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Cost of decarbonising global energy system falls sharply, new report shows

Published on Tuesday by the International Renewable Energy Agency (Irena), the document also calculates that the savings from reduced externalities and avoided subsidies could outweigh the additional energy system costs by a factor of three to seven.


The study, titled ‘Global Energy Transformation: A Roadmap to 2050’, calculates that cumulative investments would need to reach $110-trillion by 2050 to transition the global energysystem towards a scenario that limits the rise in global temperature to below 2°C above pre-industrial levels.

The figure is $15-trillion higher than the current planned investment scenario of $95-trillion, which still risks putting the world on a pathway of a 2.6°C of temperature rise. It is a full 40% lower, however, than Irena’s 2018 projection for transitioning to a decarbonised energy system.


The cost decline is attributed to the continued fall in wind and solar photovoltaic (PV) costs, as well as the emergence of electrification solutions that are cheaper and more efficient.

Shifting the composition of investments away from the fossil-fuel sector towards energy efficiency, renewables and enabling infrastructure will, nevertheless, require a political commitment, as a portion of the additional investments are front loaded. In addition, the cumulative additional systemcosts over the period to 2050 add up to $21-trillion.

Irena director-general Francesco La Camera stresses, though, that the additional costs will be more than offset by cumulative savings of between $65-trillion and $160-trillion over the period, arising from lower human healthcare costs, environmental damage and energy subsidies.

“Viewed differently, for every $1 spent for the energytransition, there would be a payoff of between $3 and $7,” La Camera avers.

The calculation, he adds, does not take account of the lower water consumption, increased job creation and higher gross domestic product (GDP) associated with the deployment of renewable energy and energy efficiency. “By 2050, the energytransformation would provide a 2.5% improvement in GDP and a 0.2% increase in global employment, compared to business as usual.”

Launched at the Berlin Energy Transition Dialogue, the report argues that pathways already exist to meet 86% of global power demand from renewable energy by 2050, as well as to decarbonise other energy end uses by having electricity cover half of all global energy demand by that date.

To achieve the objective, global power supply would have to more than double over the period, with the bulk of it generated from renewable energy, mostly solar PV and wind.

“Renewable energy is the most effective and readily-available solution for reversing the trend of rising carbon dioxide emissions. A combination of renewable energy with a deeper electrification can achieve 75% of the energy-related emission reduction needed,” La Camera explains.

Under the scenario outlined by Irena, the share of electricityin total energy use would increase to almost 50% by 2050, up from 20% currently.

The primary drivers of increased electricity demand would be the introduction of more than a billion electric vehicles, an increased use of electricity for heat and the emergence of renewable hydrogen. Overall, renewable energy would supply two-thirds of final energy under the scenario outlined in the report.

South African Wind Energy Association CEO Brenda Martin, who also addressed the Berlin Energy Transition Dialogue 2019, says the transition from fossil fuels to renewable energy is gathering speed and that South Africacannot afford to be left behind.

In March, the World Economic Forum’s Energy Transition Index ranked South Africa 114 out of 115 economies in measuring progress in the transition towards a more sustainable and secure global energy system.

“Part of the problem is that, while the country’s Renewable Energy Independent Power Producer Procurement Programme launched in 2011 is widely regarded as a model for what can be achieved through private sector inclusion, its potential has been compromised by stop-start procurement in recent years,” Martin argues.

Future procurement of renewables capacity hinges on the finalisation of South Africa’s Integrated Resource Plan (IRP), which has not been revised since 2011. The 2019 IRP update is currently before the National Economic Development and Labour Council for final consultation ahead of promulgation. 


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