The world needs to spend $45,000bn on green technologies in the next 40 years, or 1.1 per cent of annual global economic output, to halve greenhouse gas emissions by 2050, the International Energy Agency said on Friday. Presenting a 643-page report on the agency’s findings in Tokyo yesterday, Nobuo Tanaka, IEA executive director, said reaching the emissions goal would require a “technology revolution” that would “completely transform the way we produce and use energy”. He added: “If we really go to the 50 per cent reduction, costs are going to be very steep.” Sixty per cent of the investment would need to be made in developing countries, the agency said. Disagreements over who should pay for such investments have been a major stumbling block to convincing China, India and other fast-growing but poor countries to sign on to emissions-cutting schemes.

The Intergovernmental Panel on Climate Change, an advisory body to world leaders, concluded last year that global carbon dioxide emissions would need to fall by 50-85 per cent by 2050 to prevent average global temperatures from rising more than 2 degrees centigrade. Among the G8, Japan, Germany, the UK, France, Italy and Canada – but not the US or Russia – have endorsed the goal of cutting emissions by half.

The IEA report, commissioned by G8 leaders at the Gleneagles summit in 2005, said reducing carbon emissions by half would require commercialising technologies now deemed too experimental or expensive given the present economic costs of polluting.
European emissions credits, for example, currently trade at about $30 a tonne, but under the IEA’s scenario could rise to between $200 and $500, depending on the rate of technological advance.

Reading the IEA report the only conclusion that can be made is the significant need to invest in renewable energy sources. Save Earth Fund especially take note of the assessment of the carbon credit trading scheme and the potential future spikes in prices for carbon credits. Higher prices for carbon credits will result in higher electricity prices, which again would cause Grid Parity to occur sooner. We also note that European electricity forward rates have increased significantly lately. This is positive for the solar sector.

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