We must reduce global greenhouse gas emissions by at least 80% by 2050 in order to avoid dangerous risks to the environment and ourselves. Meanwhile, electricity demand is rising worldwide: even if the world converges at half the OECD's current electricity intensity, total demand will still be 2.7 times higher by 2050. To meet this demand while reducing total emissions by 80%, we must replace current coal and natural-gas plants with something more than 90% cleaner. This can only be renewables.
Carbon capture and storage (CCS) systems cannot do the job. They may reduce direct emissions from coal and gas plants by nearly 90%, but other steps in the supply chain would increase these emissions several-fold. For example, large amounts of methane are released whenever coal is mined or natural-gas wells are finished. CCS systems also increase fuel requirements by 20-30%, exacerbating all the other impacts of coal and gas extraction, such as damage to watersheds and landscapes and lives lost in mines. On a life-cycle basis, emissions from CCS plants are more than twice as high as we need for 2050, so most of our coal and gas consumption will need to be replaced by something else.
What about nuclear power? Even before the Fukushima Daiichi disaster, the costs of nuclear projects were spiralling upwards; who knows where they will go with increased safety standards for new projects? Investors will not take on the financial risk of nuclear projects without government support, and even if they would, the technology simply cannot be scaled up to provide a large share of global electricity. If nuclear plants provided half of the world's electricity in the scenario outlined above (nearly eight times more than they produce now), known reserves of uranium would last only 12 years. All the undiscovered conventional uranium in the world might last another 30 years beyond that.
As Sherlock Holmes says, "When you have eliminated the impossible, whatever remains, however improbable, must be the truth." In this case, what is left is renewable energy. Wind and solar power are commercially proven, with life-cycle emissions 90-98% lower than today's fossil-fuel plants. Wind power is available on the same scale as our electricity demand, and solar power could meet our demand nearly 1,000 times over. Providing all our 2050 electricity from these resources would require scaling up wind a solar production by a factor of 150—a target that will be reached by 2030 at current growth rates.
Wind and solar power are intermittent, but that poses no insurmountable obstacles. Intermittency can be reduced by combining both wind and solar power, and by pooling resources across large regions. Power systems will also need conventional plants for the rare periods when neither wind nor sun are available, but most of these have already been built, and they would be needed whether we use renewables or not. In power systems with large shares of renewable energy, the most difficult challenge will be overproduction of power at certain times. But this can become a virtue: electric vehicles charged with night-time wind or morning sun can simultaneously ease integration of renewable energy, reduce transport emissions by more than 90%, and fill their tanks at a cost equivalent to $40 per barrel of oil.
Renewables do, however, remain more expensive than digging up coal and burning it, so we will not get the power system we need without some sorts of external incentives. One option would be a carbon-focused policy, such as a carbon tax or emission-trading system. However, carbon prices would have to be very high to mobilise the needed investments, which could have major impacts on social equity and economic compe iveness (if no global carbon policy can be agreed).
A carbon-only approach would also send an uncertain financial signal to the renewable energy industry, needlessly raising the cost of renewable power. The ideal incentive would crystallise our willingness to pay for renewable energy in a form that project developers can literally "take to the bank". For example, feed-in tariffs eliminate several artificial risks for project developers—volatility in the prices of carbon permits, renewable obligation certificates and electricity. With a feed-in tariff, project developers can tap into low-cost capital, directly reducing the cost of renewable power.
If they are designed appropriately, subsidies need not break our budget or persist forever. With low-cost capital, wind power is already cheaper than future projections for natural gas. Solar projects remain more expensive, but they get cheaper every year as manufacturers plough revenues back into optimising production. This is the same sort of virtuous cycle that we saw in the computer industry in the past two decades.
Renewable power is poised to become the next new trillion-dollar industry, and the countries that grow strong in this area will gain the most in employment and GDP. Renewable power creates more jobs than fossil fuels—and wouldn't it be better to spend our energy budget building and operating new productive assets at home, rather than paying inflated prices to owners of oil and gas wells?
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