PolicyScenarios
Figure 4: Cumulative Power Investments by Plant Type, 2030
price signals, including carbon pricing, will
beimportantandlessonslearnedfromtheEU
Emissions Trading Scheme can inform the
effortsofothercountries.Inmanynon-OECD
countries, the removal of subsidised fuel
prices, is an important first step. However,
prices alone are not enough. Delivering a
low-carbon future requires major
breakthroughs in technology development
and deployment. Governments have the
Source: IEA
meanstoputinplaceincentivestoinnovate,
investment needed to bring forth this capacity is US$6.8 toencouragepromisingresearchactivitiesandtobreakdown
trillion.Inthe 550 Policy Scenario,totalnewcapacityisover4 international barriers. Much of the additional spending will
700GW,atatotalcostofUS$8.2trillion.Newcapacityinthe have to be made by households: a huge step-change in the
450 Policy Scenarioissubstantiallyhigher;itreaches5,700GW, attitudes to energy efficiency and consumer purchases by
at a total cost of US$10.6 trillion. Figure 4 breaks down the hundredsofmillionsofpeopleworldwideisthereforeneeded.
correspondingcumulativeinvestmentsbyplanttypeoverthe Governments, through information provision, sound
period 2012-2030. In the 450 Policy Scenario, the volume of regulation and targeted fiscal incentives, have a key role to
investment necessary to build up playinensuringthat,worldwide,the
sufficient capacity in hydro, wind
...uncertaintyaboutfutureclimate
right decisions are taken to
andotherrenewablesisintheorder
ofUS$1,700billioneach,ordoubled
policyisoneofthegreatestrisks
safeguard the future of the energy
sector – and of the planet.
compared to the Reference Scenario,
withwhichinvestorsinthepower
Developing countries will certainly
and is similar to investments in
sectorarecurrentlyfaced
needsomesupport,bothfinancially
conventionalfossilplants. andpractically.
Europehasbeenleadingtheway,mostrecentlythroughits
The Policy Response to the Climate Challenge 20-20-20package,whichaimstoachieveemissionssavingsof
The transition to low-carbon technologies will require a 20% by 2020. However, given Europe’s size, its can only
major transformation of the electricity sector. The current achieve so much on its own. To put things in perspective, if
economic slowdown, which has already led to a number of Europe were to meet its 20-20-20 target, the EU’s cumulative
cancellations in power investment programmes, must not emissionssavingsovertheperiod2006-2020wouldamountto
divert attention from the longer-term objectives of energy just 40% of the annual emissions in China in the Reference
securityandenvironmentalprotection.Atpresent,uncertainty Scenario in 2020. Recently, the Waxman-Markey proposal,
about future climate policy is one of the greatest risks with tentativelycalled“AmericaCleanEnergyandSecurityActof
which investors in the power sector are currently faced. 2009”,pavedthewayforanambitiousUSenergyandclimate
National – and international – climate policies will have a action, which awaits endorsement by President Obama’s
significant impact on the absolute and relative costs of administration.Anumberofothercountrieshaveannounced
different electricity generation options and when there is policies,someofthemincludingbindingtargetsandtherapid
uncertainty about these future policies, this leads to great implementationofnationalemissiontradingsystems.Looking
uncertainty about future generating costs and the merits of aheadtotheCopenhagennegotiations,ifEuropeandtheUS
different investment options. This can result in companies wish to be successful in leading the global climate change
delayinginvestmentsuntilgreaterpolicycertaintyisavailable effort,theymust,aboveall,ensurethattherestoftheworldis
– not the best outcome for the global climate change effort. alsoreadytoactdecisively.
•
Goingforward,itwillbeimportanttominimisepolicyriskby
providing a comprehensive, robust post-2012 framework,
Bertrand Magné worksintheInternationalEnergy
whichinstillsconfidenceintheenergysectorastothedirection
Agency’sOfficeoftheChiefEconomist,Dr.FatihBirol.
ofglobalpolicyfortheforeseeablefuture.
Itisforgovernmentstogalvanisethetransformation.Clear
www.iea.org
worldPower2009 17
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