Grønn konkurransekraft det økonomiske potensialet i klimaomstillingen Måns Nilsson, Research Director Stockholm Environment Institute CenSES 3-4 December 2015
33 supporting Working Papers released in 2014-15, including 4 country studies. The New Climate Economy project Commissioned in 2013 by 7 countries Colombia, Ethiopia, Indonesia, Norway, Sweden, South Korea, United Kingdom Led by a Global Commission 28 former heads of government, finance ministers, CEOs and heads of economic institutions. The set-up of the project was overseen by an Economic Advisory Panel of 14 leading economists, chaired by Lord Nicholas Stern Better Growth, Better Climate: the New Climate Economy report (September 2014) showed that economic growth and climate protection can be achieved together. Seizing the Global Opportunity: Partnerships for Better Growth and a Better Climate (July 2015) focuses on how international and multi-stakeholder cooperation can catalyse better growth and a better climate.
NCE Partner Institutes Ethiopian Development Research Institute Indian Council for Research on International Economic Relations Overseas Development Institute Managing partner Over 120 organizations have provided input towards the project, including:
Better Growth, Better Climate: The New Climate Economy The false dilemma vs Promoting economic growth Fighting climate change
The Global Goals for Sustainable Development And low-carbon strategies to achieve much more 4
Components of competitiveness
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More sustainable countries perform better Denmark Norway Luxembourg Sweden Switzerland 1. Switzerland 87.67 2. Luxembourg 83.29 3. Australia 82.4 4. Singapore 81.78 5. Czech Republic 81.47 6. Germany 80.47 7. Spain 79.79 8. Austria 78.32 9. Swedn 78.09 10. Norway 78.04 11.Netherlands 77.75 12. United Kingdom 77.35 13.Denmark 76.92 14.Iceland 76.5 15.Slovenia 76.4 16. New Zealand 76.41 17. Portugal 75.8 18.Finland 75.72 19. Ireland 74.67 20.Estonia 74.66
3 key drivers for combining growth and climate performance Cities Land use Energy Enhancing resource productivity Driving innovation Mobilising investment
Enhancing resource productivity
costs have fallen dramatically Example: solar can compete with fossil fuels in favorable circumstances Indicative solar PV costs over time USD / MWh 1200 Solar PV Current fossil fuel range, indicative Best utility-scale project, 2014-61% 140 50 1990 1995 2000 2005 2010 2014 Assuming 9.25% WACC, 17% capacity factor for solar PV, 70 USD/tonne coal price and 10 USD/MMBtu natural gas price. Sources: Citi Research 2012; IEA World Energy Outlook 2013; G. F Nemet, Beyond the learning curve, Energy Policy 34, 3218-3232 (2006)
The costs of wind energy are coming down 90 Wind power costs over time USD/MWh 80 70 60 50 Natural gas 40 Coal 30 2000 2005 2010 2015 2020 1990 1995 2000 2005 2010 2014 Note: Assuming coal price of 70 USD/tonne and gas price of 10 USD/Mmbtu. Assuming a 35% capacity factor for wind power i.e. 35% utilisation, and a 15% capacity factor for solar power Sources: Citi Research 2012; G. F Nemet, Beyond the learning curve, Energy Policy 34, 3218-3232 (2006); Bloomberg NEF (Turner 2013); IEA World Energy Outlook 2013, WEO 2012
Traffic congestion is costing some cities greater than 4% of GDP Cost of traffic congestion as a percentage of GDP in selected cities 5% Percentage of GDP 4% 4,2% 4,1% 4,0% 4,0% 3,4% 3% 2,6% 2,4% 2,1% 2% 1,8% 1% 0% Beijing Dublin Cairo Manila Dakar Mexco City San Paulo Bangkok Kuala Lumpar Sources: IBM Institute for Business Value, Smarter cities for smarter growth. Li-Zeng Mao, Hong-Ge Zhu, and Li-Ren Duan (2012) The Social Cost of Traffic Congestion and Countermeasures in Beijing. Sustainable Transportation Systems: pp. 68-76. 14
Selling the European model of urban development? Atlanta and Barcelona have similar populations and wealth but very different carbon productivities ATLANTA BARCELONA Atlanta s built-up area Barcelona s built-up area Population: 5.26 million Total area: 16,605 km 2 Urban area: 7692 km 2 Transport carbon emissions: 6.9 tonnes CO 2 p.c. Population: 5 million Total area: 3263 km 2 Urban area: 648 km 2 Transport carbon emissions: 1.2 tonnes CO 2 p.c. Source: LSE research, drawing on data from Atlanta Regional Commission (2014), Autoritat del Transport Metropolita (Area de Barcelona) (2013), GenCat (2013), UCSB (2014), D Onofrio (2014), based on latest data.
- Compact and connected urban growth could reduce global infrastructure investment requirements by US$3 trillion through to 2030. (NCE, 2014)
Low-carbon transport, buildings, and waste sectors are a US$17 trillion opportunity Source: New Climate Economy
The costs of air pollution Particulate matter concentrations in air for selected cities Annual mean PM10 ug/m3 140 120 100 80 60 40 WHO air quality standards 20 0 Nature s red-light warning against inefficient and blind development Data from World Health Organisation
25 MARCH 2014 GENEVA In new estimates released today, WHO reports that in 2012 around 7 million people died - one in eight of total global deaths as a result of air pollution exposure. This finding more than doubles previous estimates and confirms that air pollution is now the world s largest single environmental health risk. Reducing air pollution could save millions of lives.
Value of the premature deaths from PM2.5 air pollution ENERGY Source: NCE estimate, based on WHO mortality data
Driving Innovation
Innovationsfaser (source: Energimyndigheten 2014:13)
Innovation and knowledge spillovers a national benefit Innovations generate public goods knowledge spill overs Low carbon innovations generate larger spillovers than their dirty counterparts - more generic applications - early stage give steep learning curves On average 50% stays in the country Dechezleprêtre et al 2013 25
Driving innovation or sustaining incumbents? Fossil-fuel subsidy reform, led by India & Indonesia, reduces the global subsidy bill below $500 billion in 2014
Galvanise low-carbon innovation markets
Rapidly falling costs of electric vehicle batteries Björn Nykvist and Måns Nilsson, 2015: 'Rapidly falling costs of battery packs for electric vehicles. Nature Climate Change, in press
Mobilising investment
About 40 national and over 20 sub-national carbon pricing schemes are underway Source: The World Bank, 2015. Carbon Pricing Watch 2015: An advance brief from the State and Trends of Carbon Pricing 2015 report, to be released late 2015. Washington, DC.
Momentum is building: in 2013, more low-carbon electricity capacity was added than fossil fuel capacity (GW) Source: Liebreich, M., 2015. State of the Industry Keynote. Presented at the Bloomberg New Energy Finance Annual Summit, New York, 14 April. Available at: http://about.bnef.com/presentations/liebreich-state-industry-keynote/.
Investments in low-carbon energy have increased, but 2/3 still goes to fossil fuels Investment in global energy supply by fossil fuel, non-fossil fuel (renewable energy, nuclear, biofuels) and transmission & distribution in the power sector. 1 800 000 1 600 000 Fossil fuels Million USD (2012) 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 69% Power T&D Non-fossil fuel 69% 200 000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 +303% Source: IEA (2014): World Energy Investment Outlook.
Mobilising investment for a decarbonization scenario Source: OECD (2006, 2012), IEA ETP (2012), modelling by Climate Policy Initiative (CPI) for New Climate Economy, and New Climate Economy analysis.
Energy assets are changing Current infrastructure has been optimized around fossil fuels assets Latest energy assets have different characteristics Centralized facilities Volatile fuel prices High operating costs Complex operations/maintenance Multi-billion scale Decentralized assets High capital cost Near zero marginal cost Low operational requirements All scales projects Different RISK profiles - Different RETURN profiles
Sustainable companies perform The CDP Climate Leadership Index outperformed the Bloomberg World Index of major companies by 9.1% over four years. Source: CDP, 2014.
Nordic lead market? Multiple strategies available Smart connected cities Carbon-free electrification in houses, transport & industries Bioresources and biorefineries Circularity in product systems Current ambiguity hurts the economy Investor uncertainty Volatile markets Both incumbents and start ups are struggling Acting now for maximum flexibility Reduce lock-in risk and asset stranding Frontline technology options Leverage Nordic regional cooperation
Barack Obama There does not have to be a conflict between a sound environment and strong economic growth. September 23, 2014 Angela Merkel Technological progress and growth can go hand in hand with climate protection. September 23, 2014 Hillary Clinton - "We do not have to choose between a healthy environment and a healthy economy." December 1, 2014 Richard Branson: Taking bold action on climate change simply makes good business sense. February 5, 2015 Narendra Modi Some people feel environment and development are on opposite sides... This is wrong. Both can co-exist. April 6, 2015 Justin Trudeau In 2015, pretending that we have to choose between the economy and the environment is as harmful as it is wrong. February 7, 2015 Ban Ki-Moon We must not be forced into a false choice between the economy and the environment. January 8, 2015