity consumed in the U.S. last year, according to the Energy Department. Hydroelectric plants supplied 7 percent of the country's power, and other renewables such as wind and solar supplied 5 percent.

Ethanol, mostly made from corn and blended with gasoline, was used to satisfy 10 percent of U.S. gasoline demand last year.

IEA Executive Director Maria van der Hoeven said in a statement that the biggest impediment to further renewable growth is changing energy policies that increase risk for investors. "Many renewables no longer require high economic incentives. But they do still need long-term policies that provide a predictable and reliable market and regulatory framework compatible with societal goals," she said.

The IEA estimates that worldwide subsides for fossil fuels are six times higher than incentives for renewables.

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  • Top Renewable Energy Sources

    Renewable energy made up 9 percent of all energy consumed in 2011, according to the <a href="http://www.eia.gov/">U.S. Energy Information Agency</a>, and that number is <a href="http://www.eia.gov/forecasts/aeo/er/pdf/0383er(2013).pdf">predicted to grow throughout the next decade</a>. Here's a breakdown of the top sources of renewable energy in the country, from wind to water and everything in between. <em>Information courtesy of the <a href="http://www.eia.gov/totalenergy/data/annual/perspectives.cfm">U.S. Energy Information Agency</a>.</em>

  • Solar Power - 2 Percent

    Solar power and photovoltaic cells make up the smallest percentage of U.S. renewable energy production, but its future looks fairly promising. Warren Buffett's Berkshire Hathaway <a href="http://www.huffingtonpost.com/2013/01/03/warren-buffett-solar-power_n_2398816.html">invested $2.5 billion in Calif. solar company SunPower</a> earlier this year. Also, unlike other sources of renewables, energy can also be generated by small-scale solar installations (like on the rooftop of a home or business), and<a href="http://www.eia.gov/todayinenergy/detail.cfm?id=8570"> declining costs</a> have made solar much more affordable. <em>Information courtesy of the <a href="http://www.eia.gov/totalenergy/data/annual/perspectives.cfm">U.S. Energy Information Agency</a>.</em>

  • Geothermal - 2 Percent

    Geothermal power captures naturally occurring heat from the earth to turn it into power. The renewable source is geographically dependent, <a href="http://www.eia.gov/todayinenergy/detail.cfm?id=3970">but the Western half of the U.S.</a> has many promising locations for power plants, <a href="http://www.geysers.com/">like The Geysers in Calif.</a>, the largest geothermal power plant in the world. The U.S. is the largest producer of geothermal power on the planet, but growth hasn't kept up with wind or solar development in recent years. <em>Information courtesy of the <a href="http://www.eia.gov/totalenergy/data/annual/perspectives.cfm">U.S. Energy Information Agency</a>.</em>

  • Waste - 5 Percent

    Believe it or not, burned garbage accounts for 5 percent of all renewable energy created in the U.S. each year. More than 29 million tons of municipal solid waste was burned in 2010 to create steam to spin turbines and generate power, <a href="http://www.eia.gov/todayinenergy/detail.cfm?id=7990"> and there are more than 75</a> waste-to-energy plants in the country. Emissions regulations have been in place at waste incineration plants since the 1960s, but the <a href="http://www.epa.gov/ncer/publications/research_results_needs/combustionEmmissionsReport.pdf">EPA warned in a 2006 report that the toxins released</a> during the process could pose a serious environmental risk if not strictly enforced. <em>Information courtesy of the <a href="http://www.eia.gov/totalenergy/data/annual/perspectives.cfm">U.S. Energy Information Agency</a>.</em>

  • Wind - 13 Percent

    The amount of wind power has grown for each of the past three years throughout the U.S. and accounted for the <a href="http://www.eia.gov/todayinenergy/detail.cfm?id=9931">largest growth in capacity</a> of any energy resource in the country last year. Wind turbines now supply more than <a href="http://www.reuters.com/article/2012/10/19/us-utilities-windpower-usa-idUSBRE89I0TX20121019">50,000 megawatts a year,</a> enough to power 13 million homes, according to Reuters. Federal tax credits, which were set to expire at the end of 2012, have made wind farms an attractive form of renewable energy. Congress <a href="http://www.forbes.com/sites/davelevitan/2013/01/02/wind-power-tax-credit-survives-fiscal-cliff-deal/">approved an extension of the credits</a> through the end of 2013. After production, wind turbines are net zero, meaning they require no energy and produce no emissions. The only problematic thing generated in some cases other than clean power has been <a href="http://www.huffingtonpost.com/2011/05/24/wind-power-noise-pollution-maine_n_866182.html">a whole lot of noise</a>. <em>Information courtesy of the <a href="http://www.eia.gov/totalenergy/data/annual/perspectives.cfm">U.S. Energy Information Agency</a>.</em>

  • Biofuel - 21 Percent

    Biofuels, like ethanol, are created from organic matter like corn or soybeans. Gasoline in the U.S. contains 9 percent of the resource by federal mandate under the <a href="http://www.epa.gov/otaq/fuels/renewablefuels/index.htm">Renewable Fuel Standard program,</a> and more than <a href="http://www.huffingtonpost.com/2012/08/10/us-should-change-biofuel-_n_1764735.html">40 percent of the corn crop</a> last year was turned into biofuel. The resource is slightly more unstable than other renewables because it depends on the productivity of farms - <a href="http://www.huffingtonpost.com/2012/08/10/us-should-change-biofuel-_n_1764735.html">drought or other environmental problems</a> can significantly lower yields and increase prices. On average, <a href="http://www.afdc.energy.gov/vehicles/flexible_fuel_emissions.html">ethanol has 20 percent fewer emissions</a> than traditional gasoline but some types, like <a href="http://en.wikipedia.org/wiki/Cellulosic_ethanol">cellulosic ethanol,</a> cut greenhouse gas emissions more than 85 percent, according to the U.S. Department of Energy. <em>Information courtesy of the <a href="http://www.eia.gov/totalenergy/data/annual/perspectives.cfm">U.S. Energy Information Agency</a>.</em>

  • Wood - 22 Percent

    Timber accounts for nearly a quarter of all renewable energy created in the country. <a href="http://news.nationalgeographic.com/news/energy/2012/10/121022-wood-for-heating/">Rising energy costs </a>have led to an upswing in wood burning over the past decade, and nearly <a href="http://www.eia.gov/forecasts/steo/report/winterfuels.cfm">20 percent of New England homes </a>use wood for heating, according to a National Geographic report. Although it may be a cheaper alternative, wood burning stoves and fireplaces<a href="http://www.epa.gov/burnwise/energyefficiency.html"> release more emissions of fine particles </a> than other home heating methods, according to the EPA. Burning <a href="http://www.epa.gov/burnwise/bestburn.html">good wood in an efficient burner</a> lowers toxic emissions and lost energy. Oh, and always have working smoke and carbon monoxide detectors handy. <em>Information courtesy of the <a href="http://www.eia.gov/totalenergy/data/annual/perspectives.cfm">U.S. Energy Information Agency</a>.</em>

  • Hydroelectric - 35 Percent

    Almost all of the current hydroelectric power plants in the U.S. were <a href="http://www.eia.gov/energy_in_brief/article/hydropower.cfm">built before the mid-1970's</a>, but it's still the highest producing renewable energy source in the country. In 2011, 8 percent of all power created in the U.S. came from hydroelectric sources, but it's also one of the most geographically dependent sources of energy. The Pacific Northwest gets more than half of all power via hydroelectric due to prime geography. <em>Information courtesy of the <a href="http://www.eia.gov/totalenergy/data/annual/perspectives.cfm">U.S. Energy Information Agency</a>.</em>

  • How To Really Go Renewable

    Watch this TED talk on the missing link in the future of renewable energy.