New “Apollo” programme could make the two degrees climate target $4 trillion cheaper
In The News
17 Dec 2015
Good news for the 195 governments that have signed up to the Paris Agreement: a new global “Apollo” programme — named after the space project that put the first humans on the moon in 1969 — could reduce the cost of meeting the two degrees climate target by up to $4 trillion.
New research published by Frontier Economics and Climate-KIC partner the Grantham Institute at Imperial College London has assessed the costs and benefits associated with increasing global investment in low carbon innovation. The outcome? A strong economic case for a new Apollo programme.
Just as with the Apollo space missions of the 1960s, great scientific minds could be assembled to find a solution to one of the biggest challenges we face, backed by strong government funding. The Global Apollo Programme — proposed earlier this year by a group of seven prominent economists and scientists — aims to deliver a step change in the research, development and demonstration of renewable energy.
The programme would reduce the cost of the technologies that can help produce clean energy cheaply. Governments who join the programme would devote at least 0.02% of GDP to public expenditure on renewables innovation over a 10-year period starting in 2016.
The new study now finds that the programme could reduce the cost of meeting a two degrees climate target by $0.7-4.0 trillion out to 2040, and that there is a strong economic case for increasing global spending on low carbon innovation.
A coalition of 20 countries already signed up to “Mission Innovation” earlier this month at the UN climate talks in Paris, pledging to double their expenditure on clean energy innovation over the next 5 years.
One of the people backing the new Apollo project is David Attenborough, the renowned British documentary maker an naturalist. Attenborough was at the UN climate change summit to advocate the project.
75 per cent drop in solar costs
The analysis suggests that the increased RD&D spending under the Apollo programme has the potential, under plausible but relatively optimistic assumptions, to help reduce the costs of electricity generated by solar to below the costs of electricity from coal by 2025. This would entail a fall in the costs of solar photovoltaics of 75 per cent from today’s levels.
Even under more conservative assumptions, the study finds significant reductions in the cost of solar photovoltaics.
Major global benefits would be delivered by the programme, under all scenarios. Even in the absence of any additional climate change policy, the programme has the potential to have a transformational impact on the energy sector.
In the scenario where the costs of solar falls below the costs of coal, solar photovoltaics could provide 26 per cent of global electricity generation by 2040, saving 10 per cent of total global emissions.
True savings expected to be larger
The positive impact in a world where global governments sign up to a two degrees climate target is likely to be extremely significant.
These costs savings of up to $4 trillion could represent a minimum, the study suggests as it does not take into account the wider benefits of innovation, such as impacts on productivity and spillovers to other sectors.
Also not included in the cost benefit study are the wider benefits associated with an increase in renewables such as the health benefits related to an improvement in air quality, and the social and economic benefits that may come with connecting more off-grid properties.
Strong economic case for new Apollo programme
Because of the market failures associated with innovation and climate change, this type of research and development is not likely to happen without government intervention, such as the proposed Global Apollo Program.
Although the potential benefits of increasing research and development spending on renewables could be large, private spending is low. This is because market failures relating to innovation in low carbon energy are limiting this investment.
Coordinated action between international governments has the potential to most effectively overcome these market failures. While there is uncertainty over the scale of cost reduction, given the potential size of the benefits, there is a strong economic case for implementing the Global Apollo Programme.