With the COP24 in Katowice in Poland just around the corner, the Intergovernmental Panel on Climate Change (IPCC) has released a new report assessing the current efforts in climate change mitigation, and calculating the costs and benefits of staying with a 1.5°C warming scenario, compared to a 2°C scenario.
The IPCC presented its latest report on Monday, in Incheon, South Korea, highlighting that limiting global warming to 1.5°C would require unprecedented changes in all aspects of society, and they would need to be implemented very rapidly and at a large-scale.
Until 2035, the world would need to invest US$2.4 trillion for the transition of the industrial, energy, agricultural, residential and transport sectors. For the energy sector, the panel recognized the critical role solar PV and storage are playing, as system costs for both have plummeted over the last years, making it a highly affordable source of energy, also for regions where there had been no access to electricity, so far.
The benefits of limiting global warming to 1.5°C instead of 2°C would be significant, as the 91 authors point to the fact that current warming levels of 1°C already have cause sea-level rise, increasing the intensity and frequency of extreme weather events and droughts. The scientists claim that staying within the limits of 1.5°C would decrease the likelihood of an ice-free arctic from once per decade in a 2°C scenario, to once per century. Furthermore, coral reefs would decline by 70-90% instead of >99%.
Valerie Masson-Delmotte, Co-Chair of Working Group I, said on the matter, “The good news is that some of the kinds of actions that would be needed to limit global warming to 1.5°C are already underway around the world, but they would need to accelerate.”
Sustainable growth enabled by renewables
To meet the target, “rapid and far-reaching” transitions in all sectors are necessary. The report suggests that to meet the target, global human-caused carbon emissions, would need to decrease by 45% from 2010 levels, by 2030, to reach “net-zero” by 2050.
“This report gives policymakers and practitioners the information they need to make decisions that tackle climate change while considering local context and people’s needs. The next few years are probably the most important in our history,” said Debra Roberts, Co-Chair of IPCC Working Group II.
According to the report, urban areas prompt higher energy consumption, due to higher income, mobility, and overall consumption. Bearing in mind that until 2050, an additional 70 million people will reside in urban areas, each year, the authors highlight the importance and urgency with which the adaption of an urban energy system should be driven.
Due to this high energy intensity, and high growth rate of urban areas, the report makes clear that improved energy governance with regards to smart grids and energy efficiency would have a particularly large impact.
The IPCC further highlights that managing Sustainable Development Goals (SDGs) is critical. Herein, the authors see that if not carefully arbitrated, potential trade-offs are looming. In contrast, if well managed, the panel see that staying on a 1.5°C pathway could create synergies between SDG’s and combating climate change.
Overall, the synergies prevail in the report provided by the IPCC. Apart from providing clean energy via micro-grid systems in rural low-income areas, a clean tech turn or “fuel switch” could also provide cleaner air in urban areas, helping with health goals. Additionally, extreme weather events, like droughts or storms, can have disastrous effects on farmers yields, hampering progress on food security goals.
Financial requirements for the 1.5°C goal
Looking at the investment requirements, the IPCC see that large-scale financial action is needed to enable the deployment of low carbon energy systems. According to their analysis, around $2.4 trillion would need to be invested between 2016 and 2035. This would be tantamount to 2.5% of global GDP.
A report by DNV GL presented a corresponding calculation of the costs of the energy transition. According to DNV GL, overall global energy expenditure will increase by 33%, from $4.5 trillion in 2016, up to $6 trillion in 2050. However, because global GDP is also expected to rise by a significant 130%, the proportion of global GDP invested in the world energy systems will decrease from 5.5% in 2016, down to 3.1% in 2050.
The IPCC estimates that between 2015 and 2050, the average energy-related mitigation investment needed to stay within 1.5°C target would need to be around $900 billion per year. In its analysis, the panel considers six different pathways to reach this target, for which the investments differ within the range of $180 billion to $1,800 billion.
This corresponds to total annual average energy supply investments of $1,600 billion to $3,800 billion and total annual average energy demand investments of $700 billion to $1000 billion for the period 2015 to 2050.
The IPCC estimates that this would result in a 12% hike in energy-related investments, in the range of 3% to 23%, depending on different pathways, and relative to the investments necessary for meeting the 2°C target. Furthermore, the report stipulates that the average annual investment on low-carbon and energy efficiency ought to be upscaled by a factor of four to five by 2050, compared to 2015 levels.
Solar and storage are on the right path
The report identifies that solar PV and wind have experienced “dramatic” growth trajectories, and highlights the significant cost reduction of solar PV. Thus, the technology is considered a key driver and enabler of the 1.5°C target.
Furthermore, especially solar PV in combination with battery systems are lauded as a cheap, easy to use and flexible energy resource. The authors laud its versatility, citing 19 million installations in Bangladesh, to demonstrate how this technology could be installed with relative ease in low-income areas and is simple enough to be used by the masses.
Additionally, the IPCC sees that scientific advancements in solar PV made the technology viable for use in areas of low solar irradiation, such as north-western Europe.
Growth in storage technologies is also considered a key driver of this development. The panel considers the majority of installed storage capacity to fulfill the function of grid flexibility resources (GFR). Herein, the majority comprises pumped hydro with an installed capacity of 150 GW.
Though grid-connected battery storage comprises a mere 1.7 GW, the authors also recognize the technology’s enormous growth over the last years. They link the growth to cost reduction as a result of mass EV production in the last years. The report further establishes that currently, examined alternative storage technologies, other than lithium-ion, bear potential, but are outcompeted by lithium-ions cost advantage due to its high degree of commercial maturity.