To limit climate change to 2° Celsius, low-carbon energy options will need additional investments of about US $800 billion a year globally from now to mid-century, according to a new study published in the journal Climate Change Economics. But much of that capital could come from shifting subsidies and investments away from fossil fuels and associated technologies. Worldwide, fossil subsidies currently amount to around $500 billion per year.
“We know that if we want to avoid the worst impacts of climate change, we need to drastically transform our energy system,” says IIASA researcher David McCollum, who led the study. “This is a comprehensive analysis to show how much investment capital is needed to successfully make that transition.”
The study, part of a larger EU research project examining the implications and implementation needs of climate policies consistent with the internationally agreed 2° C target, compared the results from six separate global energy-economic models, each with regional- and country-level detail. The authors examined future scenarios for energy investment based on a variety of factors, including technology progress, efficiency potential, economics, regional socio-economic development, and climate policy.
Investments in clean energy currently total around $200 to 250 billion per year, and reference scenarios show that with climate policies currently on the books, this is likely to grow to around $400 billion. However, the amount needed to limit climate change to the 2° target amounts to around $1200 billion, the study shows.
The energy investments needed to address climate change continue to be an area of large uncertainty. By comparing the results from multiple models, the scientists were able to better define the costs of addressing climate change.
“Many countries say that they’re on board with the a target of 2° Celsius global mean temperature stabilization by 2100; some have even made commitments to reduce their greenhouse gas emissions. But until now, it hasn’t been very clear how to get to that point, at least from an investment point of view. It’s high time we think about how much capital is needed for new power plants, biofuel refineries, efficient vehicles, and other technologies—and where those dollars need to flow—so that we get the emissions reductions we want,” says McCollum.
IIASA Energy Program Director Keywan Riahi, another study co-author and project leader, says, “Given that energy-supply technologies and infrastructure are characterized by long lifetimes of 30 to 60 years or more, there’s a considerable amount of technological inertia in the system that could impede a rapid transformation. That’s why the energy investment decisions of the next several years are so important: because they will shape the direction of the energy transition path for many years to come.”
The study shows that the greatest investments will be needed in rapidly developing countries, namely in Asia, Latin America, and Sub-Saharan Africa.
“Energy investment in these countries is poised to increase substantially anyway. But if we’re serious about addressing climate change, we must find ways to direct more investment to these key regions. Clever policy designs, including carbon pricing mechanisms, can help.” says Massimo Tavoni, researcher at the Fondazione Eni Enrico Mattei, a climate research center in Italy, and overall coordinator of the LIMITS project, of which the new study is a part.
The researchers note that their analysis of future investment costs does not attempt to quantify the potentially major fuel savings from switching from fossil fuels to renewable sources, such as wind and solar energy. As shown in the IIASA-led Global Energy Assessment, such savings could offset a considerable share of increased investment on a global scale.
This study provided an important input into the Intergovernmental Panel on Climate Change Fifth Assessment Report, Working Group III, Chapter 16 on Cross-cutting Investment and Finance Issues.
About the LIMITS project
This study was conducted as part of the Low Climate Impact Scenarios and the Implications of Required Tight Emissions Control Strategies (LIMITS) project, a European Union Seventh Framework Program (FP-7)-supported collaboration between the International Institute for Applied Systems Analysis (IIASA), the Fondazione Eni Enrico Mattei (FEEM) in Italy, the Potsdam Institute for Climate Impact Research (PIK) in Germany, the, the Joint Research Centre of the European Commission, Central European University, the National Development and Reform Commission Energy Research Institute in China, the Indian Institute of Management (IIM), the National Institute for Environmental Studies (NIES) in Japan, and the Pacific Northwest National Laboratory (PNNL) in the US.
Reference
McCollum D, Nagai Y, Riahi K, Marangoni G, Calvin K, Pietzcker R, Van Vliet J, van der Zwaaan B. (2014). Energy investments under climate policy: a comparison of global models. Climate Change Economics Vol. 04, No. 04. DOI: 10.1142/S2010007813400101
“Given that energy-supply technologies and infrastructure are characterized by long lifetimes of 30 to 60 years or more, there’s a considerable amount of technological inertia in the system that could impede a rapid transformation.
Ya think?
Thanks, Captain Obvious.
@Crispin in Waterloo but really in Singapore says: at 1:15 am +1
@Frederick Colbourne at 1:27 am
Notice that this study has apparently aggregated the national accounts of all countries in the world. This works for labor and capital although prices for labor and capital are distorted by barriers that restrict the cross-boundary flow.
I would like to see how these subsidies are computed. I suspect that “subsidies” equal the difference between domestic prices for fossil fuels and world market prices.
Frederick, I think you have hit a big part of it. There are countries where the government state owned oil companies sell gasoline and historically cheap prices to the public. It is either keep gasoline, bread, rice cheap, or suffer revolution.
There is also a big element of subterfuge in these “subsidy” numbers.
There was an Article in the WSJ, “The Energy Subsidy Tally”, Aug. 17, 2012, There the claim was “The natural gas and oil industry received $2.8 billion in total subsidies” On a discussion thread I dived into the numbers. Source: Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010 (pdf)
I concluded that about $ 1 Billion was listed as Percentage Depletion instead of Cost Depletion. [I disagree this is a subsidy, see note 1 below]. Then a big howler:
OK, about 3% R&D to Oil and Gas over a period of 32 years.
Funny, they don’t say how much went to Oil and Gas in FY2010.
The bulk of that Oil and Gas R&D was for Oil Shale (not Shale Oil, OIL SHALE) in the Carter Administration!
2010 R&D for Oil and Gas amounted to only $0.07 billion.
I could find only 1 billion of the claimed 2.8. Another poster suggested the the missing $1.8 billion was in biofuels: From page xix of the report:
There was some reduction in excise tax that reduced the overall net, but this appeared to be the unaccounted for “oil and gas” subsidy — an inducement to the refiners to make them take ethanol from ADM and the agriculture sector. That’s a green subsidy! “Oh no its an Oil and Gas subsidy because the check is made to the refiners.” It’s an agriculture subsidy, “No the check is going to oil and gas companies who buy corn products.” It has elements of the “Dead Parrot Sketch”.
More warmist happy-speak… To date there are no effective solar and wind replacements or any other alternative/renewable energy sources able to replace the warmist’s intended large-scale baseload reductions they wishfully and gleefully want to impose. So they want you to pay more for less available energy – more empty promises – just like with the ACA!
Edit: Sorry, the bold tag should have been closed at the end of:
“The natural gas and oil industry received $2.8 billion in total subsidies”
Note 1 from Stephen Rasey at 8:21 am
Why I disagree with the Premise that “Percentage Depletion,” or even “Excess Percentage Depletion of Cost Depletion” is an oil and gas subsidy. I’ll quote what I wrote at judithcurry on Oct. 22, 2012.
The US alone spent $77 billion dollars on climate change between 2008 and 2013.
The budget for 2014 is over $21 Billion dollars. 18 agencies are recipients of this pork barrel.
This includes DOE among others.
Can anyone tell me what energy breakthrough has been realized as the result of this expenditure?
Does anyone thing spending more $$$ will make wind turbines, solar, or biofuels effective or will it continue to be just a subsidy for the Government buddies
http://fas.org/sgp/crs/misc/R43227.pdf
Yea, it won’t cost us any more than our fossil-fuel economy….. IF we go back to living standards of the mid-1800’s like they want. Maybe they want to scratch out a subsistence-level existence and they have every right to go contemplate their navels in a commune somewhere but they shouldn’t force the rest of us to live in squalor….
Here are some abstracts showing what happened to the biosphere when the mean temperature of the Earth was over 5C – it did not collapse and the tropical rain forests thrived as well as biodiversity. The 2C target is BS. We need 3C ASAP, but how will we ever reach it?
Alan the Brit says:
July 3, 2014 at 4:31 am
Many of the progs I know are also the kind of people who didn’t really have a problem with the first “final solution”.
Why? That’s silly. With savings not taken into account, an economic analysis is meaningless.
Then, the most remarkable effect of switching from traditional sources to wind and solar is not decreased carbon dioxide emissions, but a huge increase in land use coupled with abandoning baseload power for intermittent sources. That is, large swaths of countryside are to be converted into industrial zones with a dense network of heavy duty roads, while the poor are forced to learn to live with frequent blackouts. Only wealthy households can afford to operate uninterrupted power supplies made of battery packs and a backup diesel generator. And, of course, no industrial process can rely on intermittent power, so industries either move out to countries with reasonable energy policy or operate their own power plants, at higher costs and lower efficiency than dedicated services.
According to the authors some 43 trillion dollars have to be invested before mid century into a transition, which does not make economic sense.
I am quite sure liquid salt breeder reactors operating at low pressure with passive safety, a hundred times better fuel efficiency than our Cold War Plutonium factories, no long half life isotopes left in waste and built in anti proliferation measures can be made cheaper than coal at a tiny fraction of that cost, especially because there used to be test systems already in operation many decades ago, subsequently killed off for political reasons. As one ton of ordinary granite (the default stuff continents are made of) contains as much fuel as fifty tons of coal + a hundred and thirty tons of atmospheric oxygen, and we have a thousand times better ores than that enough for millennia, from that point on one only has to let the market do its job with no special taxes, no subsidies, governmental loan guarantees or any other artificial incentive whatsoever.
Until such time this mob wakes up and starts to push for alternative baseload power, which can only be provided by nuclear technologies, their suggestions lack authenticity and should be dismissed without further discussion.
How much is that $500 billion in fossil fuel subsidies per gallon??
Here is what I came up with help from Wikpedia.
33% of world energy consumption is from oil. Let’s make the very rough assumption that’s about 170 billion in subsidies for oil. (assuming subsidy/energy unit is similar for coal/gas)
91 millions barrels of oil are consumer per day * each barrel makes 19 gallons of gasoline * 365 days/year = 631,000 million gallons of gasoline consumed per year. (I know much of that oil is refined into fuel oil, but this is just a wild stab)
Take 1700 million in subsidies and divide it by 631,000 million gallons of gasoline = .2 cents per gallon.of subsidies. Maybe someone smarter than me can check my logic?
The relentless banality of the AGW believers is annoying and disturbing.
Subsidies are the only reason nuclear power exists. It is far too expensive ant too dangerous to compete on its own merits.
See US Nuclear Plants Are Heavily Subsidized at
http://sowellslawblog.blogspot.com/2014/04/the-truth-about-nuclear-power-part-13.html
See Price-Anderson Act Gives Too Much Protection To Nuclear Plants at
http://sowellslawblog.blogspot.com/2014/07/the-truth-about-nuclear-power-part-25.html
The French also heavily -and illegally – subsidize their nuclear power industry. See Part 11 in the series.
I would like to suggest a thought experiment in regard to the supposed wisdom of limiting GMT change to 2C. Let us suppose that an intrepid inventor, working away in his garage, has built a most wonderful machine. The capability of this wonderful machine is such that all one would need to do is push a button to turn it on and the GMT and the entire climate of the world would revert to what it was in the 18th century at the end of the LIA. No extra expenses or inputs are required. The question for consideration is; who would be stupid enough to vote to push that button?
Admittedly there are a number of misanthropic statists who would probably relish punishing their fellow humans with the undoubtedly less friendly climate of that era, but IMHO I suspect we would finally have a climate question worthy of a 97% consensus and that consensus would be “No Way!”. I hope most people would demand the machine be immediately destroyed lest it, even accidentally, be turned on.
If there is someone out there who would like to argue that the old climate would be superior to what we have today I am willing to listen but fair warning, for me personally, that notion will be an extremely tough sell.
That’s not true, for not all nuclear technologies are created equal.
It may be so for our current Plutonium factories, generating electricity as a byproduct at less than 1% fuel efficiency with lots of long half life isotopes left in waste, with a high pressure core, which needs active cooling even offline. The only reason we have not moved ahead long ago was political, that is, Cold War demand for Plutonium, a dangerous substance, pretty useless for anything else but nuclear warheads, followed by a mindless environmentalist opposition, which refused to go into technological details, preferring word games instead.
With a hundred times less nuclear waste for the same energy output, which does not have to be sequestered for a hundred thousand years, only for centuries, the picture is quite different. The reactor core can be operated at atmospheric pressure, with no physical possibility of an explosion whatsoever. Also, we can have passive safety, which means in case of malfunction the process simply stops on its own with no need for any further intervention, no meltdown can occur and nothing gets out into the environment.
We could have developed the technology a long time ago, but the process was stopped dead by an unholy alliance between the military-industrial complex, Big Oil and their joint puppet, the environmental movement.
Dave Wendt,
“Let us suppose that an intrepid inventor, working away in his garage, has built a most wonderful machine.”
‘Unintended Consequences’, it’s not just a bad idea, it’s the law!
Willis Eschenbach says:
July 3, 2014 at 2:58 am
kadaka (KD Knoebel) says:
July 3, 2014 at 7:16 am
You da’ man!
Thanks,
w.
Doug says:
July 3, 2014 at 12:13 am
“Worldwide, fossil subsidies currently amount to around $500 billion per year.”
I sure wish someone would show me those subsidies. I ran my $500 a month of oil production through turbotax, and when the domestic production tax credit came up, it was just about eliminated because the income is from oil and gas. Gravel, corn. political pamphlets, anything would get a tax break as long as it is not oil or gas. I imagine solar and wind would be treated a bit better.
======================================================
Most of the US so called oil/gas subsides are either GAP accounting rules or general tax rules applicable to all manufacturers, and these are a tiny fraction of world wide subsides.
The truth is most of those World wide subsides are supports to state run oil companies in oil producing countries that are run by either totalitarian governments or communist pseudo democracies. Good luck getting those countries to divert those funds.
It depends upon what the meaning of the word “subsidy” is. Some definitions only include cash payments, others include tax reduction (http://www.investopedia.com/terms/s/subsidy.asp).
Big Oil and their joint puppet, the environmental movement.
=======
follow the money. big oil stands to benefit the most from the EPA war on coal. windfall profits for Big Oil in return for campaign contributions. and campaign contributions are tax deductible. pay once, benefit twice. sweet deal if you can get it.
Stephen Rasey says:
July 3, 2014 at 8:23 am
Fixed.
Also, for details of how much of their claimed $500 billion in subsidies is from taxes, see my new post here. Short answer may surprise folks, it surprised me …
None.
w.
ferdberple says:
July 3, 2014 at 11:55 am
Big Oil and their joint puppet, the environmental movement.
=======
follow the money. big oil stands to benefit the most from the EPA war on coal. windfall profits for Big Oil in return for campaign contributions. and campaign contributions are tax deductible. pay once, benefit twice. sweet deal if you can get it.
There is not a shred of truth in this comment. Your claim of a sweet deal is foolish if not totally uninformed. Follow the facts not the lies of the left!
I know this is what the Left and the enviros want you to believe, but if you get the actual facts you would know this is post is void of truth.
“Any donation to a political party, campaign, or action committee is not tax deductible. According to the Internal Revenue Service, “You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund.”
Furthermore I don’t know who you believe “Big Oil” are but it is also part of the nasty smearing, name calling by the left because they only can deal in misinformation and distortions. Furthermore it is uninformed to believe that US Oil companies are happy with the war on coal since they know as you should that they are next in line for destruction. The EPA and the administration are doing everything in their power to put Oil companies out of business with biofuels.
Also It is foolish to believe that liquid fuels for transportation are interchangeable with coal for electricity generation. Very little electricity generation comes from oil. Electric powered cars have a long way to go to replace gasoline/diesel. The only fuel that is practical for use by transportation and electricity generation is natural gas. It would take decades and huge subsidies to replace the auto filling stations infrastructure with electricity.
Roger Sowell says:
July 3, 2014 at 9:39 am
Your record is cracked.
“A Trillion here, a Trillion there, pretty soon, you’re talking real money.”
Martin Durkin had a good illustration (Britain’s Trillion Pound Horror Story) of a Trillion (£). He claimed that if you made a stack of a Trillions worth of £50 notes it would be some 6.5 thousand miles high.
Now perhaps it’s late here in England and I’ve had a long day but 79 Trillion would get us to The moon and back.
Roger Sowell July 3, 2014 at 9:39 am
“Subsidies are the only reason nuclear power exists.
It is far too expensive and too dangerous to compete
on its own merits.”
Before I start laughing uncontrollably at the magnitude of sheer ignorance displayed in that sentence, I continue in a rational manner ..
The real facts are that nuclear power is close (and sometimes is, depending upon the price of coal) to being the cheapest form of power generation – only coal is cheaper, but insignificantly so. And nuclear is , by far the safest form of power generation as shown in this graph Accidents generating electricity per
Giga Watt electric year 1966 to 1996
Fatalities Injured
LP Gas 3.1 15
Hydro 0.9 0.2
Coal 0.35 0.07
Wind 0.17 0.35
Nat Gas 0.09 0.21
Nuclear 0.009 0.11
At Fukushima, no civilian nor worker received radiation even remotely close to the level considered unsafe, although that level is far below the natural background radiation and may loactions around the world.
At Chernobyl there were aproximately 30 worker deaths during the reactor meldown. The levels of radiation received by civilians was only 1.6 millisieverts/year above the typical background radiation of 6/yr. Many locations around the world have background levels far higher than that, without any health effects – SouthWest France,for example has levels of 80/yr, Sweden 18/yr and Ramsur Iran 700/yr!! with no apparent health effects.
Current Gen 3 nuclear reactors are deemed at least 100 times safer than Gen 2 reactors by the NRC, and Gen 2 plants were safer than any other means of producing power.
Cost of a kWhr generated by nuclear power is easily calculated from the price of uranium fuel (.75 cents /kWhr), ops and maintenance (1.65 cents/ kWhr), lifespan of plant (minimum 60 years for Gen 3), cost to build reactor ($5.5 billion, which could be paid back at .9 cents/kWhr for 60 years). decomissioning costs (varies but less than .1 cents /Kwhr) , nuclear waste storage (0.1 cents/kWhr – and is too much according to recent court judgement) , interest on build loan (if any)
.3 cents/kWhr. All based on 60 year lifespan, which is conservative, so those number estimates are high.They produce cost per kWhr of 3.8 centst/kWhr, as opposed to the estimated price of wind (18 cents/kWhr).
Nuclear fuel costs have declined over the past 35 years. And the availability of uranium is essentially unlimited. The is especially the case when fast reactors come online in quantitiy – the run will stop shining and solar power and wind power will cease to exist before we ever run out of uranium. The oceans provide an unlimited soucre, which can be extracted very economically for fast reactors.
China is currently building around 30 nuclear plants, some in country, for around $4 billion, and some by Westinghouse for roughly $5 billion apiece. No subsidies are given. South Carolina Gas and Electric is building two Westinghouse AP 1000 plants and they are currently running ahead of schedule and below cost, which is currently estimated to be between $5 and $6 billion. The company received NO govt subsidies. Nor did Georgia Power and Light, which is also bulding two AP1000 plants. I know what prices are being paid for many of the 75 new nuclear plants being built around the world or contracted for future build -well over 30 nuclear plants are scheduled and contracted for in Middle Eastern oil producing countries. Saudi Arabia has contracted for 25 nuclear plants, for example. England hss scheduled roughly 20 new nuclear plants to be built in the next decade. Russia and Eastern European countries also have scheduled new nuclear plants and also Finland, Sweden, Latvia, Poland, etc
For a technology claimed by Sowell to be non-competitive, an awful lot of countries are choosing nuclear as THE prime power generator.China has plans for 400 reactors by 2050 and 1600 by 2100. Maybe Sowell should write these country’s energy ministers and clue them in on the big mistake they are all making. Sowell might also manufacture some statistics to convince them that they are also building death traps. Of course, this may require a few lies sprinkled about here and there. Well, perhaps more than a few, and perhaps more plausible than his previous fare.
@ur momisugly Col Mosby July 3 at 2:09 pm
Every statement you made is false, but it is typical of the mis-informed nuclear power cheerleaders.
Debunking such claptrap is why I wrote the Truth About Nuclear Power articles. 25 are published now with 5 more to go.
This is not my opinion, the articles are solid fact-based with references cited.
Feel free to try to refute the facts. Mere arm-waving, as you did at 2:09 pm, makes you one who parrots the industry falsehoods.
I suggest you read Part 2 and Part 3 for facts on nuclear plant costs and electricity pricing.
Part 10 shows they do not last for 60 years.