The New Climate Economy (NCE), OVO Energy and Imperial College London have published two independent studies highlighting the financial savings resulting from a transition to a low-carbon economy.
In its report, NCE stipulates that through a full-scale integration of low-carbon and sustainable technologies into the current global economic system, the financial benefits could be more than US$26 trillion through to 2030, compared to the ‘business-as-usual’ case scenario. The report not only considers renewable energy deployment, but also a plethora of other issues, ranging from circular economy, smart urban development, the water economy, and land use cases.
For example, the global economy could earn $2.8 trillion by implementing carbon tax schemes and discontinuing subsidies for fossil fuels, alone. The report cites the International Energy Agency (IEA), saying that in 2016, subsidies for fossil fuels were twice as high than those for renewable energy. Instead, an effective carbon pricing scheme would unleash ingenuity to find the least cost and least carbon alternatives to energy and other infrastructure components.
As there is an alleged business interest to move into low-carbon alternatives, NCE’s analysts found that nearly 1,400 major companies, and some large development banks, have committed to applying a shadow internal carbon price scheme to make their investments “future-proof”.
The trend towards clean energy is also exemplified by the fact that currently, renewable energy generation capacity equivalent to 1,500 coal-fired power plants, is being constructed or planned. The NCE stipulates in its report that falling prices for battery storage are accelerating this trend further.
The report says that current electricity generation comprises 65% fossil fuels, more than half of which is coal. Renewables have experienced an uptake in recent years, but still only account for 24% of the global energy mix. Citing the International Renewable Energy Agency (IRENA), NCE’s analysts stipulate that doubling the world’s renewable energy capacity could result in savings for the global economy of between $1.2 trillion and $4.2 trillion.
Overall, energy infrastructure investments could amount $1.7 trillion in direct expenditures per year, or a third of total infrastructure expenditure until 2030. The expenditure could be slightly higher, if the 2°C target were to be met, though here considerably higher spending in the efficiency segment would be somewhat offset by lower spending on fuels, like coal and oil.
Additionally, the NCE report stipulates that adaptations of the global clean economy could result in the creation of 65 million jobs in the repsective sectors. According to the authors, there are already examples of modern schemes in place, which would ensure that the workforce currently employed by the coal industry would not be hard hit. In China, for example, four million to six million people could potentially retire earlier than is usually possible for workers, to avoid coal workers entering unemployment at the final stages of their work life.
In a similar report, British electricity company, OVO Energy, in cooperation with Imperial College London, have launched a report calculating annual household savings in the U.K., if a range of decarbonization technologies was deployed.
According, to the study, adding flexibility from thermal storage to electric heating, can save around $5 billion in system costs, and thus represents one of the lowest cost pathways to heat decarbonization. Additionally, intelligent EV and vehicle-to-grid charging could create savings of nearly $4.6 billion.
The study estimates that through high penetration of renewable energy into the British grid, the use of residential battery storage, as well as electrifying heating and transport, could result in savings in the range of $8.8 billion per year.
The authors calculated three scenarios with varying degrees of renewable energy penetration, the proportion of electric heating, and the use of EVs. The most ambitious scenario sees 25 million EVs on British roads, 21 million homes equipped with electric heating and assumes that 93% of electricity comes from renewable sources.
The entailing carbon emissions reduction would be around 65%. This scenario could ensure global temperatures stay within the 2°C target, if it was achieved by 2040, the authors claim.
Toby Ferenczi, OVO’s Director of Strategy, said, “Electrification and the intelligent use of residential energy technologies are absolutely critical to bringing down emissions and powering the future sustainably. This research shows that households up and down the country can each play a role in creating a balanced, flexible, and almost completely renewable energy system while at the same time saving over $258 a year.
“OVO continues to call for the Government, regulators and the industry to work together and adapt to this new energy system where demand flexibility makes energy cheaper for everyone.”