Offshore wind could become a cornerstone of the world’s power supply as steep cost reductions and improved technology unleash the potential of the green energy source, said the International Energy Agency (IEA) on Friday.

Renewables replacing fossil fuel is crucial to meet a globally-agreed goal of limiting temperature rise to below 2 degrees Celsius this century and the expansion of offshore wind could avoid 5-7 billion tonnes of CO2 emissions from the power sector globally, said the IEA.

Power generated from wind turbines at sea only accounts for 0.3% of global electricity generation today, said the IEA in what it called “the most comprehensive” study of offshore wind to date.

However, based on current and proposed policies, capacity is set to increase 15-fold over the next two decades, turning it into a $1-trillion business, it said.

“In the past decade, two major areas of technological innovation have been game-changers in the energy system by substantially driving down costs: the shale revolution and the rise of solar PV,” said IEA executive director Fatih Birol.

“And offshore wind has the potential to join their ranks in terms of steep cost reduction.”

Last year it cost more than $4 billion to build a 1 gigawatt offshore wind project, including transmission, but the cost is set to drop by more than 40% over the next decade, the IEA said.

In Europe, offshore wind will soon beat new natural gas-fired capacity on cost and be on a par with solar photovoltaics (PV) and onshore wind while in China, it is set to become competitive with new coal-fired capacity around 2030, it added.

However, it cautioned that large investments into onshore grid infrastructure and real political action were needed.

“More and more of that potential is coming within reach, but much work remains to be done by governments and industry for it to become a mainstay of clean energy transitions,” said Birol.

While the green transition is increasingly taking over the global political agenda, there is a growing disconnect between climate ambitions and real-life emissions trends as energy-related CO2 emissions reached a historic high last year.

The first offshore turbines were installed in 1991 in Denmark, which last year produced 15% of its electricity from offshore wind.

The UK today has the biggest capacity but the industry is growing, especially in the United States and in Asian countries, including Taiwan and Japan.