The global economy could save as much as US$1.8 trillion between 2015 and 2035 if governments embark upon a large-scale transition to a low-carbon economy, finds two reports from the Climate Policy Initiative (CPI).
Both reports, titled Moving to a Low Carbon Economy: The Financial Impact of the Low-Carbon Transition, and Moving to a Low Carbon Economy: The Impact of Different Policy Pathways on Fossil Fuel Asset Values, posit that the adoption of renewable energy over the next two decades will bring about pivotal savings in financing worldwide.
Significantly reduced operational costs associated with the extraction and transportation of coal and gas could be replaced by the far cheaper option of increasing financial support for the development of solar, wind and other renewable energies, say the CPI reports.
With governments most exposed to potential losses in the value of existing fossil fuel assets (governments control around 70% of the world’s coal, oil and gas resources), energy policymakers should seek ways to minimize their governments’ risk to external forces. The best way to do this, finds the report (which was commissioned by the New Climate Economy project), is to initiate policies that will trigger a transition to a low-carbon economy.
Net importers have much to gain
Regions such as Europe, North America, China and India import more oil than they produce and, as such, stand to benefit most from reducing their oil consumption. But oil-producing countries may also move to diversify their own economies in anticipation of oil-importing countries seeking to reduce their reliance on oil. In this scenario, many of the worlds leading governments could effectively end oils stranglehold within a generation benefiting economies on both sides.
Coal, additionally, offers an easier win, finds the CPI. Transitioning away from coal towards renewables could lower a countrys emissions by as much as 80%, and all for just 12% of the asset value at risk, making this the most cost-effective path to a cleaner future, particularly for Europe and the U.S. In China and India, there will need to be alternative energy sources in place before any widespread decommissioning of coal-fired plants can take place.
Improving financing vehicles for renewable energy sources such as solar power will also deliver a smoother transition to a low-carbon economy, argues the report, and could reduce the cost of low-carbon power by 20% in Europe and the U.S. For developing countries, such policies could prove even more effective, lowering low-carbon costs by up to 30%.
"For policymakers around the world wondering whether the transition to a low-carbon economy will help or hurt their countries’ ability to invest for growth, our analysis clearly demonstrates that, for many, the low-carbon transition is a no-brainer," said CPI executive director, Tom Heller. "It not only reduces climate risks; its benefits are clear and significant."
The CPI’s senior director David Nelson adds that the analysis shows that the right policy choices over the next 20 years can ensure governments reduce emissions, stabilize their energy supply and free up trillions of dollars collectively that can be used for investment in other parts of the economy.
Solar heating a valuable proposition in U.S.
An equally effusive report into the cost saving potential of solar heating and cooling (SHC) technology was also published today by the Solar Energy Industries Association (SEIA) of the U.S.
The report is intended to demonstrate the many benefits achieved by utilizing solar heating and cooling systems on U.S. businesses and commercial buildings, and finds that some systems could save up to $1.5 million over their lifetime.
"From hotels to grocery stores to breweries, solar heating and cooling technology is proven to lower energy use and save money for Americas commercial buildings," said SEIA president and CEO Rhone Resch. "And not only can SHC improve a business’ bottom line, solar is a zero-emission, renewable resource that helps protect our environment.
"This important new study should be taken as a handbook for any commercial building owner or business with significant heating, cooling or hot water use."
SEIAs report details a handful of case studies where SHC installations have been installed, and projects the potential savings each application will bring. With heating and cooling representing 35% of the energy costs of most commercial buildings in the U.S., such installations are proving to have a dramatic effect in lowering energy bills.
The Solar Heating and Cooling Roadmap, released in 2013, found that the SHC market could save more than $61 billion in future energy costs, and create more than 50,000 U.S. jobs, if 100 million new SHC panels were installed atop commercial roofspace nationwide.