Physics Faculty Publications

Document Type

Article

Publication Date

2013

Publication Source

The RoSE Project of the Potsdam Institute for Climate Impact Research

Abstract

EXECUTIVE SUMMARY

Exploring energy demand and supply uncertainty: An exploration of uncertainty on drivers of energy demand and supply is indispensable for better understanding the prospects of long-tern climate stabilization. The RoSE study is the first of its kind to systematically explore the impact of economic growth, population and fossil fuel scarcity, in scenarios with and without climate policy, using a model ensemble. A feature of RoSE is the participation of five established integrated assessment modelling teams from three important regions in international climate policy negotiations: the EU, the USA and China.

Economic growth: Neither slow nor rapid economic growth solves the climate problem by itself. In the absence of climate policy and if energy intensity improvements continue along historical trends, higher economic activity implies higher energy demand and greenhouse gas emissions. The increase in energy and carbon intensity improvements with higher economic growth is overcompensated by the larger growth in per capita income. Even under slow economic growth assumptions, GDP will rise significantly above today’s level, leading to an increase in greenhouse gas emissions.

Fossil fuel availability: Fossil fuel scarcity is insufficient to slow global warming significantly. Low fossil fuel availability leads to levels of greenhouse gas emissions that are higher than those under climate change stabilization. Nevertheless, fossil fuel availability significantly influences the energy mix and the CO2 emissions in scenarios without climate policy.

Energy use: There are robust patterns in projections of energy use in the absence of climate policy. Higher economic growth increases the scale of the energy system, which continues to be mostly supplied by fossil fuels. Structural differences in the energy supply mix occur for variations in fossil resource availability, particularly coal and oil supply. Models unanimously show an electrification of energy end use independently of economic growth and fossil resource assumptions.

Emissions phase out: Climate stabilization requires a phase out of global greenhouse gas emissions in the long run. For a stringent stabilization target compatible with the 2°C goal (a level of 450 ppm CO2 equivalent in the atmosphere), net emissions have to be nearly phased out by 2100. For a less ambitious, but still stringent stabilization level of 550 ppm CO2e, emissions would need to be more than halved by the end of the century, and decline towards zero in the 22nd century.

Energy systems transformation: Climate stabilization implies a fundamental transformation of global energy systems. Climate stabilization requires a transformation to a low carbon energy system in the 21st century with historically unprecedented decarbonization rates. Models tell different stories when and what to reduce, but some robust patterns emerge. On the supply side, coal is rapidly replaced with non-fossil energy sources. On the demand side, models foresee a larger share of electricity and gases coupled with a strong reduction of solids. The structure of the energy transformation is largely unaffected by variations in fossil fuel availability and economic growth. The effect of fossil fuel availability on fossil fuel use is negligible in climate stabilization scenarios. Thus, climate policy effectively limits uncertainty about future fossil fuel use.

Carbon prices and mitigation costs: Variations in economic growth and fossil fuel availability can alter carbon prices and mitigation costs substantially. A supply push of fossil energy can be more easily neutralized with a carbon price signal than a demand pull due to higher levels of economic output. Thus, carbon prices vary more strongly with growth projections than with fossil fuel availability. Mitigation cost estimates are sensitive to economic growth and fossil fuel assumptions. Costs increase by approximately 30 to 100% from low to high economic growth, and from low to high fossil fuel availability

Weak policies: Current climate policies are insufficient for 2°C stabilization With the currently planned climate policies and pledged emissions reductions the world is not on track towards the 2°C target. If current trends of weak and globally uncoordinated climate policies continue, global mean temperatures are likely to increase by more than 3°C by 2100.

Delayed action: Delaying action greatly increases the challenge of keeping warming below 2°C. In case of a further delay in the implementation of comprehensive global emissions reductions the transformation effort needs to be compressed into a shorter period of time. These higher emission reduction rates required in such later-action scenarios imply, inter alia, i) faster decarbonization of the energy system, ii) faster reductions of energy demand, iii) more stranded investments due to pre-maturely retired fossil capacities, and iv) higher transitory economic losses during the phase-in of climate policies. The implications of delaying action until 2030 are considerably more severe than those of a delay until 2020. While the models are able to compute low-stabilization scenarios with a prolonged delay of action, the dramatic increase in mitigation challenges in case of policy delay until 2030 make it seem unlikely that such pathways can be implemented in the real world.

China: Climate stabilization implies a fundamental energy transformation for China. Carbon emissions from fossil fuel combustion in China are expected to double from 2005 levels by 2020. Different assumptions on climate policy driven carbon intensity reductions lead to a large range of 6-12 Gt CO2 emissions by 2050, as calculated with an energy system model of the Chinese economy (China-TIMES model). Climate stabilization scenarios from global models show emissions in China below or at the low end of this range in 2050. The emission trajectories differ across models but all peak during 2020-2025 for the 450 ppm CO2e target and 2025-2030 for the 550 ppm CO2e target. This indicates that stringent climate targets would imply ambitious emission reductions in China.

Africa: The rates of economic and population growth in Africa have profound implications for energy use and greenhouse gas emissions. Today Africa accounts for a modest 3% of global energy system CO2 emissions. The evolution of Africa’s emissions over the coming century depends critically on future population and income. Absent any climate policy, Africa could become a major emitter in the second half of the 21st century if economic growth in this part of the world is steady. In the shorter term, the extent of energy poverty and improvements in access to modern energy in Africa are also driven by assumptions regarding future population and economic growth. Slower economic growth and larger population growth result in a significantly slower transition to modern energy access and use on the continent.

Climate policies have a strong impact on energy resource markets, resource rents and energy security. Climate policies interfere with fossil fuel markets and reallocate rent incomes from providing scarce goods. The global losses of fossil fuel rents are overcompensated by revenues from carbon pricing. The losses of rents from coal are much smaller than those for oil, though coal is the fossil fuel that needs to be reduced the most. Achieving the 2°C target still allows using conventional and unconventional oil reserves. Large part of the coal reserve needs to be left underground.

Energy security is significantly improved by climate policy under all assumptions about resource availability and GDP growth. That is due to a reduction of risks associated with energy trade and an increase in the resilience of energy systems through higher diversity. Climate policy also makes total energy supply, the energy mix and energy trade more predictable and possibly easier to manage. Climate policies may also entail certain risks for energy security. In particular, deep penetration of solar energy in the electricity sector or biofuels in the liquid fuels sector may reduce the diversity of these energy systems by the end of the century.

Land use: Population, economic growth, and fossil fuel scarcity all have implications for land use. Larger populations require more food, increasing the extent of cropland area. Wealthier populations tend to eat more meat, a landintensive commodity, increasing cropland and pasture cover. Growing, wealthier populations also demand more energy. Fossil fuel scarcity drives increased consumption of bioenergy and land devoted to its production. All three of these effects lead to reductions in forest cover and increases in land-use change CO2 emissions.

Investments and innovation: Economic growth and fossil fuel scarcity can both stimulate clean energy innovation and non-fossil-fuel investments.

When economies grow faster energy resources are used more efficiently, but fossil fuels would remain the prevalent source of energy. In contrast, the expectation of high energy prices could redirect ample financial resources to R&D programs aimed at developing new energy sources.

Although economic growth and fossil fuel prices can create an economic opportunity for more investments in non-fossil energy technologies and clean energy R&D, still they would lag behind the levels observed in stabilization scenarios and would not induce emission reductions compatible with climate stabilization objectives. On average, baseline total R&D investments amount to about 67 billion 2005 US$/yr while they increase to almost twice as much (113 billion 2005 US$/yr) in the 450 ppm CO2e stabilization scenario. The availability of cheap gas resources would increase gas investments, mostly to substitute coal especially in coal-intensive countries. Yet, it would only marginally displace investments in clean energy innovation.

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Published Version

Publisher

Potsdam Institute for Climate Impact Research

Peer Reviewed

yes

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