Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:


Putting a price tag on the 2° climate target


Addressing climate change will require substantial new investment in low-carbon energy and energy efficiency – but no more than what is currently spent on today’s fossil-dominated energy system, according to new research from the International Institute for Applied Systems Analysis (IIASA) and partners.

To limit climate change to 2° Celsius, low-carbon energy options will need additional investments of about US $800 billion a year globally from now to mid-century, according to a new study published in the journal Climate Change Economics. But much of that capital could come from shifting subsidies and investments away from fossil fuels and associated technologies. Worldwide, fossil subsidies currently amount to around $500 billion per year.

Accomplishing a major transition in energy systems from fossil fuels to renewable energy requires substantial investment, a new study shows.

© kreicher

“We know that if we want to avoid the worst impacts of climate change, we need to drastically transform our energy system,” says IIASA researcher David McCollum, who led the study. “This is the first comprehensive analysis to show how much investment capital is needed to successfully make that transition.”

The study, part of a larger EU research project examining the implications and implementation needs of climate policies consistent with the internationally agreed 2° C target, compared the results from six separate global energy-economic models, each with regional- and country-level detail. The authors examined future scenarios for energy investment based on a variety of factors, including technology progress, efficiency potential, economics, regional socio-economic development, and climate policy. 

Investments in clean energy currently total around $200 to 250 billion per year, and reference scenarios show that with climate policies currently on the books, this is likely to grow to around $400 billion. However, the amount needed to limit climate change to the 2° target amounts to around $1200 billion, the study shows.

The energy investments needed to address climate change continue to be an area of large uncertainty. By comparing the results from multiple models, the scientists were able to better define the costs of addressing climate change.

“Nearly all countries say that they’re on board with the 2° target; some have even made commitments to reduce their greenhouse gas emissions. But until now, it hasn’t been very clear how to get to that point, at least from an investment point of view. It’s high time we think about how much capital is needed for new power plants, biofuel refineries, efficient vehicles, and other technologies—and where those dollars need to flow—so that we get the emissions reductions we want,” says McCollum.

IIASA Energy Program Director Keywan Riahi, another study co-author and project leader, says, “Given that energy-supply technologies and infrastructure are characterized by long lifetimes of 30 to 60 years or more, there’s a considerable amount of technological inertia in the system that could impede a rapid transformation. That’s why the energy investment decisions of the next several years are so important: because they will shape the direction of the energy transition path for many years to come.”

The study shows that the greatest investments will be needed in rapidly developing countries, namely in Asia, Latin America, and Sub-Saharan Africa.

“Energy investment in these countries is poised to increase substantially anyway. But if we’re serious about addressing climate change, we must find ways to direct more investment to these key regions. Clever policy designs, including carbon pricing mechanisms, can help.” says Massimo Tavoni, researcher at the Fondazione Eni Enrico Mattei, a climate research center in Italy, and overall coordinator of the LIMITS project, of which the new study is a part.

The researchers note that their analysis of future investment costs does not attempt to quantify the potentially major fuel savings from switching from fossil fuels to renewable sources, such as wind and solar energy. As shown in the IIASA-led Global Energy Assessment, such savings could offset a considerable share of increased investment on a global scale.

This study provided an important input into the Intergovernmental Panel on Climate Change Fifth Assessment Report, Working Group III, Chapter 16 on Cross-cutting Investment and Finance Issues.

McCollum D, Nagai Y, Riahi K, Marangoni G, Calvin K, Pietzcker R, Van Vliet J, van der Zwaaan B. (2014). Energy investments under climate policy: a comparison of global models. Climate Change Economics Vol. 04, No. 04. DOI: 10.1142/S2010007813400101

About the LIMITS project
This study was conducted as part of the Low Climate Impact Scenarios and the Implications of Required Tight Emissions Control Strategies (LIMITS) project, a European Union Seventh Framework Program (FP-7)-supported collaboration between the International Institute for Applied Systems Analysis (IIASA), the Fondazione Eni Enrico Mattei (FEEM) in Italy, the Potsdam Institute for Climate Impact Research (PIK) in Germany, the, the Joint Research Centre of the European Commission, Central European University, the National Development and Reform Commission Energy Research Institute in China, the Indian Institute of Management (IIM), the National Institute for Environmental Studies (NIES) in Japan, and the Pacific Northwest National Laboratory (PNNL) in the US.

For more information contact:

David McCollum
Research Scholar
+43(0) 2236 807 586

Katherine Leitzell
IIASA Press Office
Tel: +43 2236 807 316
Mob: +43 676 83 807 316

About IIASA:
IIASA is an international scientific institute that conducts research into the critical issues of global environmental, economic, technological, and social change that we face in the twenty-first century. Our findings provide valuable options to policy makers to shape the future of our changing world. IIASA is independent and funded by scientific institutions in Africa, the Americas, Asia, Oceania, and Europe.

Weitere Informationen:

Katherine Leitzell | idw - Informationsdienst Wissenschaft

Further reports about: Analysis Climate Climate change Energy IIASA Italy emissions investments renewable energy

More articles from Studies and Analyses:

nachricht Network analysis shows systemic risk in mineral markets
16.11.2015 | International Institute for Applied Systems Analysis (IIASA)

nachricht NIST study of Colorado wildfire shows actions can change outcomes
10.11.2015 | National Institute of Standards and Technology (NIST)

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Innovative Photovoltaics – from the Lab to the Façade

Fraunhofer ISE Demonstrates New Cell and Module Technologies on its Outer Building Façade

The Fraunhofer Institute for Solar Energy Systems ISE has installed 70 photovoltaic modules on the outer façade of one of its lab buildings. The modules were...

Im Focus: Lactate for Brain Energy

Nerve cells cover their high energy demand with glucose and lactate. Scientists of the University of Zurich now provide new support for this. They show for the first time in the intact mouse brain evidence for an exchange of lactate between different brain cells. With this study they were able to confirm a 20-year old hypothesis.

In comparison to other organs, the human brain has the highest energy requirements. The supply of energy for nerve cells and the particular role of lactic acid...

Im Focus: Laser process simulation available as app for first time

In laser material processing, the simulation of processes has made great strides over the past few years. Today, the software can predict relatively well what will happen on the workpiece. Unfortunately, it is also highly complex and requires a lot of computing time. Thanks to clever simplification, experts from Fraunhofer ILT are now able to offer the first-ever simulation software that calculates processes in real time and also runs on tablet computers and smartphones. The fast software enables users to do without expensive experiments and to find optimum process parameters even more effectively.

Before now, the reliable simulation of laser processes was a job for experts. Armed with sophisticated software packages and after many hours on computer...

Im Focus: Quantum Simulation: A Better Understanding of Magnetism

Heidelberg physicists use ultracold atoms to imitate the behaviour of electrons in a solid

Researchers at Heidelberg University have devised a new way to study the phenomenon of magnetism. Using ultracold atoms at near absolute zero, they prepared a...

Im Focus: Climate Change: Warm water is mixing up life in the Arctic

AWI researchers’ unique 15-year observation series reveals how sensitive marine ecosystems in polar regions are to change

The warming of arctic waters in the wake of climate change is likely to produce radical changes in the marine habitats of the High North. This is indicated by...

All Focus news of the innovation-report >>>



Event News

Fraunhofer’s Urban Futures Conference: 2 days in the city of the future

25.11.2015 | Event News

Gluten oder nicht Gluten? Überempfindlichkeit auf Weizen kann unterschiedliche Ursachen haben

17.11.2015 | Event News

Art Collection Deutsche Börse zeigt Ausstellung „Traces of Disorder“

21.10.2015 | Event News

Latest News

Harnessing a peptide holds promise for increasing crop yields without more fertilizer

25.11.2015 | Agricultural and Forestry Science

Earth's magnetic field is not about to flip

25.11.2015 | Earth Sciences

Tracking down the 'missing' carbon from the Martian atmosphere

25.11.2015 | Physics and Astronomy

More VideoLinks >>>