måns nilsson. energy transitions and the new climate economy 17022016
TRANSCRIPT
Energy Transitions and the New Climate Economy
Måns Nilsson, Research DirectorStockholm Environment Institute
The New Climate Economy project
Better Growth, Better Climate: the New Climate Economy report (September 2014) showed that economic growth and climate protection can be achieved together.
Seizing the Global Opportunity: Partnerships for Better Growth and a Better Climate (July 2015) focuses on how international cooperation can catalyse better growth and a better climate.
33 supporting Working Papers released in 2014-15, including 4 country studies.
Commissioned in 2013 by 7 countries Colombia, Ethiopia, Indonesia, Norway, Sweden, South Korea, United KingdomLed by a Global Commission 28 former heads of government, finance ministers, CEOs and heads of economic institutions.
Indian Council for Research on International Economic Relations
NCE Partner Institutes
Ethiopian Development Research Institute
Overseas Development Institute
Over 120 organizations have provided input towards the project, including:
Managing partner
The false dilemma
vs
Promoting economic
growth
Mitigating climate change
Better Growth, Better Climate: The New Climate Economy
Half glass empty? (source Max Roser)
Energy transitions – what’s next?
Source: Citi Research 2012
What are the key levers for combining climate action with economic performance in a smart energy transition?
1. Enhancing productivity
… solar can compete with fossil fuels in favorable circumstances
Indicative solar PV costs over timeUSD / MWh
2014
50
140
20102005200019951990
1200
-61%
Best utility-scaleproject, 2014
Current fossil fuelrange, indicative
Solar PV
Assuming 9.25% WACC, 17% capacity factor for solar PV, 70 USD/tonne coal price and 10 USD/MMBtu natural gas price. Sources: Citi Research 2012; IEA World Energy Outlook 2013; G. F Nemet, “Beyond the learning curve”, Energy Policy 34, 3218-3232 (2006)
Wind power costs over time
Note: Assuming coal price of 70 USD/tonne and gas price of 10 USD/Mmbtu. Assuming a 35% capacity factor for wind power i.e. 35% utilisation, and a 15% capacity factor for solar power
USD/MWh
Sources: Citi Research 2012; G. F Nemet, “Beyond the learning curve”, Energy Policy 34, 3218-3232 (2006); Bloomberg NEF (Turner 2013); IEA World Energy Outlook 2013, WEO 2012
1995 201020001990 2005
2000 2005 2010 2015 202030
40
50
60
70
80
90
Coal
Natural gas
2014
Low-carbon transport, buildings, and waste sectors are a US$17 trillion opportunity
Source: New Climate Economy
- Compact and connected urban growth could reduce global infrastructure investment requirements by US$3 trillion through to 2030. (NCE, 2014)
11
Traffic congestion is costing some cities greater than 4% of GDP
Cost of traffic congestion as a percentage of GDP in selected cities
Sources: IBM Institute for Business Value, Smarter cities for smarter growth. Li-Zeng Mao, Hong-Ge Zhu, and Li-Ren Duan (2012) The Social Cost of Traffic Congestion and Countermeasures in Beijing. Sustainable Transportation Systems: pp. 68-76.
Percentage of GDP
Beijing Dublin Cairo Manila Dakar Mexco City San Paulo Bangkok Kuala Lumpar
0%
1%
2%
3%
4%
5%
4.2%4.1%
4.0% 4.0%
3.4%
2.6%2.4%
2.1%1.8%
25 MARCH 2014 | GENEVA
In new estimates released today, WHO reports that in 2012 around 7 million people died - one in eight of total global deaths – as a result of air pollution exposure.
This finding more than doubles previous estimates and confirms that air pollution is now the world’s largest single environmental health risk. Reducing air pollution could save millions of lives.
Particulate matter concentrations in air for selected cities Annual mean PM10 ug/m3
“Nature’s red-light warning against inefficient and blind development”
Beijing
Cheng
du
Wuh
an
Chong
qung
Tianji
n
Hangz
hou
Dongg
uan
Shang
hai
Guang
zhou
Shenz
hen
Lond
on
New Y
ork0
20
40
60
80
100
120
140
WHO air quality standards
Data from World Health Organisation
Value of the premature deaths from PM2.5 air pollution
Source: NCE estimate, based on WHO mortality data
ENERGY
2. Driving Innovation
Innovationsfaser (source: Energimyndigheten 2014:13)
Rapidly falling costs of electric vehicle batteries
Björn Nykvist and Måns Nilsson, 2015: 'Rapidly falling costs of battery packs for electric vehicles’. Nature Climate Change, in press
Innovations driving range and price - BEVs will be at tipping point within 5 years
20
Galvanise low-carbon innovation markets
Innovations and new business models
3. Mobilising investment
CLEAN ENERGY: Investments in low-carbon energy have increased, but 2/3 still goes to fossil fuels
0
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
69%
+303%
20122011201020082007 2009200620052004 20132000 200320022001
69%
Non-fossil fuelPower T&DFossil fuels
Source: IEA (2014): World Energy Investment Outlook.
Investment in global energy supply by fossil fuel, non-fossil fuel (renewable energy, nuclear, biofuels) and transmission & distribution in the power sector.
Mill
ion
US
D (2
012)
Momentum is building: in 2013, more low-carbon electricity capacity was added than fossil fuel capacity (GW)
Source: Liebreich, M., 2015. State of the Industry Keynote. Presented at the Bloomberg New Energy Finance Annual Summit, New York, 14 April. Available at: http://about.bnef.com/presentations/liebreich-state-industry-keynote/.
Source: OECD (2006, 2012), IEA ETP (2012), modelling by Climate Policy Initiative (CPI) for New Climate Economy, and New Climate Economy analysis.
27
Lower capital costs are crucial
Source: Waissbein et al. 2013
Energy assets are changing
Current infrastructure has been optimized around fossil fuels assets
Latest energy assets have different characteristics
Centralized facilities
Volatile fuel prices
High operating costs
Multi-billion scale
Decentralized assets
High capital cost
Near zero marginal cost
All scales projects
Different RISK profiles - Different RETURN profiles
Complex operations/maintenance
Low operational requirements
Driving innovation or sustaining incumbents?
$120 bn Renewables subsidies globally
$548 bn Fossil fuel consumption
subsidies
Over $30 bn Company car & parking tax benefits in developed countries
$55-90 bnFossil fuel support, developed countries
Fossil-fuel subsidy reform, led by India & Indonesia, reduced the global subsidy bill below $500 billion in 2014
CARBON PRICING: About 40 national and over 20 sub-national carbon pricing schemes are underway
Source: The World Bank, 2015. Carbon Pricing Watch 2015: An advance brief from the State and Trends of Carbon Pricing 2015 report, to be released late 2015. Washington, DC.
Sustainable companies outperform their peers
The CDP Climate Leadership Index outperformed the Bloomberg World Index of major companies by 9.1% over four years.
Source: CDP, 2014.
Power market and investment mechanism is not designed to accommodate a
carbon-neutral supply system or incentivize investment
Governing innovations Smart innovaions are not reaching market scale as
sufficient pace and requires further incentives and measures
Incumbent actors , interests and rules are blocking promising developments and policy
frameworks
The role of the public as prosumers in the smart energy system is not well
understood
CHALLENGES IN THE SMART ENERGY TRANSITION