The Business Case for a Strong Global Deal

Mexico's "low-carbon growth pathway" also illustrates the potential for low-carbon growth to create jobs – an extra 500,000 by 2030 compared with business as usual.⁵ First, new, green industries add new activities to the economy, such as retrofitting building insulation, and with them new jobs. Even after adjusting for employees who move out of an eliminated position into a new, green job, the net effect of such green industries is still positive. Second, some existing sectors of the economy will become more labour-intensive when they switch to a low-carbon path. Clean power technologies will have other benefits such as making distributed power available in rural areas that are currently uneconomic to connect to the grid.

The cost of these technologies does not need to be an insuperable barrier, especially if actions to increase energy efficiency are taken in parallel. New clean energy technologies have made tremendous gains despite limited incentives and relatively modest levels of investment compared with investments in fossil fuels. The costs of photovoltaic solar for example have declined 20% with every doubling of installed capacity.⁶ Wind power capacity has grown 30% a year for a decade.⁷ Each of these technologies – and others somewhat further out such as carbon capture and storage (CCS) – has the potential to reach a tipping point in productivity and cost, accelerating growth and creating new industries and jobs.

Project Catalyst has developed a set of global scenarios focused on accelerated clean-tech deployment in the power sector over the next 20 years. What these scenarios show is striking: that even countries with fossil-intensive power sectors could supply more than half their energy from renewables by 2030 at moderate cost if the right supporting policies were in place.

For example, the U.S. could decarbonize 50% of its power sector by 2030 for an average cost of less than €30 per tonne. This would require significant – but feasible – changes, which include establishing a more effective national grid, implementing measures to handle intermittency (e.g., aggressive demand response coupled with use of available hydro resources for storage), and providing financial incentives to owners of combined cycle gas turbine (CCGT) plants to leave them online as low-utilization backing capacity.

Achieving greater energy security

The major energy-consuming economies have the potential to benefit massively from a shift towards a low-carbon economy. Over the past decade, energy prices have become more volatile. This is largely due to sharply rising global demand as a result of much faster GDP growth in the major emerging markets. Overall energy demand is increasing by 2% per year – and expanding the reliable supply of energy will be essential to lift the next 1-2 billion people out of (energy) poverty.

The shift to a low-carbon economy could significantly increase energy security. First, it could lead to much greater energy conservation. Estimates of the potential to reduce energy consumption suggest that it would be possible to cut demand by over 20% without any loss of economic utility. Second, it could lead to a diversification of energy sources, including more nuclear, more renewables, and much more bioenergy (in both power and transport sectors). Third, the development of clean energy distributed- and offgrid technologies could lead to a massive expansion of rural electrification, creating greater energy security for those at the bottom of the global pyramid.