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IEA: Decarbonising the economy will save $71 trillion by 2050

Economic growth can be decoupled from emissions, while natural gas could lose ‘low carbon’ status by 2025 as renewables boom

Source: Dong Energy

Source: Dong Energy

By Sophie Yeo 

Replacing fossil fuels with renewables as the world’s primary source of energy will not only save the planet from dangerous levels of warming – it will also save the global economy US$ 71trillion by 2050.

This is the finding of a report, Energy Technology Perspectives 2014, released today by the International Energy Agency, which looks at the direction of the energy sector over the next 40 years.

The changes needed to keep the world within 2C of warming— a widely agreed target in efforts to tackle climate change – will benefit the global economy, confirms the report, although a “coordinated policy approach” will be required to unlock these savings.

“The USD 44 trillion additional investment needed to decarbonise the energy system in line with the 2DS [2C scenario] by 2050 is more than offset by over USD 115 trillion in fuel savings – resulting in net savings of USD 71 trillion,” its says.

The findings support those who say that it is possible to decouple economic growth from emissions—something the EU has strongly advocated as it has increased its wealth while at the same time remaining on track to reduce its emissions by 20% by 2020. In China, meanwhile, emissions have rocketed in order to sustain economic growth of around 10% a year.

Energy

The future of the energy system will depend upon the price of renewables, energy efficiency, carbon capture and storage (CCS) technology and new climate policies, the report forecasts.

In a 2C scenario, it predicts that renewable energy will provide around 65% of electricity by 2050, compared to 20% in 2011. At the same time, it warns that the continuing rise in the use of coal threatens to undermine progress made in renewables, with growth in coal-fired generation since 2010 amounting to more than that of all non-fossil fuel sources combined.

If climate goals are to be achieved, progress in the development of CCS must be achieved quickly, although its future currently remains uncertain due to a lack of political and financial achievement.

CCS will soon have to be applied to natural gas, adds the report, which is set to lose its status as a low-carbon alternative by 2025, as the increasing volume of renewables on the grid will mean that the energy supplied by gas becomes higher than the shifted average carbon intensity.

But in the short term the report forecasts that gas will continue to play a key role in increasing the integration of renewables and displacing dirtier coal-fired generation. It adds that the outcome of the competition between coal and gas is likely to be determined by economics rather than technology: “If coal and CO2 prices are low, unabated coal plants are sufficiently flexible and will remain profitable,” it says.

Meanwhile, the report forecasts that it is improvements in energy efficiency that will account for the greatest reductions in greenhouse gas emissions by 2050.

Carbon price

A price on carbon continues to show “strong potential” as a means for governments to stimulate the low carbon investment needed to transform the energy sector, the report says, but it is far from being the only solution.

“In the absence of carbon markets, innovation in technology deployment, policy action and investments can enable progress,” it says.

Overall, the report concludes that policy and technology will become driving forces in transforming the energy sector over the next 40 years, and have the potential to avert a future of increasing energy insecurity and a volatile fuel supply.

“Recent technology developments, markets and energy-related events have asserted their capacity to influence global energy systems. They have also reinforced the central role of policy in the increasingly urgent need to meet growing energy demand while addressing related concerns for energy security, costs and energy-related environmental impacts.

“Radical action is needed to actively transform energy supply and end use.”

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  • Jens Rundberg

    Are they really claiming that EU is on track decoupling growth from emissions? It is not honest when CO2-emissions from the products we import from China and consume in EU is not accounted for in EU, but in China. So who controls the rules about where to measuse the CO2-emissions? Change the rules!

  • jack lehr

    No, no – 150 TRILLION! No, wait – A BILLION TRILLION! Yeah, yeah, that’s it. I love how the prediction ends with a one (71) – a classic sales technique. Perhaps all the science is really “settled” (hard to see how with such a complex problem, but who knows?), but the bullying of not coincidentally left wing new age fascists really beggars belief of whatever they say.

    • Matt

      I thought the classic sales technique was to end with a nine? “Left wing new age fascists”. Preposterous nonsense – I presume you’ve never encountered anyone who works at the IEA.

  • Janetk

    If I understand it, renewable energy is cheaper in the long run, while coal and natural gas are cheaper in the short run but disastrous in the long run. It took cholera epidemics for sewer systems to be installed in the 19th century (yet to be installed in large areas of third world), must we wait for more devastating epidemics, “natural” disasters, unbreathable air, undrinkable water to make a full scale commitment to renewable energy? As the article said, the energy sector is policy driven. Time for policies to favor the public over short term profits.

  • Lester Forsythe

    US DOE just predicted exactly the opposite…. “However, fossil fuels continue to supply almost 80 percent of world energy use through 2040.” http://www.eia.gov/forecasts/ieo/

  • Lester Forsythe

    Just confused, because DOE says just the opposite………..http://www.eia.gov/forecasts/ieo/

  • Shootist

    For the love of God, before you do anything as stupid and short sighted as all that, call Freeman Dyson and see what he thinks (’cause he’s smarter than you and is a “climate scientist” to boot).

    “The polar bears will be fine.” – Freeman Dyson

    “Generally speaking, I’m much more of a conformist, but it happens I have strong views about climate because I think the majority is badly wrong, and you have to make sure if the majority is saying something that they’re not talking nonsense.” – Freeman Dyson

    “What I’m convinced of is that we don’t understand climate.” – Freeman Dyson

    As a general rule, if Freeman Dyson doesn’t understand something, you don’t, either. And yes, IEA, I am talking to you.

    “The polar bears will be fine.” – Freeman Dyson

  • snafubar

    So what I want to know is, when the world goes into a deep freeze what are you gonna do about it? Sun spot activity, which is not included in IPCC models, is a minimum right now. Think of New York Harbor freezing, like it did in the late 1700′s. Increases in death and destruction is due to overpopulation in coastal areas. We are living where we shouldn’t be.

    • Jimmy

      What?

  • ekaneti

    These people would be complete jokes were it not for the fact they’d turn society into a toltalitarian police state.

  • moovova

    “However, fossil fuels continue to supply almost 80 percent of world energy use through 2040. Natural gas is the fastest-growing fossil fuel in the outlook.”

    http://www.eia.gov/forecasts/ieo/

  • MyNameisGuyFaux

    Great money-saving opportunity, but our politicians don’t get bribed from mother nature to pass corrupted legislation.

  • Brad

    The market should choose this solution because of the lower cost. However, I fear that it won’t choose this solution quickly because of the power of the fossil fuel industry and the extreme short term orientation of the market. It’s more spending up front for savings in the future, and short term oriented market system doesn’t like that kind of solution. Putting a price on carbon and making polluters pay to use our shared atmosphere as their toxic waste dump is what we need to overcome these obstacles.