Title: A multi-model study of energy supply investments in Latin America under climate control policy

Abstract

In this article we investigate energy supply investment requirements in Latin America until 2050 through a multi-model approach as jointly applied in the CLIMACAP-LAMP research project. We compare a business-as-usual scenario needed to satisfy anticipated future energy demand with a set of scenarios that aim to significantly reduce CO₂ emissions in the region. We find that more than a doubling of annual investments, in absolute terms, occurs in the business-as-usual scenario between 2010 and 2050, while investments may treble over the same time horizon when climate policies are introduced. However, investment costs as a share of GDP decline over time in the business-as-usual scenario, as well as the climate policy scenarios, due to the fast economic growth in that region. Business-as-usual cumulative investments of 1.4 trillion US$ are anticipated between 2010 and 2050 in energy supply, and increase when additional climate policies are introduced: under a carbon tax of 50 $/tCO₂e in 2020 increasing with a rate of 4% per year, an additional 0.6 trillion US$ (+45%) investment is needed. Climate control measures lead to increased investment in low-carbon electricity technologies, primarily wind, solar, and CCS applied to fossil fuels and biomass. Our analysis suggests that compared to the business-as-usualmore » case an average additional 21 billion US$ per year of electricity supply investments is required in Latin America until 2050 under a climate policy aiming at 2°C climate stabilization. Conversely, there is a disinvestment in fossil fuels. For oil production, a growth from 58 billion US$ to 130 billion US$ annual investment by 2050 is anticipated in a business-as-usual scenario: ambitious climate policy reduces this to 28 billion US$. Finally, mobilizing necessary additional investment capital, in particular for low-carbon technologies, will be a challenge, and suitable frameworks and enabling environments for a scale-up in public and private investment will be critical to help reach required levels. The economic case for such a transition still remains to be articulated.« less

Authors:

Kober, Tom ^[1]; Falzon, James ^[1]; van der Zwaan, Bob ^[2]; Calvin, Katherine ^[3]; Kanudia, Amit ^[4]; Kitous, Alban ^[5]; Labriet, Maryse ^[6]

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+ Show Author Affiliations

1. Energy Research Centre of the Netherlands, Amsterdam (The Netherlands). Policy Studies
2. Energy Research Centre of the Netherlands, Amsterdam (The Netherlands). Policy Studies; Johns Hopkins Univ., Bologna (Italy). School of Advanced International Studies; Univ. of Amsterdam (Netherlands). Faculty of Science
3. Pacific Northwest National Lab. (PNNL), Richland, WA (United States)
4. KanORS-EMR, Delhi (India)
5. European Commission, Sevilla (Spain). Joint Research Centre
6. Eneris Environment Energy Consultants, Madrid (Spain)

Publication Date:

Sun May 01 00:00:00 EDT 2016

Research Org.:

Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)

Sponsoring Org.:

USDOE; USEPA; European Union (EU)

OSTI Identifier:

1406813

Report Number(s):

PNNL-SA-109344
Journal ID: ISSN 0140-9883; 453040310

Grant/Contract Number:  

AC05-76RL01830

Resource Type:

Accepted Manuscript

Journal Name:

Energy Economics

Additional Journal Information:

Journal Volume: 56; Journal Issue: C; Journal ID: ISSN 0140-9883

Publisher:

Elsevier

Country of Publication:

United States

Language:

English

Subject:

54 ENVIRONMENTAL SCIENCES; climate policy; low-carbon energy technology; technology investment costs