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.
“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:
+43(0) 2236 807 586
IIASA Press Office
Tel: +43 2236 807 316
Mob: +43 676 83 807 316
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. www.iiasa.ac.at
Katherine Leitzell | idw - Informationsdienst Wissenschaft
High in calories and low in nutrients when adolescents share pictures of food online
07.04.2016 | University of Gothenburg
Brain connectivity reveals hidden motives
04.03.2016 | Universität Zürich
Using an ultra fast-scanning atomic force microscope, a team of researchers from the University of Basel has filmed “living” nuclear pore complexes at work for the first time. Nuclear pores are molecular machines that control the traffic entering or exiting the cell nucleus. In their article published in Nature Nanotechnology, the researchers explain how the passage of unwanted molecules is prevented by rapidly moving molecular “tentacles” inside the pore.
Using high-speed AFM, Roderick Lim, Argovia Professor at the Biozentrum and the Swiss Nanoscience Institute of the University of Basel, has not only directly...
If a person pushes a broken-down car alone, there is a certain effect. If another person helps, the result is the sum of their efforts. If two micro-particles are pushing another microparticle, however, the resulting effect may not necessarily be the sum their efforts. A recent study published in Nature Communications, measured this odd effect that scientists call “many body.”
In the microscopic world, where the modern miniaturized machines at the new frontiers of technology operate, as long as we are in the presence of two...
Researchers from the Max Planck Institute Stuttgart have developed self-propelled tiny ‘microbots’ that can remove lead or organic pollution from contaminated water.
Working with colleagues in Barcelona and Singapore, Samuel Sánchez’s group used graphene oxide to make their microscale motors, which are able to adsorb lead...
Neutron scattering and computational modeling have revealed unique and unexpected behavior of water molecules under extreme confinement that is unmatched by any known gas, liquid or solid states.
In a paper published in Physical Review Letters, researchers at the Department of Energy's Oak Ridge National Laboratory describe a new tunneling state of...
Honeycomb structures as the basic building block for industrial applications presented using holo pyramid
Researchers of the Alfred Wegener Institute (AWI) will introduce their latest developments in the field of bionic lightweight design at Hannover Messe from 25...
27.04.2016 | Event News
15.04.2016 | Event News
12.04.2016 | Event News
04.05.2016 | Physics and Astronomy
04.05.2016 | Physics and Astronomy
04.05.2016 | Materials Sciences