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Lundi 04 Septembre 2017
The historic Paris Agreement hinges on the average global temperature of our planet increasing no more – and preferably substantially less – than 2° above pre-industrial levels. But to achieve this, the world’s countries are going to have to do far more than they pledged to do in their Intended Nationally Determined Contributions (INDCs).
Towards a Low-Carbon Economy - Better Energy, Greater Prosperity

Given this, the US’ decision to withdraw from the world’s first comprehensive climate accord is nothing less than a major setback.

The French government, however, has stepped up to provide much needed momentum by taking the ambitious step in July of this year of committing to achieving carbon neutrality, or net zero carbon emissions, by 2050. It has also vowed to ban the sale of both gasoline and diesel vehicles by 2040.

Tellingly, the auto maker Volvo announced one day before France made its position public that all the vehicles it manufactures would be either electric or hybrid by 2019.

Indeed, it often seems there is a divide between the increasing optimism and commitment of industry and civil society to tackling climate change and the at times hemmed political leadership on the issue.

Recognizing the need for a broad coalition to provide an impetus to the transition to a low-carbon economy, a diverse group of investors, energy companies, equipment suppliers, non-profit organizations, advisors and academics from both developing and developed countries formed the Energy Transitions Commission (ETC). It aims to inform experts and the wider public on how to limit global warming to well below 2˚C while stimulating economic development and social progress. At the same time, it seeks to provide decision-makers with objective research and information that can be used to help usher in a low-carbon energy regime. 

France Stratégie recently invited the ETC chair, Lord Adair Turner, to present and discuss the commission’s most recent report, Better Energy, Greater Prosperity.

The renewables lynchpin

The premise of the report is that it is not only possible to transition to a low-carbon economy, but that clean energy can be used to drive economic growth while keeping global warming well within the 2°C threshold.

It maps out a plan for both halving carbon emissions by 2040 and ensuring consumers in developing countries have sufficient supplies of affordable, clean and reliable energy to develop their economies and raise their standards of living. Four interdependent transition strategies must be pursued to achieve this: 1) decarbonize power and extend electrification; 2) decarbonize the economy; 3) increase energy productivity growth to twice its historic pace; and 4) optimize the use of fossil fuels within the remaining carbon “budget”.

“I think we can completely decarbonize electricity…and have GDP growth, if we still want that,” Turner said.

Renewable energy is, of course, the lynchpin in a decarbonized energy regime. The report advocates developing and developed countries increase their renewable sources to as much as 90% of their energy system by resorting to cost-effective storage and backup solutions.

“The assumption in the past has been it will be hard to take intermittent renewables beyond 40 or 50 percent because of the difficulties of backup,” he said.

He pointed to the rapidly falling cost of both renewables and batteries, highlighting their cost-effectiveness, which makes them “unstoppable and essential to the transition to a low-carbon, energy-abundant world.”

The report concludes that even with conservative estimates for the decline in the cost of lithium-ion batteries, the cost of backup power does not make systems based on solar and wind power uncompetitive. Specifically, it posits that by 2035 a fully loaded near-total-variable-renewable power system using combine-cycle gas turbine (CCGT) plants and batteries to provide flexibility could be competitive with a natural gas power system, costing about USD70/MWh. If governments were to back a carbon price, pushing it to between USD50-100, this would further accelerate the decarbonization of power systems.

Nuclear will continue to play an important role in some G20 countries, but new nuclear power plants will not be competitive unless significant cost reductions can be achieved.

Strong public policies

But there are some key economic activities that will be hard to electrify in the near future. Aviation, shipping and heavy industries like steel, cement or chemicals, he mentioned, cannot for the time being be cost-effectively electrified. Nevertheless, solutions such as replacing fossil fuel with bioenergy, using hydrogen to carry energy and undertaking carbon capture and storage (CCS) are all possibilities. Turner stressed that governments and companies need to invest in R&D to help drive down the cost of these technologies.

Beyond decarbonizing the economy, the report stresses the necessity of providing people in the developing world with sufficient energy. It estimates that for a strong standard of living per-person primary energy consumption should be in the range of 80 to 100 gigajoules per year. Today, top energy consumers like Americans and Australians use over 200 gigajoules, while many people in sub-Saharan Africa use a mere 20 gigajoules per year (India, for example, consumes only 28 per person on average).

Improving energy productivity is also crucial. The report puts forth that doing so alone could deliver a third of the emissions reductions needed by 2040, but there would have to be a 3% increase per year, about twice the historic rate. At the same time, energy-efficiency progress would have to be ramped up in construction, transport and industry.

According to the report’s scenario, fossil fuels would still represent up to 50% of final energy demand by 2040. This means that meeting the Paris Agreement’s goal would require wide-scale carbon capture and sequestration. Significantly, it proposes keeping fossil fuel use for applications with the highest value, which would check coal consumption.

Turner emphasized the importance of strong public policies in achieving the energy transition. The report highlights carbon pricing, the phasing-out of fossil fuel subsidies, R&D for low-carbon technologies, robust standards and regulations and investment in transport and urban infrastructure.

The ETC estimates some USD300-600 billion in annual investments are needed. While it doesn’t see this as major global financial challenge, it stresses the need for governments to reduce the risk and hence the cost of capital for long-term sustainable infrastructure investment. Developing countries with limited access to capital will also require support.

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Richard Venturi
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