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Q: “[is it] exponential, stupid!?”](https://image.slidesharecdn.com/michaelgrubb-infra4devkeynotepresentation-201202203657/85/Michael-Grubb-2020-Infra4dev-Conference-Keynote-presentation-4-320.jpg)
Michael Grubb: 2020 #Infra4dev Conference Keynote presentation
- 1. Michael Grubb Professor of Energy and Climate Change University College London
- 2. To begin at the end …. Infrastructuretotalcost (Energy,transport,comms) Greenhouse gas and other environmental impacts
- 3. Global energy costs Annual global emissions Time ‘Green’ futures •High-innovation system •Increasingly integrated across sectors •Low-carbon, ‘smart electricity’ •Biomass and electricity in transport •High capital costs…. •……but low operating costs ‘Brown’ futures • Continued dependence on fossil fuels • Unconventional and synthetic oil in transport • Low capital costs… •…but higher operating costs • … and a host of environmental issues beyond carbon PlanetaryEconomicsChapter10,“Transformingsystems”, Figure10-6:Twokindsofenergyfuture–thecarbondivide ‘Ignoranti quem portum petat nullus suus ventus est’ - Lucius Annaeus Seneca No wind favours those who don't know where they are going Diverging paths …. Topics for this talk: • Are we crossing the ridge? • What are the costs? • Policy foundations? • … and Covid? We are here
- 4. https://www.wemeanbusinesscoalition.org/s-curve-power-report/ Q: “[is it] exponential, stupid!?”
- 5. Notes: Comparison of linear extrapolation of historic trend in growth of renewables’ share of electricity generation (2008-2019 average rate), with exponential growth (7% annual increase), and with 2030 and 2050 benchmarks derived from Climate Action Tracker (CAT, 2020), Climate Ambition Benchmarks (CAB) (Climate Works Foundation et al., 2019), and ‘Our Paris-consistent benchmark’, based on the median of relevant scenarios from Huppmann et al (2018) Renewables in global electricity Hydro % contribution stable, New Renewables’ only 7% of global electricity generation
- 6. Notes: Comparison of linear extrapolation of historic trend in growth of renewables’ share of electricity generation (2008-2019 average rate), with exponential growth (7% annual increase), and with 2030 and 2050 benchmarks derived from Climate Action Tracker (CAT, 2020), Climate Ambition Benchmarks (CAB) (Climate Works Foundation et al., 2019), and ‘Our Paris-consistent benchmark’, based on the median of relevant scenarios from Huppmann et al (2018) Renewables in global electricity Hydro % contribution stable, New Renewables’ only 7% of global electricity generation …. Growing how, and how fast?
- 7. ` Growth rates of wind+PV – plausible tracks to global transitions … as measured 2010-2019, compared to S-curve dynamic 2010-2050, defined to median end-point from SR1.5 model database On track with 30%/year emergence growth rate, which also hits 2030 median benchmark but not those of more renewables-dominated scenarios Source: Grubb, Drummond and Hughues (2020), The Shape and Pace of Change in the Electricity Transition: Sectoral dynamics and indicators of progress, We Mean Business, Oct 2020 Note the huge change 2020 – 2030 especially under 30 – 35%/yr emergence growth rates
- 8. Notes: IRENA estimates of levelised cost of energy (grey) and cost data revealed by auctions and power purchase agreements (blue), for onshore wind, offshore wind and solar PV. Boxes show 5th to 95th percentile range. Lines show weighted averages. IRENA estimates of high and low range of new fossil fuel power generation shown in red. Data from IRENA (2020b). Major investment – but sustained momentum from dramatic cost reductions Onshore wind, offshore wind and solar PV levelised cost of energy (grey) and cont
- 9. Notes: Historic data for 2000-2009 from IEA (2018), and for 2010-2019 from IEA (2020a). But the trend of fossil fuel – carbon intensity – in conflict Historic (2000-2019) and projected (2010-2050) CO2 intensity of global electricity generation – linear and S-curve projections
- 10. Power: the cost of low carbon pathways depends on timing and demand management Early investments in renewables + demand management Investments in fossil fuel generation + stranded assets 3.0% of GDP per year 2.2% of GDP per year Investments in fossil fuel generation + stranded assets 3.0% of GDP per year urce: World Bank (2019), ‘Beyond the Gap’
- 11. Contrasting indicators point to trend transition risk? Traffic light summary (Executive Summary version) System element Indicator Current (2019) status /decadal trend (2010-2019) Paris-consistent? CO2 emissions and technology deployment Power system Total CO2 emissions +10% CO2 intensity (per kWh) -12% Wind Generation growth rate 17%/year average growth Solar Generation growth rate 41%/year average growth Wind and solar PV Combined share of total generation Increase from 2% to 8% Unabated fossil fuels Share of total generation 5.2 percentage point decline Electricity demand Demand growth substantially outpacing non-fossil fuel growth and mostly not displacing other carbon-intensive energy Costs and finance Onshore wind Global weighted average cost (auctions/PPAs) -28% Offshore wind Levelized cost of energy -29% Solar PV Global weighted average cost (auctions/PPAs) -69% All renewables Generation investment – share of renewables ~65%
- 12. What of Transport – will projections be realised? Mostly vehicles 10 million passenger EVs on the road today, along with more than 500,000 e-buses, almost 400,000 electric delivery vans and trucks and 184 million electric mopeds, scooters and bikes. Growth rate 40% per year
- 13. Dramatic movements … ` • Most international vehicle manufacturers now producing or launching lines of electric vehicles • Costs sharply declining • Growing number of countries moving to set phase-out date for sale of traditional vehicles • UK set to announce tomorrow - (20 Nov) bringing forward its ICE phase-out date from 2040 to 2030
- 14. Urban transport: Land use planning lowers investment needs by 20 percent and reduces emissions 0.37% of GDP per year 0.47% of GDP per year Dense cities & public transit Sprawl & individual mobility
- 15. Shared Micromobility Trips Grew by 62% in 2019 The number of micromobility trips grew 62% from 2018 to 2019 due to the large increase in scooter trips. Shared micromobility refers to small fleets of fully or partially human-powered vehicles including bikes, e-bikes, and e-scooters. Trips on scooters more than doubled from 2018 to 2019 while bike trips increased by 3% and e-bike trips increased 54%. Data collection by the National Association of City Transportation Officials (NACTO) began in 2010 and included only bike trips until 2018. Note: Data includes systems with over 150 bikes or scooters and includes only data reported by large cities. Data does not include private or closed campus systems like those operating on university campuses. For more detail, see the source report. Source: National Association of City Transportation Officials (NACTO), Shared Micromobility in the U.S.: 2019, Summer 2020.
- 16. With the right policies, investments of 4.5 percent of GDP will enable LMICs to achieve the infrastructure-related SDGs and stay on track to full decarbonization by the second half of the century Source: World Bank (2019), ‘Beyond the Gap’
- 17. Global energy costs Annual global emissions Time ‘Green’ futures •High-innovation system •Increasingly integrated across sectors •Low-carbon, ‘smart electricity’ •Biomass and electricity in transport •High capital costs…. •……but low operating costs ‘Brown’ futures • Continued dependence on fossil fuels • Unconventional and synthetic oil in transport • Low capital costs… •…but higher operating costs • … and a host of environmental issues beyond carbon PlanetaryEconomicsChapter10,“Transformingsystems”, Figure10-6:Twokindsofenergyfuture–thecarbondivide ‘Ignoranti quem portum petat nullus suus ventus est’ - Lucius Annaeus Seneca No wind favours those who don't know where they are going Diverging paths …. Topics for this talk: • Are we crossing the ridge? • What are the costs? • Policy Foundations? • … and Covid? We are here
- 18. with different characteristics and theoretical foundations, apply at different scales Three Domains of decision-processes Improved efficiency and service New technology waves 1. Satisficing Habits, myopia/present-bias, risk aversion, inattention to incidental / intangible costs & opportunities, individual diversity & experimentation, malleable preferences; network effects Behavioural and organisational economics DOMAIN Theoretical foundations Characteristics S O C I A L S C A L E T I M E H O R I Z O N 2. Optimising Economic optimisation based on relative prices, ‘representative agents’ with ‘rational expectations’, stable preferences and tech trends Neoclassical and welfare economics 3. Transform -ing Structural, technological, institutional and behavioural change, typically from strategising, innovation, infrastructure investment Evolutionary and institutional economics New markets, vs Incumbents Source: Planetary Economics
- 19. The ‘Dark Matter of macroeconomic growth’ • Macro-economic research points to two key areas of economic growth in addition to resource & capital accumulation: – Improving efficiency of many economic actors and structures throughout the economic system – Infrastructure, innovation and education • ie. First and Third Domain processes are recognised as important for macroeconomic development. Yet these remain – largely absent in global (or national) modelling – poorly charted in policy
- 20. H M L H Highest relevance M Medium relevance L Lowest relevance Satisfice Transform Optimise Domain Standards & Engagement Markets & Prices Strategic Investmen t ‘Smarter’ individual & corporate choices Cleaner products & processes Innovation & infrastructure 1 2 3 L/M H L/M L M H Policy pillars “The EU 3-targets approach is madness.. “ “Other policies such as feed-in tariffs, industry regulation and subsidies, are far less economically preferable than carbon pricing to reduce emissions… “ (OECD, 2013) I beg to differ … Ideal policy comprises a package … Key is to match the best instrument to the respective domain of decision-making
- 21. Global energy costs Annual global emissions Time ‘Green’ futures •High-innovation system •Increasingly integrated across sectors •Low-carbon, ‘smart electricity’ •Biomass and electricity in transport •High capital costs…. •……but low operating costs ‘Brown’ futures • Continued dependence on fossil fuels • Unconventional and synthetic oil in transport • Low capital costs… •…but higher operating costs • … and a host of environmental issues beyond carbon PlanetaryEconomicsChapter10,“Transformingsystems”, Figure10-6:Twokindsofenergyfuture–thecarbondivide ‘Ignoranti quem portum petat nullus suus ventus est’ - Lucius Annaeus Seneca No wind favours those who don't know where they are going Diverging paths …. Topics for this talk: • Are we crossing the ridge? • What are the costs? • Policy foundations? • … and Covid? We are here
- 22. Emerging post-COVID stimulus – mostly in the wrong direction
- 23. … though in global volume, much may hinge on future of US and Chinese stimulus developments .. Source: Vivid Economics, Green Stimulus Index
- 24. Covid • A huge macroeconomic shock • A dramatic episode of ‘Schumpeterian Destruction’ • – can it be made a creative one? • Keys will be: – A clear and compelling narrative of the opportunities (and the risks) – International financial cooperation (eg. underwriting) – Synthesis between financial and energy/transport policies – Central Banks need to care about how the money is used – Links between the lending, infrastructure contracts, and environmental revenue opportunities to underwrite 10-20 year payments (eg. carbon pricing, road pricing)
- 25. 25 Sector policy still crucial to accelerating decarbonisation `To overcome obstacles in international diffusion ‒ Country risk particularly in some developing countries create high cost of capital ‒ Some State-Owned Enterprises particularly in Asia still funding coal and sometimes impeding renewables ‒ Challenges may be exacerbated by aftermath of Covid (impact on debt and attention to sectoral reform) To reform power market structures appropriate to ‘free to run’, variable output power sources To provide the infrastructure of interconnection and electric vehicle charging To help incumbent industries adjust To promote both efficient use, and electrification of carbon-intensive end-uses
- 26. Global energy costs Annual global emissions Time ‘Green’ futures •High-innovation system •Increasingly integrated across sectors •Low-carbon, ‘smart electricity’ •Biomass and electricity in transport •High capital costs…. •……but low operating costs ‘Brown’ futures • Continued dependence on fossil fuels • Unconventional and synthetic oil in transport • Low capital costs… •…but higher operating costs • … and a host of environmental issues beyond carbon PlanetaryEconomicsChapter10,“Transformingsystems”, Figure10-6:Twokindsofenergyfuture–thecarbondivide ‘Ignoranti quem portum petat nullus suus ventus est’ - Lucius Annaeus Seneca No wind favours those who don't know where they are going Diverging paths …. We are here “.. Then took the other, as just as fair, And having perhaps the better claim, Oh, I kept the first for another day! Yet knowing how way leads on to way, I doubted if I should ever come back. I shall be telling this with a sigh Somewhere ages and ages hence: Two roads diverged in a wood, and I— I took the one less traveled by, And that has made all the difference.” Robert Frost
- 27. Michael Grubb Professor of Energy and Climate Change University College London