Can we make the shift from high- to low-carbon energy?

British analysts say that global investment in clean energy technologies has been undermined by the widening recession, meaning that the world is no longer on track to avert the worst impacts of climate change. Moreover, although the downturn also means short-term reductions in greenhouse gases, the long-term outlook is grim.

The analysts are with New Energy Finance (NEF) which provides information and research to investors in renewables, low-carbon technology and the carbon markets. Their latest report, presented March 4 to the NEF Summit in London, has as a baseline the estimated $155 billion (U.S.) invested in clean energy technologies, companies and projects last year.

 ”Our latest Global Futures report demonstrates that investment needs to reach $500 billion per annum by 2020 if CO2 emissions from the world’s energy system are to peak before 2020,” they say, adding that this looks highly unlikely. “Scientific experts fear that continued growth of emissions beyond 2015, or 2020 at the latest, would create the strongest risks of severe and irreversible climate change.

“The recession’s direct impact on CO2 emissions is likely to be moderate and certainly not enough to avert a continued upward trend,” the analysts say. Their baseline projection shows investment growing to $348 billion by 2020 and $461 billion in 2030 and they expect renewables will provide 26 per cent of all electricity by 2030. That compares with the average annual investment of $229 billion and 23 per cent of electricity generation by 2030 set out in an International Energy Agency (IEA) scenario.

The NEF 2009 baseline indicates that global energy-related CO2 emissions in 2030 will be some 11.5 per cent below the IEA scenario as a result of accelerated growth in renewables, coupled with lower energy intensity per unit of gross domestic product and faster “buildout” of carbon capture and sequestration capacity.

Installation of wind power capacity could moderate during the recession, but the volume of energy produced is expected to reach new highs over the longer term. The most prominent markets will be Europe, thanks to turbines’ proximity to markets and supportive policies, as well as in the United States and China.

Insofar as solar photovoltaics are concerned, they say cost-reduction progress is expected to yield “a wave of expansion” over the next two decades, assuming continued public support until the industry achieves full cost competitiveness. 

Their analysis also considers the impact on emissions of nuclear power, geothermal, biomass and biofuels, marine power and hydro and the impact of each in the base and peak scenarios is included in the report.

Guy Turner, NEF’s director of new carbon finance, said his division’s research indicates that climate change policies and specifically carbon cap-and-trade systems are making a material difference to shifting from high-carbon to low-carbon energy. “However, the Global Futures 2009 work is sobering: it shows that it just is not happening fast enough.”