Addressing climate change will require substantial new investment in low-carbon energy and energy efficiency but no more than what is currently spent on today's fossil-dominated energy system, according to new research from the International Institute for Applied Systems Analysis (IIASA) and partners.
To limit climate change to 2 Celsius, low-carbon energy options will need additional investments of about US $800 billion a year globally from now to mid-century, according to a new study published in the journal Climate Change Economics. But much of that capital could come from shifting subsidies and investments away from fossil fuels and associated technologies. Worldwide, fossil subsidies currently amount to around $500 billion per year.
"We know that if we want to avoid the worst impacts of climate change, we need to drastically transform our energy system," says IIASA researcher David McCollum, who led the study. "This is the first comprehensive analysis to show how much investment capital is needed to successfully make that transition."
The study, part of a larger EU research project examining the implications and implementation needs of climate policies consistent with the internationally agreed 2 C target, compared the results from six separate global energy-economic models, each with regional- and country-level detail. The authors examined future scenarios for energy investment based on a variety of factors, including technology progress, efficiency potential, economics, regional socio-economic development, and climate policy.
Investments in clean energy currently total around $200 to 250 billion per year, and reference scenarios show that with climate policies currently on the books, this is likely to grow to around $400 billion. However, the amount needed to limit climate change to the 2 target amounts to around $1200 billion, the study shows.
The energy investments needed to address climate change continue to be an
|Contact: Katherine Leitzell|
International Institute for Applied Systems Analysis