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
Win-win strategies for climate and food security
02.10.2017 | International Institute for Applied Systems Analysis (IIASA)
The personality factor: How to foster the sharing of research data
06.09.2017 | ZBW – Leibniz-Informationszentrum Wirtschaft
Salmonellae are dangerous pathogens that enter the body via contaminated food and can cause severe infections. But these bacteria are also known to target...
University of Maryland researchers contribute to historic detection of gravitational waves and light created by event
On August 17, 2017, at 12:41:04 UTC, scientists made the first direct observation of a merger between two neutron stars--the dense, collapsed cores that remain...
Seven new papers describe the first-ever detection of light from a gravitational wave source. The event, caused by two neutron stars colliding and merging together, was dubbed GW170817 because it sent ripples through space-time that reached Earth on 2017 August 17. Around the world, hundreds of excited astronomers mobilized quickly and were able to observe the event using numerous telescopes, providing a wealth of new data.
Previous detections of gravitational waves have all involved the merger of two black holes, a feat that won the 2017 Nobel Prize in Physics earlier this month....
Material defects in end products can quickly result in failures in many areas of industry, and have a massive impact on the safe use of their products. This is why, in the field of quality assurance, intelligent, nondestructive sensor systems play a key role. They allow testing components and parts in a rapid and cost-efficient manner without destroying the actual product or changing its surface. Experts from the Fraunhofer IZFP in Saarbrücken will be presenting two exhibits at the Blechexpo in Stuttgart from 7–10 November 2017 that allow fast, reliable, and automated characterization of materials and detection of defects (Hall 5, Booth 5306).
When quality testing uses time-consuming destructive test methods, it can result in enormous costs due to damaging or destroying the products. And given that...
Using a new cooling technique MPQ scientists succeed at observing collisions in a dense beam of cold and slow dipolar molecules.
How do chemical reactions proceed at extremely low temperatures? The answer requires the investigation of molecular samples that are cold, dense, and slow at...
23.10.2017 | Event News
17.10.2017 | Event News
10.10.2017 | Event News
23.10.2017 | Life Sciences
23.10.2017 | Physics and Astronomy
23.10.2017 | Health and Medicine