Towards a green economy

and 24 per cent for oil in 2050. The share of other sources of energy remains almost constant through to 2050.

With respect to energy end-uses, the transport sector surpasses industry under BAU to become the largest energy consumer (29 per cent) by 2050. The annual growth rates for transport and industry are 1.4 per cent and 1.0 per cent respectively. The residential sector, which is most directly influenced by population growth, is projected to exhibit the fastest growth throughout the simulation period (1.7 per cent per year) to reach 28.9 per cent of total energy demand in 2050. All these trends imply that under BAU, energy-related CO2

emissions will grow from 28 Gt in 2007 to 41 Gt in 2030, and 50 Gt in 2050. 4.2 Green investment scenarios

The renewable energy subsector receives an additional 0.52 per cent of global GDP in the G2 scenario, on top of current investment and capacity trends in the sector.29

These

investments are mostly directed into the supply of renewable energy. A considerable portion of the remainder of the investment portfolios is also invested in energy efficiency, particularly in the transport, buildings and industry sectors. Such investments on the demand side interact with supply- side investments, particularly through the (endogenised) price for fossil fuels. The effects of investments in curbing the growth of demand are discussed in other chapters, but are also summarised in this section.

The following is a discussion on the different results from G2 and BAU, focusing on energy savings on the demand side, the penetration rate of renewable energy on the supply side, jobs and GHG emissions. The effects on GDP at the global aggregate level are covered in the modelling chapter of this report, as it is difficult to isolate such effects by inter-related sectors such as energy and manufacturing. As mentioned above, compared with G1 the allocation of additional investments under G2, with a heavy concentration on energy supply and use, is designed to achieve the maximum reduction in emissions, based on existing knowledge and assumptions.

Effects on energy demand – achieving energy savings Under the G2 scenario, additional green investments totaling US$ 651 billion (at constant US$ 2010 prices, same unit for monetary values below) per year over the next 40 years are allocated to improve efficiency for end- use energy demand.30

These are concentrated in power

use (across sectors) and in fuel use in both industry (see also HRS-MI 2009) and transport (transport investments are analysed in detail in the Transport chapter as funds are mostly allocated to the expansion of the public transport network as opposed to increased efficiency).

Under G2, these energy savings efforts curb total primary energy demand by 15 per cent by 2030 and by 34 per cent by 2050, compared with BAU, with demand reaching 14,269 Mtoe in 2030 and 13,051 Mtoe in 2050. Total fossil-fuel demand is 41 per cent lower than under BAU in 2050.31

The lower energy consumption generates

considerable savings on energy expenditure. Avoided capital and fuel costs in the power sector, for example, result in savings averaging US$ 760 billion per year between 2010 and 2050. As explained above and in other chapters, these results are driven by the expansion of the public transportation network (rail and buses) and by improvements in energy efficiency (e.g., in the industrial and buildings sector), as well as the increased use of renewable energy and energy recovered from waste.

Effects on energy supply – raising the penetration rate of renewable energy In G2, the energy supply sector receives additional investments of US$ 656 billion per year between 2010 and 2050 to expand biofuel production and power generation using renewables. The unit costs of investments applied in the simulations are based on estimates in the IEA’s Energy Technology Perspectives 2010 (IEA 2010b) and a range of other published sources (detailed in the Modelling chapter and its technical annex).32

Additional investments in energy supply go to both the use of renewables in power generation and biofuel production. Fifty per cent of the additional investment (US$ 327 billion (G2) per year over the 40-year period) is allocated to power generation.33

The power-generation

investment is further divided into nine areas: eight power-generation options plus carbon capture and storage (CCS). Two of the renewable power- generation options dominate:

■ Solar power generation: 35 per cent of power- generation investment (additional US$ 63 billion in 2011 under G2) with an average additional investment of US$ 114 billion per year over the 40-year period.

29. As published and projected by IEA (2010b, 2010d).

30. These are investments in the remainder of the G2 investment portfolio, as described above; i.e. G2 allocates 0.52 per cent of GDP of investments to renewable energy supply, and an additional portion of the total 2 per cent of GDP portfolio to energy efficiency in the sectors described.

31. Somewhat similarly, fossil fuel demand is 48 per cent lower under G2, compared to BAU2.

32. In general, the scenarios do not significantly alter current trends of development of nuclear energy, and the potential for developing carbon capture and storage (CCS) is kept fairly modest, in order to focus the analysis on renewable sources.

33. It is important to recall that the amounts of investment modeled in the G2 scenario (and also G1) are additional to existing investment trends in the energy sector, including in renewable energy sources. The amounts cited here for the investment scenario are therefore substantially lower than figures of total investment, for example, in renewable energy, as published by Bloomberg New Energy Finance, UNEP SEFI and others, that are elsewhere in this chapter.

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