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Friday, October 09, 2009

IEA Sends Message to Copenhagen Delegates: $10 tn Needed to Combat Climate Change

Originally posted at the Breakthrough Institute

Massive investment in clean energy technology, to the tune of approximately $10 trillion over the next two decades, is needed to combat climate change, according to the International Energy Agency's early release of the World Energy Outlook 2009.

The new IEA report argues that the focal point for global climate and clean energy policy should center on three key "opportunities:" (1) accelerating the deployment of clean energy and the decarbonization of the global energy system; (2) improving the energy intensity of national economies; and (3) providing the financing and technology support necessary for clean and sustainable economic growth in the world's developing nations. That advice should be a lesson to negotiators preparing for climate talks this December, where in order to succeed, international policy must focus on concrete and actionable commitments to spur investment in climate change mitigation and clean energy technology, not symbolic and ultimately empty carbon emissions targets.

The truncated report, released on Tuesday, is designed to inform the international climate debate leading up to Copenhagen, and uses two scenarios, the Reference Scenario (no change to existing policies) and the 450 ppm scenario (necessary measures to achieve stability at 450 ppm CO2-e ) to demonstrate the scale of the technology and infrastructure challenges the world faces and the level of action necessary to overcome such obstacles.

According to the 450 ppm scenario analysis, $10 trillion over two decades or $500 billion annually, is necessary to fill the investment gap and accelerate innovation in clean energy technologies. This recommendation is based on the scale of the technology challenge which requires that wind and "other renewables" account for approximately 1,800 GW of power generation capacity and all low-carbon energy sources account for approximately 4,000 GW by 2030, up from less than 250 GW and around 1300 GW of power generation capacity, respectively, in 2007, the base year. In total, low-carbon power (nuclear and hydro included) would require $6.6 trillion in additional investment between 2010 and 2030 with 72% of that money flowing into renewable power generation.

The IEA identifies three "policy opportunities," or objectives, which international governments and representatives at Copenhagen must work towards in order to construct effective, Kaya-Direct national and international climate policy:

1) "An ambitious, robust global agreement in Copenhagen," that ensures financial and technology support for developing regions that will require aid to both manage the consequences of climate change and facilitate their growth based on clean energy sources.

2) Accelerated deployment of clean energy technologies

3) Increasing incentives to improve end-use energy efficiency

For delegates preparing to work out the details of international climate treaty, this reader's digest version of the IEA's highly regarded World Energy Outlook should offer a clear, realistic sense of the scale and complexity of the challenge before them as well as blatant proof that such complicated problems cannot be "magically" solved by insisting on unsubstantiated carbon emissions reduction targets. Only a focused and concrete commitment to those three key levers will drive down global emissions and help build up a clean global energy system.

While the IEA may have been hoping to deliver a wake-up call to negotiators, this is not the first time that IEA analysis has pointed to the need for more investment in clean energy technology. The IEA's Energy Technology Perspectives, released in June 2008, called for an annual $10-100 billion in energy technology RD&D investment each year over the next 15 years. Although the figure has increased over the last year (by about five times!), the urgency expressed by both analyses demonstrates that international leaders are still reticent to acknowledge the actual costs of climate change in favor of symbolic commitments to targets and timetables.

Binding commitments are going to be a critically necessary part of the talks in Copenhagen, but not the types of commitments exemplified by the Kyoto signatories. Instead of commitments to reduce X amount of emissions by year Y without any real plan to achieve those cuts, nations should instead focus their commitments on specific, actionable targets based on the key levers (according to the Kaya Identity) outlined by the IEA. Specifically, an agreement at Copenhagen must include actionable commitments to improve energy efficiency, decarbonize energy supplies by bringing clean energy technology to market, and provide financial assistance and technology transfer to developing countries to boost their climate mitigation efforts.

A recent proposal, put forth by Australia, for a "Kaya-direct" system of "national schedules" as an alternative to the Kyoto framework would require these types of binding commitments. Such an alternative could, in combination with the analysis in this report, help to shift the focus of the climate debates toward action-centered plans and away from empty promises, particularly from developing nations like China and India, to reduce emissions. According to U.S News and World Report (, IEA Executive Director Nobuo Tanaka emphasized that the discussion in Copenhagen must revolve around energy:

"Energy is at the heart of the problem--and so must form the core of the solution."

Success in Copenhagen is dependent on whether delegates can agree to enact the types of policies that will drive enough investment to fill the gap in funding for clean energy technology, energy efficiency, and aid to developing nations, as the IEA recommends. If they take the IEA recommendations to heart, national representatives will focus on ensuring a global commitment to these goals and outlining specific steps, instead of wasting time on "magical solutions," like emissions targets and timetables.

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