The world needs more energy and less carbon dioxide, argues James Smith, chair of the Carbon Trust.
For those who still doubt whether climate change is happening, the only way to prove it is to keep running this dangerous global carbon emissions experiment. But that is a risk we cannot take. There is no reset button for the weather and no mop up and muddle through option. While the details of the impact of climate change are hard to predict, the damage to food production and infrastructure could be severe.
Energy lifts people out of poverty and in the first half of this century we will need to double energy production. But we must also halve carbon emissions. Is this achievable?
Fortunately major supply technologies such as nuclear, wind and carbon capture and storage (CCS) are available and will be critical, along with the trebling of energy efficiency, to reduce carbon emissions. But we have already left it very late. So negative carbon technologies, such as bioenergy and CCS, that takes carbon out of the atmosphere, will also be needed.
Estimated at between 1% and 2% of GDP, the cost of reducing carbon emissions is affordable. But that still represents approximately US$800bn per year globally or £23bn per year for the UK. So carbon reduction at the lowest cost is essential and has to be delivered under the dispassionate rigour of competitive market forces and cost-engineering. Open-ended subsidies for expensive technologies risk undermining innovation and eroding public support for positive action.
However, despite the clear potential for low-carbon technologies, we haven’t been getting on with carbon reduction at anywhere near the necessary pace. The big economic and carbon-emitting geographic zones need to firm up serious and practical political agreements. Their collective will should be focused on carbon pricing, using CCS on coal and gas-fired power plants, deploying renewables and nuclear energy and saving forests.
Much of society’s technological and engineering capability lies in the corporate sector, which has a vital role to play in campaigning for low-carbon energy driven by market forces, to deliver the most cost-effective solutions.
People question whether low-carbon investment is financeable. Uneconomic solutions won’t be. And finance must not be used to prop up technology solutions that are not economic. But finance of the right mix will be found for investments within a credible low-carbon energy strategy, underpinned by sound, long-term policy arrangements that properly reflect cost and market realities.