Zero-carbon economy possible by 2050, to cost only 1-1.5% of global GDP: Report
The Energy Transition Commission (ETC) has estimated that the required additional investment for achieving net zero carbon economy by 2050 — while significant in absolute dollar terms — will amount to no more than 1-1.5 per cent of global GDP ($1-2 trillion, annually).
This is affordable, given the current global savings and investments, particularly in the prevailing macroeconomic context of sustained low-interest rates.
“The scale of the required investment is small compared with the the massive public spending and fiscal deficits now being dedicated to stimulating the economy after the Covid-19 crisis. It is providing an opportunity to accelerate the energy transition,” ETC said in a report released on Wednesday.
ETC is a coalition of global leaders from across the energy landscape: Energy producers, energy-intensive industries, equipment providers, finance players and environmental NGOS.
The largest element of expenditure would be to build a global power system that can deliver 100,000 TWH per year. This would be for new renewable electricity capacity, transmission and distribution networks, battery storage for diurnal flexibility, and additional technology deployment to supply inter-day and seasonal flexibility.
This would represent a total additional annual investment of around $1-1.5 trillion, annually. The ramp-up of hydrogen production, transport and storage will also require massive investments either in electrolysis equipment or in the capital equipment for steam methane reforming or auto thermal reforming.
This investment could amount to around $3.7 trillion over 30 years, or $130 billion annually.
The upfront capital cost of light-duty electric vehicles (EVS) is likely to fall below those for internal combustion engine (ICE) vehicles by the mid-2020s. For medium and heavy-duty vehicles, decarbonisation will likely entail either battery-based electrification or use of hydrogen in fuel cell EVS. The former would dominate shorterdistance intra-city applications and the latter for longer distance.
The report said transportation is likely to become electric, in either battery or hydrogen fuel cell form, well before 2050 and far faster than many projections suggest. This is due to the inherent energy efficiency advantage of electric engines.
ETC works out scenarios to limit global warming to below 2°C and as close as possible to 1.5°C. For this, the world needs to achieve net-zero green-house gas emissions by around mid-century.
It said battery-based electrification and hydrogen will also play a significant role in short-distance journeys. But the limited energy density of batteries and the low volumetric density of hydrogen may make the use of liquid fuels necessary for long distances in the foreseeable future.
These fuels could come from either a low-carbon, sustainable bio-feedstock (like alcohol or biofuel) or from a power-to-liquid production route (ammonia in the case of shipping and synfuels in the case of aviation). The report said the impact of achieving a zero-carbon-emission economy on human welfare in 2050 will be hugely positive.