Uncertainty analysis of the future cost of wind energy on climate change mitigation

Abstract

We conduct uncertainty analysis on the impacts of the future cost of wind energy on global electricity generation and the value of wind energy to climate change mitigation. We integrate data on global onshore and offshore wind energy cost and resources into the Global Climate Assessment Model (GCAM), and then propagate uncertainty based on distributions derived from an expert elicitation study on the future cost of onshore and offshore wind energy. The share of wind energy electricity generation in 2035, without a global policy on CO2 emissions, ranges between 4% and more than triple the 2019 share of 5.3%. Under a 1.5°C cap, this range is wider, with shares up to 34%. This range of uncertainty implies the need for flexible systems and policies, allowing large amounts to be deployed if needed. We explore whether a breakthrough in wind energy could prevent the demand for natural gas as a bridge technology to a low carbon economy, and find that uncertainty in wind energy is only pertinent for medium-stringency policies, such as a $60/t carbon tax. Under this scenario, there is a 95% chance that the cost of wind energy will be low enough to lead to an immediate reduction in the share of natural gas. In contrast, under a business-as-usual scenario without a breakthrough in cost, natural gas is highly likely to continue increasing in share of electricity generation. Under a 1.5°C cap, natural gas will decrease in share regardless of wind energy cost.