Technology, development and climate: the need for an integrated approach Bert Metz, European Climate Foundation

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1 Technology, development and climate: the need for an integrated approach Bert Metz, European Climate Foundation

2 Key messages: 1. Climate change is a development problem (causes and impacts) 2. Solving climate change is also a development problem 3. An international climate change regime should be based on a transition to low carbon, climate resilient development 4. Technology is a means to solve climate change, not a goal in itself 5. Institutional structures in such a regime need to integrate technology in the instruments needed for the transition to low carbon, climate resilient development. 1

3 Climate Change: a development problem Source: IPCC TAR 2

4 Scientific evidence suggests that a 450ppm CO 2 e pathway with overshoot gives a 40 60% probability to limit global warming to 2 degrees Global GHG emissions and pathways for GHG stability Probability of temperature increase under 2 C Expected temperature increase 70 GtCO 2 e per year Peak at 550 ppm, long-term stabilization 550 ppm Peak at 510 ppm, long-term stabilization 450 ppm 60 Peak at 480 ppm, long-term stabilization 400 ppm ppm pathway 450 ppm pathway 400 ppm pathway C 2.0 C 1.8 C 450ppm is not safe it has a 40 60% probability of warming exceeding 2 o C Even 2 o C will require significant investment in adaptation * Climate impact estimates for current proposals calculated using C-ROADS model Source: IPCC WG3 AR4,, den Elzen, van Vuuren; Meinshausen; Global GHG Abatement Cost Curve v2.0, Catalyst analysis 3

5 17 Gt of reductions below BAU in 2020 are required for 450ppm Global GHG emissions, Gt CO 2 e per year Reference pathway BAU Current proposals ppm pathway (with overshoot) Change relative to 1990, % 29% 20% -3% Source: McKinsey Global GHG Abatement Cost Curve v2.0; Houghton; IEA; US EPA; den Elzen, van Vuuren; Project Catalyst analysis 4

6 Opportunities to achieve a 450ppm pathway exist at under 60/t Global abatement cost curve, 2020 (up to costs of 60/t, excluding transaction costs, 4% discount rate) Solar PV Reduced intensive agriculture conversion Solar conc. Wind (high penetration) Grassland management Wind (low penetration) Organic soil restoration Biomass Reduced deforestation Pastureland afforestation from pastureland conversion Nuclear Reduced deforestation from slash-and-burn agriculture conversion Rice management Shift coal new build to gas Electricity from landfill gas New waste recycling Cars ICE improvement Cars aerodynamics improvement Retrofit building envelope (commercial) -80 Lighting switch incandescents to LED (residential) Average cost of opportunities up to 17 Gt = 0/t (if benefits of left hand side fully captured) Abatement potential Gt CO 2 e Breakdown by abatement type 9 Gt for terrestrial carbon (forestry and agriculture) 6 Gt for energy efficiency 4 Gt for low carbon energy supply Source: McKinsey Global GHG Abatement Cost Curve v2.0 5

7 In 2030 reduction opportunities are much larger Abatement cost per tco 2 e 60 Low penetration wind Cars plug-in 50 Residential electronics hybrid Degraded forest reforestation Residential 40 appliances Nuclear Pastureland Retrofit residential HVAC afforestation 30 Tillage and residue mgmt Degraded land restoration 20 Insulation retrofit (residential) 2 nd generation biofuels Building Cars full hybrid efficiency new 10 build Waste recycling 0 Iron and steel CCS new build Coal CCS new build Power plant biomass co-firing Reduced intensive agriculture High penetration conversion wind Solar PV Solar CSP Organic soil restoration Geothermal Abatement potential Grassland management GtCO 2 e per year -30 Reduced pastureland conversion Reduced slash and burn agriculture conversion -40 Small hydro 1-50 generation biofuels Rice management Breakdown by abatement type -60 Efficiency improvements other industry Electricity from landfill gas 30% for terrestrial carbon -70 Clinker substitution by fly ash (forestry and agriculture) -80 Cropland nutrient management 40% for energy efficiency Motor systems efficiency 30% for low carbon energy supply -90 Insulation retrofit (commercial) Lighting switch incandescent to LED (residential) -100 Note: The curve presents an estimate of the maximum potential of all technical GHG abatement measures below 60 per tco 2 e if each lever was pursued aggressively. It is not a forecast of what role different abatement measures and technologies will play. Source: Global GHG Abatement Cost Curve v

8 South African vision for the road ahead on climate change 1. Transition to climate resilient and low-carbon economy 2. Our climate response policy, built on six pillars, will be informed by what is required by science to limit global temperature increase to 2 C above pre-industrial levels 3. Continue to pro-actively build the knowledge base and our capacity to adapt to the inevitable impacts of climate change, 4. GHG emissions must peak, plateau and decline - stop growing at the latest by , stabilise for up to ten years, then decline in absolute terms 5. Long term: redefine our competitive advantage and structurally transform the economy by shifting from an energy-intensive to a climate-friendly path as part of a pro-growth, pro-development and pro-jobs strategy Source: Dept of Environment and Tourism, South Africa Source: Dept of Environment and Tourism, South Africa7

9 The role of technology Technology is the means to get to a low carbon, climate resilient economy, not the goal It means: Application of existing technologies Improvement of existing and development of new technologies 8

10 For a 450ppm pathway, and based on equity considerations, developed countries should take on stringent emission caps and provide support 450 ppm pathway as global goal and following equity considerations Resulting responsibilities for developed countries Caps Support on mitigation/ adaptation Leadership on technology Take on collective caps which are consistent with a 450 ppm pathway 80-95% below 1990 by % below 1990 by 2020 Provide financial support to developing countries on adaptation and mitigation Develop/ demonstrate emerging low C technologies Facilitate the transfer of environmentally sound technologies, know-how, practices and processes to developing countries Source: IPCC AR4 Box 13.7; project Catalyst analysis 9

11 Achieving necessary abatement of 17 Gt relies on both developed and developing nations Developed world target in 2020 Required abatement to 450ppm, Gt CO 2 e 13% (as proposed) IPCC 25% IPCC 40% Developed Additional world technical developed world domestic contribution: potential potential at > 60/t at costs behaviours of < 60/t carbon offsets Additional developing world reductions required to achieve 17 Gt Source: Project Catalyst analysis 110

12 Low Carbon Growth Plans (LCGPs) as a way to operationalise developing country mitigation and adaptation actions Focus: Development, mitigation + adaptation Differentiation: Both developing + developed Time horizon: Long term and short/medium term LCGP (=low carbon growth plans) Content: Priorities, policies/measures and international support Process: Support, best practices, review, MRV 11

13 Developing countries require different types of support for their LCGPs Developing country abatement cost curve, 2020 (up to costs of 60/t) Cost of abatement / ton Forestry Agriculture Industry Power Transport Buildings * Energy efficiency in buildings, transportation and industry Agriculture and forestry Power supply Abatement potential Gt CO 2 e Demos / investment in emerging technologies Support to overcome barriers (best practice info, capacity building,loans) Technology follows investment Support to compensate incremental costs, e.g. through offset market or grants Support to compensate incremental costs (grants) and international cooperation 12

14 Including elements of adaptation, the total financing need would be bn per year Annual financing flows requirement for developing countries b on average p.a Costs of 12 Gt of developing countries abatement Adaptation cost (knowledge, planning and preparation, disaster management in all developing countries, climate resilient development in vulnerable countries) Adaptation cost (climate resilient development in other developing countries) ~ ~ Required flows for abatement at cost to society* Additional cost for higher developing country financing rate (10%) Estimated transaction costs for the whole curve of 1 5 per tonne carbon abated Financing need for high cost technology deployment with high learning potential Total financing requirement for abatement in developing countries Adaptation estimate** Total financing requirement for developing countries * Assumes all abatements delivered at average cost; 4% discount rate ** Based on increased financing for global public goods (incl. research), expected funding required priority investments for vulnerable countries (based on NAPA cost estimates), and provision of improved disaster support instruments (based on MCII work) Source: McKinsey Global GHG Abatement Cost Curve v2.0; Bosetti; Carraro; Massetti; Tavoni ; UNFCCC; Project Catalyst analysis 13

15 Technology follows investment, but what else is needed? Technology application: Capacity in developing countries Good investment climate Acquiring the capacity to produce the technology locally (licensing; IP) Know how to use the new technology effectively Technology development/ improvement: R&D (capacity and magnitude) Demonstration programmes Innovation capacity Technology for the poor 14

16 Institutional structures that have been proposed (not complete) Source: M.Bazilian 15

17 Simplified institutional structure Low carbon growth plans, integrating technology needs assessment and technology development capability Financing system based on paying incremental costs of low carbon technology to developing countries, covering costs of planning for and aquiring and deploying technology Additional agreement on strengthened R&D and establishment of R&D networks (including for poor mans technologies) Innovation centres in developing countries as part of capacity building Coordinated demonstration programmes for emerging technologies Leave out all things that are better handled elsewhere (technology roadmaps, technology assessments, R&D priorities, etc) 16

18 Key messages: 1. Climate change is a development problem (causes and impacts) 2. Solving climate change is also a development problem 3. An international climate change regime should be based on a transition to low carbon, climate resilient development 4. Technology is a means to solve climate change, not a goal in itself 5. Institutional structures in such a regime need to integrate technology in the instruments needed for the transition to low carbon, climate resilient development. 17

19 Thank you Further Information on Project Catalyst can be found at 18

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