$5.7 trillion must be invested in renewables by 2035, even under the International Energy Agency’s more conservative forecast – which would still result in global warming of 3.5°C. In 2009, $115 billion was invested in renewables, by comparison.
The IEA’s World Energy Outlook report released on Tuesday warned the timid conclusion last year’s Copenhagen climate talks has added $1 trillion to the cost of keeping greenhouse gas concentrations at 450 parts per million, which scientists say will contain global warming at 2°C, preventing runaway climate change.
Renewables would make up nearly one third of the global electricity supply in 2035 under the New Policies Scenario, up from 19% in 2008 – this assumes that governments cautiously fulfil the policy promises made at Copenhagen. To meet the more ambitious 450 Scenario target, renewables will need to make up 45% of the electricity supply and 20% of the heat supply in 2035.
The shift to renewable electricity will avoid 2 billion tonnes of carbon dioxide equivalent in 2035 under the New Policies Scenario, compared to business as usual. Oil importing countries would save around $135 billion in 2035, as an additional benefit, the IEA says. The 450 Scenario would see nearly 4 billion tonnes saved.
Government subsidies will need to continue to rise in order to deliver these increases, the IEA says. Public spending to support renewables reached $57 billion last year, the first time such a calculation has been produced. This is up from $41 billion in 2007 and $44 billion in 2008. But government spending must rise to $205 billion in 2035 – although costs of installing renewable energy will decline, the IEA puts the increase down to the scale of expansion needed.
This is set against fossil fuel subsidies of $312 billion in 2009, the report shows. Iran paid out the most to support fossil fuel sales last year, making up more than $60 billion of the total figure.
Meanwhile, the glut of natural gas on the market could pose problems for the growth of renewables, however, the report warns. The current oversupply – which is already affecting the ability of US renewables projects to sign power purchase agreements with utilities – will peak soon, but only “dissipate slowly”, the IEA says.
“The gas glut will peak some time soon, but it will be with us for about 10 years,” said Fatih Birol, chief economist at the IEA, adding that this “may not be good news” for renewables. “Renewables may have major difficulties, we see the first signs of this in some countries such as the US,” he said.
The IEA is due to release an analysis of the gas market and its implications in 2011.
By. Jess McCabe