the 2020 emissions gap
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Accelerating technology t ransfer through new market m echanisms and services to help close the pre-2020 gap Latin American & the Caribbean Carbon Forum Colombia, Bogotà 03-05 September 2014 Sébastien Raoux , President & CEO Transcarbon Internationa l. The 2020 Emissions Gap. 60. - PowerPoint PPT PresentationTRANSCRIPT
Accelerating technology transfer through new market mechanisms and services to help close the pre-2020
gap
Latin American & the Caribbean Carbon Forum
Colombia, Bogotà03-05 September 2014
Sébastien Raoux, President & CEOTranscarbon International
• The remaining gap to stay within the 2°C limit by 2020 is 8-12 GtCO2e/yr.
It is more likely than not that the gap in 2020 will be at the high end of the range.
• There is a disconnect between political ambition and practical reality.
Technologies to reduce the gap are available but implementation is lacking dramatically.
• A ten year delay in starting emissions reduction leads to more than doubling the probability of exceeding the 2°C target.
After such a delay, energy-related CO2 reduction rates until 2050 need to be on average 2.4% per year (of 2010 levels), rather than 1.5% per year.
The 2020 Emissions Gap
Source: The Emissions Gap Report 2013, a UNEP Synthesis Report
Annu
al G
loba
l Tot
al G
reen
hous
e G
as E
mis
sion
s (G
tCO
2e)
40
60
Time (years)2010 2020
Case 1: 12 GtCO2e
Case 2: 11 GtCO2e
Case 3: 10 GtCO2e
Case 4: 8 GtCO2e
Business as usual: 59 GtCO2e
2°C range
Median estimate of level consistent with 2°C: 44 GtCO2e
Remaining gap to stay within 2°C limit: 8 to 12 GtCO2e
• In principle: Adopting strict accounting
rules. Moving towards unconditional
pledges. Increasing the scope of current
pledges. Furthering national and
international action.
• In reality: Options to reduce the gap
under least-cost paths are closing.
Locking-in to carbon-intensive infrastructure will narrow the range of future options.
The transfer and implementation of low-carbon technologies is insufficient.
Options to Close the Gap
Sources: Wedging the gap (Block et al., 2012), UNFCCC technical paper (2013), IEA energy / climate map (2013)
• Existing market mechanisms have limited efficiency in promoting technology transfer, even for readily-known solutions.
Limited scope of CDM project types involving technology transfer.
The creation of capacity, in a recipient country, to adapt, produce or further develop low-carbon technologies is rare.
• Barriers to technology transfer are numerous: Information and awareness. Capacity, network, and human skills. Policy, legal, and regulatory.
The Technology Transfer (TT) Gap
Sources: Technology transfer in the CDM: an updated analysis (Murphy et al., 2013), Technology transfer under the Clean Development Mechanism (Das, 2011)
Technical (technology readiness level).
Financial (capital costs). Economic (abatement costs).
• Transfer of breakthrough technologies must be accelerated Innovation must be supported by national and international policies and
effective carbon market mechanisms to overcome key barriers to technology transfer.
• Two intrinsic barriers of (many) low-carbon technologies:
High upfront capital costs.• Even for some
technologies with negative abatement costs.
High abatement costs.• Cost of ownership.
• Innovation can help bring the marginal cost curve downwards and expand the pool of available low-carbon technologies. Reallocation of financial resources (R&D) and strong carbon price signals are
required.
Intrinsic Barriers to Technology Transfer
Source: Pathway to a Low-Carbon Economy, McKinsey & Company (2009)
10$/tCO2e
40$/tCO2e
Carbon Markets & Breakthrough LCTs
€/tCO2 ICE Certified Emissions Reduction (CER) futures front contract
Source: www.quandl.com/c/futures/ice-cer-emissions-futures
• Carbon markets should stimulate innovation and diffusion of technologies to lower marginal abatement costs…
• Carbon markets should stimulate innovation and diffusion of technologies to lower marginal abatement costs…
Carbon Markets & Breakthrough LCTs
Source: State and trends of carbon pricing, World Bank Group / Ecofys (2014)
but most carbon instruments are priced at <40$/tCO2e or even <10$/tCO2e...
• A next generation of carbon mechanisms is required to bridge the technology transfer gap.
< 10$/tCO2e
<40$/tCO2e
… at insufficient prices to offset abatement costs and provide incentives for research and development (R&D) and diffusion of breakthrough technologies.
Because the development of technologies involves sunk costs, uncertainty and high price volatility further delay investments.
• Carbon markets should stimulate innovation and diffusion of technologies to lower marginal abatement costs…
Carbon Markets & Breakthrough LCTs
Source for SREC historical price curve: SRECTrade (2013)
U.S. compliance market SREC weighted average price August 2009 to August 2013
• While a ton of CO2e should always be a ton, not all tons should be born equal.
Carbon instruments for priority breakthrough technologies should be priced commensurately with their abatement costs and their long-term benefits.
• Homogeneous carbon prices is not the solution in the short term to spur the development and implementation of breakthrough Low-Carbon Technologies.
Sectoral crediting mechanisms can be effective to spur industry-specific solutions.
Technology-specific crediting mechanism could be more effective in stimulating breakthrough LCTs.• Example of Solar Renewable
Energy Credits (SRECs).
LOW CARBON TECHNOLOGY MARKETPLACE & BROKERAGE SERVICES
• Provide knowledge of the IP and End-User markets• Identify and pitch promising technology transfer transactions• Support structuring of transactions• Provide financing & risk mitigation
• The private sector can help bridge the technology transfer gap by providing services to connect the Intellectual Property (IP) and end-user markets for breakthrough LCTs.
Bridging the Technology Transfer Gap
Source: Asian Development Bank (2013)
Technology end-users
Technology Holder (IP)
Technology manufacturer or service provider
Intellectual Property Market
End-User Market
Transfer the ability to produce the good or service
Transfer the good or service
itself
Crossing the
“Valley of Death”
Priority Low-Carbon Technologies
• Priorities for breakthrough LCTs: Renewable energy
• Solar • Wind• Hydro / tidal
Energy storage
Waste to energy
Energy efficiency
Biomass/biogas/biofuels
Agriculture• Biotechnologies• agricultural practices
Transportation • Fuel switching• Energy efficiency
Water technologiesSource: Third synthesis report on technology needs identified by Parties not included in Annex I to the Convention (FCCC/SBSTA/2013/INF.7)
• The 2020 gap is not closing. Technical options exist but political ambition is lacking. Existing measures do not sufficiently stimulate innovation and low-carbon
technology transfer.
• New market mechanisms and policy instruments must be implemented to support the emergence of breakthrough technologies.
Sectoral crediting mechanisms. Technology-specific crediting mechanisms (e.g. SRECs). Specific policies aimed at boosting climate-friendly technologies.
• Increase public R&D spending in priority areas, better international collaboration.• Removing subsidies for fossil fuels.• Increasing competition in energy markets.• Use of innovation prizes.
A STRONG CARBON PRICE SIGNAL IS REQUIRED.
• The private sector can help bridge the technology transfer gap by providing services to connect the Intellectual Property (IP) and End-user markets to facilitate implementation of breakthrough LCTs.
Conclusion