Environmental Markets Beyond Copenhagen
WorldPower T
he scale and breadth of today’s energy challenge is enormous. But it can and must be met. The recession, by curbing the growth in GHG emissions (albeit temporarily)
has made the task of transforming the energy sector that much more difficult and costly. Nevertheless, it has also provided and unique opportunity by offering many countries what the IEA sees as a ‘window of opportunity’ to take action to concentrate investment in low carbon technology. It is households and business which will be largely responsible
for this transformation but it is to governments and international negotiation that we turn to create the environment, legislation and incentives to make this happen. The use of non-hydro modern renewable energy technologies
– including wind, solar, geothermal, tide and wave, bio-energy – sees the fastest rate of increase in the IEA’s Reference Scenario1 with most of this increase in power generation. The share of non- hydro renewables in total power output rises from 2.5% in 2007 to 8.6% in 2030, with wind seeing the biggest absolute increase (see page 135). The consumption of biofuels in transport also rises sharply. By contrast, the share of hydropower falls from 16% to 14%. Falling energy investment remains
energy investment highly attractive in the future. The cost of achieving the IEA’s 450 Scenario requires an increased investment of US$10.5 trilliion in energy infrastructure than in the Reference Scenario Around US$1.7 trillion of this is for power plant alone.
Did Copenhagen Matter? COP-15 has universally been described as a disaster. So
should we be disappointed? Well, actually, no, according to Bjorn Lomborg of the Copenhagen Consensus Centre. It is not that man-made global warming isn’t real or that we don’t need to take meaningful action to combat it. It is and we do. The dismal outcome of COP-15 should make us hopeful. Why? “Because its failure may be just the wake-up call the world has needed – the splash of cold water that may finally get us to face the facts about what works and what does not work to cure climate change,” says Lomborg. The fact that the Rio-Kyoto-Copenhagen approach to global
a concern, although markets have shown great resilience through the downturn (see page 89). Weaker fossil fuel prices have also undermined the attractiveness of investments in clean energy. However, government moves to encourage homegrown ‘green’ jobs as part of their stimulus packages have helped counter these effects. Cutbacks in energy-infrastructure investments also threaten to derail the process. The capital required to meet projected energy demand through to 2030 in the IEA’s Reference Scenario is huge – US$26 trillion in total, or 1.4% of GDP per year on average. The power sector requires over 50% of this expenditure, with over half of all energy investment needed in the developing world. The Reference Scenario sees a continued rapid rise in
energy-related CO2 emissions through to 2030, with over 40 Gt generated in 2030 – an average rate of growth of 1.5% with
non-OECD countries accounting for practically all this growth. Limiting this growth by extending the green economy at an accelerated pace (i.e. limiting the temperature rise to no more than 2°celsiusw) requires the low-carbon energy revolution so talked about by political leaders. Whilst energy efficiency offers the biggest scope for cutting emissions in the short-term, the deployment and encouragement of new technologies and techniques is now taking centre-stage as the world’s fossil-fuel addiction becomes ever more apparent. There is little doubt that the price of oil will again rise – and perhaps more quickly than many think – to levels (and above) which make alternative
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The share of non-hydro renewables in total power output rises from 2.5% in 2007 to 8.6% in 2030
warming was clearly getting us nowhere was apparently one of those inconvenient truths that people prefer to ignore. “I am hopeful that political leaders may finally be ready to face the truth about global warming – namely, that if we are serious about wanting to solve it, we need to adopt a new approach. Promising to cut carbon
emissions may make us feel virtuous, but that is all it does. If we actually want to cool down the planet, we need policies that are technologically smarter, politically more feasible and economically more efficient.” The stark lesson of Copenhagen is that the world is neither
willing nor able to go cold turkey when it comes to ending its addiction to fossil fuels. The problem, particularly for China, India, and the rest of the developing world, is that there simply are not any affordable alternatives. If we want to reduce (if not actually eliminate) our use of fossil fuels without totally crippling the world economy, we are going to have to increase our reliance on green energy technologies by several orders of magnitude. In a paper for the Copenhagen Consensus Centre in July
2009, Isabel Galiana and Professor Chris Green of McGill University examined the state of non-carbon based energy today – including nuclear, wind, solar and geothermal energy – and came to some disconcerting conclusions. Based on present rates of progress, they found that, taken together, alternative energy sources could, if hugely scaled up, get us less than halfway towards a path of stable carbon emissions by 2050, and only a fraction of the way towards stabilisation by 2100. The technology will simply not be ready in terms of scalability or stability. In many cases, the most basic research
worldPower 2010
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