Economic Issues in Deep Low-Carbon Energy Systems

Ignacio Mauleón

doi:10.3390/en13164151

Abstract

The main interlinked challenges to achieve a low-carbon emission economy are analyzed. It is argued first that there are no obstacles to a free market working effectively with a high penetration of distributed Renewable Energies (RE), since intermittency has been overstated, and affordable storage solutions are available because of strong learning rates. Demand-side management policies are promising too, neither are there foreseeable boundaries to the availability of economically extractable photovoltaic and wind energies. A full 100% RE system may be more challenging though, partly because bioenergy, a key dispatchable source in most available RE roadmaps, clashes with growing food needs and reforestation to counter greenhouse gases emissions. Similarly, the green growth proposal is constrained by materials availability, mainly cobalt and phosphorus, which will also constrain the deployment of electric vehicles. Alternatively, the United Nations Human Development Index may be a more suitable target for a sustainable RE system. Although history is not reassuring, the main global economic hurdle is possibly existing fossil fuel-related investments, likely to become stranded. An assessment of their value yields a substantially lower figure than is sometimes claimed, though. Finally, a limited role for nuclear energy is assessed positively, provided it is publicly owned.

Highlights

As the climate change issue has become increasingly pressing [1], several pathways and scenarios put forward by academia and policy think tanks alike for a transition to a deep low-carbon economy are continually growing
These models struggle to account for hallmark disruptive changes, notably from innovation and costs reductions endogenously derived from learning rate (LR) effects, and other nonlinear changes induce by human behavior, like consumer choices
International Energy Agency (IEA) [2] in 2050; in the worst case reported in column III, it10turns be less than 4%

Summary

Introduction

As the climate change issue has become increasingly pressing [1], several pathways and scenarios put forward by academia and policy think tanks alike for a transition to a deep low-carbon economy are continually growing. The main drivers for emissions reductions in these models are carbon taxes exogenously determined by policymakers at a suitable level, enough to deliver the desired emissions reduction targeted. These models struggle to account for hallmark disruptive changes, notably from innovation and costs reductions endogenously derived from learning rate (LR) effects, and other nonlinear changes induce by human behavior, like consumer choices. IAM models, and given its relevance, since it is an OECD government-supported think tank, it will be discussed here [2,3]. The International Renewable Energy Agency (IRENA) is likely the second most prominent and government-supported international think tank that regularly produces reports detailing transition pathways.

Results

Discussion

Conclusion