The International Energy Agency says that it will take $45 trillion in additional clean technology investments between now and 2050 in order to reduce CO2 emissions to 50 percent. That’s 1.1% of average annual global GDP over the period.
“The world faces the daunting combination of surging energy demand, rising greenhouse gas emissions and tightening resources,” said Nobuo Tanaka, Executive Director of the International Energy Agency (IEA) today in Tokyo, at the launch of the latest edition of Energy Technology Perspectives (ETP).
The ETP is built around three sets of global energy technology scenarios. These are a Baseline (business-as-usual Scenario), a range of ACT Scenarios showing how CO2 emissions could be brought back to current levels by 2050, and a set of BLUE Scenarios outlining how they could be reduced to 50% below current levels.
Business as usual
If governments around the world continue with policies in place to date – the underlying premise in the ETP Baseline scenario to 2050 – CO2 emissions will rise by 130 percent and oil demand will rise by 70 percent, according to the report. This expansion in oil equals five times today’s production of Saudi Arabia. “Such growth of oil demand raises major concerns regarding energy supply access and investment needs,” said Tanaka. In the Baseline scenario, the power generation sector accounts for 44 percent of total global emissions in 2050, followed by industry, transport, the fuel transformation sector and buildings.
Bringing CO2 back to current levels
To bring CO2 emissions back to current levels in 2050, all options are needed at a cost of up to $50 per ton CO2, according to the report. No single form of energy or technology can provide the full solution. Improving energy efficiency is the first step and is very attractive as it results in immediate cost savings. Significantly reducing emissions from power generation is also a key component of emissions stabilisation. But even this is not enough.
Reducing emissions 50% below current levels
Emissions halving implies that all options up to a cost of $200 per ton CO2 will be needed. This is based on a set of “optimistic assumptions for technology development.” Under less optimistic assumptions, options that would cost up to $500 per ton CO2.
“Total additional investment needs in technology and deployment between now and 2050 would amount to USD 45 trillion, or 1.1% of average annual global GDP over the period,” Tanaka said.
Given the growing demand for electricity, this would mean that on average per year 35 coal and 20 gas-fired power plants would have to be fitted with CO2 capture and storage technology, between 2010 and 2050 at a cost of $1.5 billion each.
In addition, 32 new nuclear plants would need to be built each year and wind capacity would have to increase by approximately 17.500 turbines each year.
On top of all this, the world would also have to make an eightfold reduction of the carbon intensity of the transport sector.
“There should be no doubt – meeting the target of a 50 percent cut in emissions represents a formidable challenge. We would require immediate policy action and technological transition on an unprecedented scale. It will essentially require a new global energy revolution which would completely transform the way we produce and use energy,”Tanaka said.