New collaborative approach can reduce the cost of clean energy by US$550 billion over the next decade
The world can save an estimated US$550 billion on the cost of deploying clean energy technologies over the next decade, putting them on a path to cost competitiveness, if countries work together to accelerate innovation by unlocking global collaboration. This is one of the key findings in a new report, United Innovations: cost-competitive clean energy through global collaboration, published today by the Carbon Trust, with funding from the UK Foreign and Commonwealth Office Prosperity Fund.
While most of the technologies needed to complete the transition to a low carbon energy system already exist, their costs need to be reduced further and their deployment accelerated to have any chance of meeting 2050 climate change targets. Global collaboration can help on both fronts, but it has proven extremely difficult to generate real momentum for action. The right stakeholders need to be around the table and align priorities and incentives in a way that maximises mutual benefits and minimises risks.
Over the past two decades there have been hundreds of bilateral and multilateral commitments to work together on low carbon technology innovation. Some have delivered successes but the overall impact has been less than expected. In many cases the original intentions behind agreements have been lost and there has been limited implementation, such as joint spending on pilot projects and demonstrations of innovative technologies.
Carbon Trust analysis, based on the International Energy Agency’s Energy Technology Perspectives 2015 2 Degree Scenario, estimates that US$5 trillion will need to be invested into the deployment of low carbon energy technologies by 2025. This cost could be reduced by more than US$550 billion through collaborative innovation. This creates a huge economic opportunity for countries willing to work together strategically on developing new innovations and deploying existing low carbon technologies.
While competition in the private sector remains essential, lack of collaboration between national programmes has resulted in a duplication of efforts and a waste of resources. More significantly, the lack of effective coordination has resulted in a number of hurdles emerging, such as misaligned incentives and contradicting regulatory regimes, which often prevent private sector involvement at scale.
Tom Delay, Chief Executive of the Carbon Trust said:
“Transitioning to a low carbon energy system is beyond the capability of any single country. Climate change is a global problem that needs global solutions. We are seeing unprecedented levels of commitment from COP21 in Paris, but to ensure we keep to a 2 degree scenario the road through Paris cannot only be paved with good intentions.
We need action, we need more of it and we need it now. We cannot afford to wait any longer. The technological foundations of the transition to a low carbon energy system must be laid in the next ten years.
We must work together to make it happen, but we recognise that collaboration can be a particularly difficult endeavour. The good news is that working together is good for a country’s national interests, creating a bigger share of a bigger prize.”
Newly industrialising economies and developing countries have also faced difficulties in accessing and adapting low carbon technologies, and have seen little involvement in high profile global initiatives. The Carbon Trust has developed a framework for international collaboration which seeks to address these barriers and provide new mechanisms for streamlining existing initiatives and help turn words into action.
In United Innovations, the Carbon Trust calls for a new approach to enhance international efforts. The report highlights the urgent need to address serious barriers to the research, development and deployment of low carbon technology at a global level. It also explains how this can be achieved through a new approach to partnership and adopting best practice models, which will enable governments and businesses to collectively create initiatives that deliver the energy technologies needed to keep global warming below 2 degrees.
The report includes five technology case studies with practical recommendations to illustrate the different types of initiatives that are needed to unlock global collaboration:
- Carbon capture and storage (CCS)
- Energy storage
- Offshore wind
- Smart grids and electricity networks
- Marine energy
The Carbon Trust has explored the individual innovation needs for each of these technologies, as well as the drivers for collaboration. This has included understanding the existing gaps in their development, as well as the enabling environment for businesses. Recommendations are made for specific project design and implementation.
The report also highlights that developing and newly industrialised countries will represent 90 percent of the growth in future energy consumption by 2050 – they can only overcome this challenge by working with developed countries, but as active participants not as passive recipients of technology transfers. Innovations will emerge from the need to adapt technologies to industrialising countries local contexts and needs.
The full report can be read at http://www.carbontrust.com/unitedinnovations
Carbon Capture & Storage (CCS)
Collaboration can support joint-industry demonstrations
The primary innovation needs for CCS are multiple source-to-sink demonstration programmes. Collaboration across governments and industry can overcome high investment risks and share the costs of running these programmes. A commitment by countries to support a pipeline of demonstrations could be fundamental in providing incentives to invest, building on the success of the full scale demonstration at Boundary Dam.
Collaboration can test business models and align integration procedures
Energy storage technologies can be split into bulk and distributed storage. The former requires government funded joint-industry demonstration projects, which collaboration can unlock through the pooling of funds. The later needs a greater degree of coordination and knowledge sharing, also at early innovation stages, building on partnerships such as the Joint Center for Energy Storage Research (JCESR). Across technologies, collaborative initiatives can create new test centres that support standardisation efforts and business models to incentivise innovation across stakeholders.
Collaboration can coordinate and share information
Beyond investment in technical areas, such as the development of new foundations, there is a greater need for developers to share performance data. Governments need to collaborate in setting long-term offshore wind targets paired with support structures that incentivise joint investment in areas of mutual benefit and provide mechanisms for disseminating performance data. Multi-year R&D and demonstration programmes, such as the Offshore Wind Accelerator (OWA), can secure industry investment.
Smart Grids & Electricity Networks
Collaboration can facilitate technology standardisation
The main barrier hindering the deployment of smart grids is a lack of interoperability across smart grid components. Collaboration across the public sector can provide a push to standardise technologies across electricity markets. It can also enable deployment through demonstration projects that test business models and integrate technologies at a systems-level, such as GRID4EU.
Collaboration can create targeted innovation programmes
Wave energy requires additional research into components to improve reliability and a greater degree of convergence across designs. Tidal stream technologies however need to transition to initial array demonstration projects. Collaboration can aid in both cases by providing targeted innovation programmes and coordination, as well as support for demonstrations.