Transcript of "Project catalyst brief synthesis paper"
December 2009 PROJECT CATALYST BRIEF: Synthesis paper Urgent crisis demands immediate action Climate change is a solvable problem. The challenge of our time also offers an unprecedented opportunity to promote low‐carbon growth and sustainable development around the globe. The required technologies are available today—and dropping in price. A handful of policies, including renewable portfolio standards, fuel economy rules, appliance standards, and building codes, will spur the massive private sector investments needed to catalyze the global economy. And the price tag for this transformation is surprisingly affordable—less than 1 percent of global GDP over the long‐term. But a problem that is solvable today will soon become intractable. Greenhouse gases can persist in the atmosphere for centuries, and with each passing day, we are locking in new emissions sources, such as coal‐fired power plants and inefficient buildings, that will last for decades. If we wait any longer, the planet will face increasing risk of feedback loops that cause runaway climate change and irreversible changes in the biosphere. The Intergovernmental Panel on Climate Change (IPCC) has shown that warming of more than 2°C poses significant threats to human society and the natural systems we rely on for water, food, shelter, and other necessities. To have a 50/50 chance of containing warming to 2°C, long‐term greenhouse gas concentrations must be stabilized below 450 parts per million (ppm) of carbon dioxide equivalent (CO2e). Achieving this goal demands 17 gigatonnes (Gt) of mitigation by 2020, compared to business as usual (Exhibit 1). Under BAU, we will exceed 550 ppm within two decades. Unless all parties lift their ambitions, the likely outcome is warming of at least 3°C. Exhibit 1 – Global GHG emissions PRELIMINARY Gt CO2e per year 75 Reference 70 pathway 70 "Business as Usual" 65 61 -35 60 Low case of -17 current proposals* 55 52 High case of 50 current proposals* 45 44 40 35 450 ppm pathway 0 (with overshoot) 1990 2000 2010 2020 2030 Change relative to 1990 for 450 ppm pathway +17% -7% Percent * E.g., 20% vs. 30% below 1990 emissions in the EU Source: McKinsey Global GHG Abatement Cost Curve v2.0; Houghton; IEA; US EPA; den Elzen, van Vuuren; Project Catalyst analysis ‐ 1 ‐
Problem is solvable and affordable—with existing technologies The transition to a low‐carbon economy will be nothing short of a revolution in how we use energy, yet Project Catalysts bottom‐up analysis of more than 200 mitigation options shows that the net cost to society could be approximately zero. The “cost curve” in Exhibit 2 illustrates the price of each option and how much carbon it saves. Each column represents a different strategy—its width measuring the mitigation potential in tonnes of CO2e (compared to business as usual) and its height measuring the cost in Euros per tonne. Options on the left side of the cost curve, such as improved insulation in buildings, will offset the more expensive options on the right side of the cost curve, such as carbon capture and storage. The one‐third of mitigation strategies that pay for themselves through reduced energy use deliver a 17 percent average return on investment. Exhibit 2 – Global GHG abatement potential McKinsey global GHG abatement cost curve, 2020 (up to costs of €60/t, excluding transaction costs, 4% discount rate) 70 60 Solar PV 50 Reduced intensive agriculture conversion 40 Solar conc. Organic soil restoration Wind (high penetration) 30 Grassland management Pastureland afforestation Biomass Reduced deforestation Wind (low penetration) 20 from pastureland conversion Nuclear 10 Reduced deforestation from slash-and-burn agriculture conversion 0 Rice management 10 15 17 Gt 19 Gt 20 -10 Shift coal new build to gas Abatement potential -20 Electricity from landfill gas New waste recycling Gt CO2e -30 -40 Breakdown by geographic Breakdown by abatement -50 Cars ICE improvement location type: -60 • 5 Gt in developed country • 6 Gt for forestry Car aerodynamics improvement -70 Retrofit building envelope (commercial) geographies • 6 Gt for energy efficiency -80 • 14 Gt in developing • 4 Gt for low carbon energy Lighting – switch incandescents country geographies supply -90 -100 to LED (residential) • 3 Gt for agriculture Source: McKinsey Global GHG Abatement Cost Curve v2.0 Based on this analysis, we know that 19 Gt of mitigation is technically and economically feasible in 2020 costing below €60 per tonne. About one‐third of the mitigation comes from greater energy efficiency in buildings, transport, and industry; one‐fifth comes from low‐carbon power; and about half comes from better management of forests and agriculture. Project Catalyst has concluded that the 17 Gt of mitigation needed to keep warming below 2°C can be realized through three main strategies: 5 Gt are available in the developed world by pursuing mitigation measures that cost less than €60 per tonne. 9 Gt can be achieved through a combination of public finance and carbon market flows from the developed to the developing world. 3 Gt will be found in the developing world in energy efficiency measures that deliver a positive return on investment. Even if we exclude energy efficiency savings and include transaction costs for the whole set of mitigation opportunities, the global incremental cost of achieving a 450‐ppm path is about €100 billion per year. By comparison, fossil fuels now receive annual subsidies of €240 billion. ‐ 2 ‐
Lowcarbon economy generates growth and cobenefits A growing body of studies shows that a period of elevated low‐carbon investment is likely to stimulate economic growth, as have past investments in railroads, highways, electrification, and broadband. Research from around the world has shown that nations can dramatically boost their carbon productivity as they grow their economies. Moreover, low‐carbon policies and investments create more jobs than high‐carbon options. California alone has created 450,000 energy efficiency jobs and Germany has created over 200,000 jobs through investments in renewables. In Mexico, a low‐carbon growth plan would create an extra 500,000 jobs by 2030, compared to business as usual. The poorest countries will bear the brunt of the impacts of climate change, even though these nations have contributed very little to the problem, but solutions to the crisis also offer the developing world the chance to leap‐frog a half‐century of unsustainable high‐carbon technology. Many mitigation strategies deliver important co‐benefits, including enhanced economic competitiveness, less volatility in energy prices, more reliable power supplies, higher agricultural productivity, and improved public health from reduced pollution. Key elements of a political agreement To avoid dangerous climate change, a high‐level political agreement should include: 1) Global longterm goals. The agreement should build on the consensus around 2°C and include specific targets for atmospheric CO2e (e.g., 450 ppm) and maximum emissions for milestone years (e.g., less than 19 Gt in 2050, which is 50 percent below 1990 levels). 2) Lowcarbon growth plans. These would blend development and mitigation goals by detailing the country’s long‐term plans for sustainable, climate resilient growth. Countries that have already adopted rigorous plans have shown how these strategies can strengthen domestic political consensus for action and increase international transparency. Preparing these plans and reporting on their progress would be required for all nations except least developed countries, which would voluntarily engage in the process. 3) A registry or schedule of commitments and actions. Global action on climate change will hinge on domestic policies and there are several proposals for capturing these commitments in an international registry or schedule. This mechanism would recognize positive actions, build trust, and allow the international community to track progress. In essence, the low‐carbon growth plans would be a pledge of “what we plan to do,” while the registry would explain “what we are doing.” 4) Developed country binding reduction targets. The agreement should reflect a collective objective from developing countries to cut emissions 80 percent or more by 2050, plus include a commitment to a 2020 target. Developed countries would make individual commitments on national reduction targets and enter them in the international registry along with their supporting policies and actions. 5) Nationally appropriate mitigation actions (NAMAs). The registry would incorporate NAMAs from developing countries that cover both self‐financed actions and activities for which financial and technical support is required. Besides committing to the NAMAs, the developing countries would provide estimates of their emissions mitigation and details on the methodology for estimating these savings. ‐ 3 ‐
6) Adaptation. Even if warming is contained to 2°C, substantial investments in adaptation will be required, especially in the developing world. The agreement needs to include pledges of financial support, institutional arrangements that are equitable, and guarantees that funding will supplement existing aid—not replace it. 7) Forestry. Forestry accounts for one‐third of the cost‐effective mitigation potential that is available in developing countries, so urgent action on this issue is the only way to ensure that global emissions peak before 2020 and warming is kept below 2°C. Considerable progress has been made and an efficient, equitable, results‐based framework for action—known as “REDD+”—is now on the table. This approach, which could be solidified in Copenhagen along with initial funding, could cut forestry emissions 25 percent by 2015. 8) Technology. An agreement could include a “Clean Energy to Fight Poverty Fund”: a network of centres of excellence to encourage R&D collaboration, specific joint technology projects between developed and developing countries, and measures that encourage intellectual property sharing while maintaining incentives for innovation. 9) Finance. An accountability system would ensure that developed countries supply promised funding and developing countries deliver mitigation based on that support. The following elements would lay the groundwork for such a system: An institutional structure that incorporates existing multilateral organizations, new structures, and bilateral funding under a common framework guided by and accountable to the Conference of Parties. A “fast start” fund that immediately commits substantial funds (about $10 billion per year from 2010 to 2012) to support preparation of low‐carbon growth plans, adaptation planning, improved emissions measurement, and other early actions on mitigation, forestry, and technology. A restructured carbon market that stimulates activity, incorporates new sector‐based mechanisms, improves environmental effectiveness and strengthens regulation. A highlevel agreement on longterm funding that sets targets for scaling up financing flows from public and private sources, and sets out the mechanisms by which funding will be raised (e.g., public finance, carbon markets, and levies on international aviation and shipping). 10) Measurement, reporting, and verification (MRV). Any agreement will require robust oversight to ensure commitments are honoured. Registered NAMAs that receive financial support and developed country financial commitments would be subject to MRV. A package of “enhanced national communications requirements” should include: Strengthened reporting on emissions and baselines Regular reporting on progress against long‐term goals in low‐carbon growth plans Highly transparent, detailed reporting on achievements versus registered commitments *** Project Catalyst is an initiative of the ClimateWorks Foundation and the European Climate Foundation. This paper is a summary based on the Project Catalyst publication Towards a global climate agreement Synthesis paper. The full paper can be found at www.project‐catalyst.info. ‐ 4 ‐