Renewable energy

energy industry generates between 1.8 and 4 times more jobs per MW installed than conventional sources (Llera Sastresa et al. 2010). China’s growing labour force in renewable energy generation may be partially offset by job losses, estimated at more than half a million by the Chinese Academy of Social Sciences, resulting from the closing of more than 500 small inefficient power plants between 2003 and 2020 (Institute for Labor Studies et al. 2010). Presumably, labour retrenchment will take the form of not replacing workers that retire. In other cases, redeployment of workers to other sectors will be needed, accompanied by targeted retraining programmes.

3.5 Investment required for renewable energy

Forecasts for future investment needs are based on estimated costs of meeting climate change mitigation targets, while still satisfying the growing demand for energy. For the 450 ppm scenario, the IEA’s World Energy Outlook 2010 (IEA 2010d) projects that a total additional investment

in low-carbon technologies and energy

efficiency (not only renewable energy) of US$ 18 trillion is needed in the period 2010 to 2035.21

Only US$ 2.2

trillion (or 12 per cent) is incurred in the first 10 of these 25 years, but more than half in the second decade, 2020- 2030. The World Energy Outlook 2010 does not specify the proportion or amount of these totals to be devoted only to renewable energy, but analysis in the previous year’s Outlook estimated the needed investments in renewables by 2020 at US$ 1.7 trillion under the 450 ppm scenario (IEA 2009a).

There are a number of other analyses with varying estimates of the investments required in renewable energy. The World Economic Forum (2010) suggests that to limit the global average temperature increase to 2°C, global investment in clean energy needs to reach US$ 500 billion per annum by 2020, while current policies imply that this figure would likely only reach US$ 350 billion per annum by 2020. Greenpeace and the European Renewable Energy Council (Greenpeace/ EREC 2010) estimate that a total additional investment in renewable energy over 2007-2030 of US$ 9.0 trillion

21. These estimates are additional to investment costs projected under the Current Policies Scenario.

22. The total projected investment over 2007-2030 in renewable energy for the Reference scenario is US$ 5.1 trillion and for the Advanced Energy [R]evolution, US$ 14.1 trillion. The IPCC (2011) selected this scenario as one of four illustrative scenarios, out of its review of 164 scenarios from 16 different large-scale models. The Advanced Energy [R]evolution represents a scenario in which considerable investments are made in reducing growth in energy demand, and without the use of CCS to reduce GHG emissions.

23. The [R]evolution scenario has a similar target, but assumes a technical lifetime of 40 years for coal-fired power plants, instead of 20 years; the estimated additional investment needed for this scenario averages to US$ 229 billion per year above the Reference scenario.

24. As quoted in UNEP SEFI (2009).

Infrastructure Hydro station Building

Coal station

Nuclear station Gas turbine Aircraft

Motor vehicle

transportation assets Source: Stern (2006)

(averaging US$ 390 billion per year) is required for the “Advanced Energy [R]evolution scenario”.22

this scenario is the reduction of CO2 emissions down to

a level of around 10 Gt per year by 2050, and a second objective of phasing out of nuclear energy.23

New Energy Finance estimated that for CO2 to peak

before 2020, annual investments in renewable energy, energy efficiency and carbon capture and storage need to reach US$ 500 billion by 2020, rising to US$ 590 billion by 2030.24

This represents an annual average

investment of 0.44 per cent of GDP between 2006 and 2030. In summary, various sources estimate the capital investments into renewable energies required for mitigating climate change to be around US$ 500 billion per year until 2020.

For climate mitigation, however, it is not only the scale of investments into renewable energy capacity that is crucial, but also the timing of these investments. This is due to the risk of locking-in a high-carbon power infrastructure because the energy sector is characterised by long life spans of power plants and distribution infrastructure (see Table 10). The carbon emissions in the decades to come are, therefore, determined by today’s investment decisions. The early retirement or retrofitting of power assets, for example, tends to be very expensive and careful transition strategies are therefore needed (Blyth 2010).

Some studies also show that any significant delays in action by governments and the private-sector to move the energy sector onto a low-carbon growth path will lead to significantly higher costs to reach a given mitigation target. For example, the IEA (2009a) estimates that every year of delay in moving the energy sector onto the 450 ppm trajectory would add approximately US$ 500 billion to the global costs for mitigating climate change. Such modelling is sensitive to assumptions about marginal abatement costs at different points in time, but the outcomes are broadly consistent with other studies. Another study (Edmonds et al. 2008) estimates that delaying mitigation actions in developing countries after 2012 could double the total discounted costs to

219 The target of

Expected lifetime (years) 75++

45+++ 45+

30-60 25

25-35 12-20

Table 10: Lifespan of selected power and