The way forward on climate


Over the coming months, the world will be preparing for what is heralded as an historic meeting for climate change negotiations. If the right decisions are taken–with the aim of making a sustainable energy future a reality–we will be able to reap enormous, multiple benefits deriving not only from decarbonisation, but also from reduced air pollution, better energy access, energy security and economic prosperity.

But as we all know, clean energy deployment is not where it needs to be. It is now crucial for governments and other stakeholders to take effective decisions for energy sustainability. This will not be possible by relying on yesterday’s technology and policies. It is clean energy innovation that will get us on the right path.

That is the key story in Energy Technology Perspectives 2015, an IEA report. It was released in May following the recent sharp decline in fossil fuel prices. This new price environment brings both challenges and opportunities to decision-makers. However, these prices should not be an excuse to seek the short-term benefits of lower energy bills at the expense of a long-term sustainable global energy system. Governments should take advantage of the dip in oil prices to slash consumption subsidies on fossil fuel, which totalled more than US$550 billion in 2013. Such subsidies prolong our reliance on the worst greenhouse gas emitting activities, protect costly old practices and reduce incentives for change. By the same token, policymakers in major energy consuming countries should take advantage of the oil market’s collapse to introduce carbon pricing, taxes or low-carbon mandates, and to strengthen existing schemes.

The analysis in this year’s Energy Technology Perspectives shows us the direction that we will need to take to achieve the so-called 2 Degree Scenario, or 2DS: a scenario under which the evolution of the energy system is consistent with limiting the long-term increase in global temperatures to 2º Celsius.

Unfortunately, we are not close to being on track for meeting this goal. With current policies, energy-related carbon emissions will exceed 50 gigatonnes of CO2 in 2050–about three times more than what would be required to meet the 2DS. A transformation is needed, and is possible–but a long-term strategy based on a portfolio approach is needed to shift to a low-carbon energy mix.

The good news is that in addition to being environmentally sustainable and enhancing energy security, the 2DS more than pays for itself in terms of fuel savings. We estimate that to meet our climate goals, an additional US$40 trillion in additional investments are needed in low-carbon energy by the middle of the century. It may seem expensive, but it represents less than 1% of cumulative global GDP over the period 2016-2050. Most importantly, these investments lead to fuel cost savings of US$115 trillion. In other words, for every dollar invested in the clean energy technologies that drive the 2DS, nearly three dollars are avoided in fuel costs by 2050.

The deployment of innovative technologies is crucial to making this scenario possible. The options that are being rolled out every day are finally starting to transform the energy system, in advanced and poorer countries alike, and policymakers must adopt the smart measures needed to encourage further momentum and ensure a fair and open global market for innovation, clean technologies and know-how.

The stakes are high for the energy sector, which is no stranger to profound technological change. An incredible chain of energy innovations has been at the vanguard of social and economic transformation for over a century, and it is exciting to see the progress being made by solar panels, energy-efficient building and fuel economy improvements for passenger cars today, to name but a few.

But given how far off course we are right now, we cannot afford to be complacent. We are setting ourselves environmental and energy access targets that rely on better technologies. Today’s annual government spending on energy research and development is estimated to be US$17 billion. Tripling this level, as Energy Technology Perspectives recommends, requires governments and the private sector to work closely together and shift their focus to low-carbon technologies. The challenge is daunting, but it is possible to fill the gap.


OECD work on Green growth and energy

OECD work on Green growth

OECD Forum 2015 Issues

OECD Observer website

‌‌‌‌Maria van der Hoeven

Maria van der
Executive Director
International Energy

© OECD Yearbook 2015


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