THE AVENUE JANUARY 13, 2010
The other day, I suggested that the world investing $10.5 trillion in new money on energy technology innovation by 2030 should become a crucial new benchmark in the world climate dialogue, one every bit as important as the goal of reducing carbon dioxide emissions by 80 percent by 2050. Now, I just want to add a quick note that $10.5 trillion--as big a number as it sounds--is actually a supportable, sensible goal in the larger scheme of things if the world is going to have a fighting chance at limiting climate change to acceptable levels.
Oh I know, $10.5 trillion--the world investment level suggested by the International Energy Agency’s World Energy Outlook-2009 as sufficient to limit the long-term concentration of greenhouse gases in the atmosphere to 450 parts per million and global temperature rise to around 2°C above pre-industrial levels--is a lot of money. And it’s an especially daunting figure given the current collapse in private-sector energy investment world-wide and the need to make the investments soon in order to stave off unacceptable climate warming by mid-century.
And yet, the fact remains that $10.5 trillion is affordable. To start with, the $10.5 trillion figure--which reflects additional investment on the part not just of governments in the developed world but also by the private sector and households and governments in the developing world--represents real money but never comes to more than 1.1 percent of world GDP. That’s a lot but a modest price for saving the world.
Look a little closer at the IEA figures, moreover, and you see that the $10.5 trillion really doesn’t actually cost that much. That’s because the costs of the additional investments needed to limit the long-term concentration of greenhouse gases in the atmosphere to 450 parts per million will be substantially offset by economic, health, and energy security benefits. For example, energy bills in transport, buildings, and industry are reduced by $8.6 trillion globally over the period 2010 to 2030, under the so-called “450 scenario” made possible by new energy technology investments. Fuel-cost savings in the transport sector alone amount to $6.2 trillion worldwide over the projected period. Likewise, a big reduction in air pollution emissions, particularly in China and India, means fewer public health costs and reduced costs of installing pollution control equipment. And then there is the fact that investing in clean technology has the potential of cutting cumulative OPEC oil-export revenues by 16 percent by 2030.
The bottom line: Delivering on any credible future scheme for getting atmospheric carbon dioxide stabilized at 450 parts per million is going to be a matter not just of rules and emissions targets but new technologies, and to get it done is going to require $10.5 trillion in new investment world-wide. Yet the fact is, it’s a doable path, and one we need to keep top-of-mind by making “10.5 by 2030” the new “it” number of the climate dialogue.