Emissions will jump 130 percent and oil demand 70 percent by 2050 unless governments take immediate action to start a new $45 trillion “energy technology revolution,” according to a new International Energy Agency (IEA) report.
Halving emissions by mid-century will require governments to rapidly drive up the cost of producing carbon to $200 per ton — or as high as $500 in the worst-case scenario — by instituting a cap-and-trade or carbon tax system. Either policy would increase the price of carbon by forcing businesses to pay for the right to emit carbon dioxide.
To do so, the report suggests that the world will need to ramp up its construction of nuclear power plants, capture and store the carbon (CCS) emitted by coal and gas plants and slash the emissions produced by vehicles eight-fold.
Specifically, the report said CCS technology would need to be installed at 35 coal- and 20 gas-fired plants every year from 2010 to 2050 at a cost of roughly $1.5 billion each. In addition, 32 new nuclear plants and 17,500 wind turbines will need to be built each year. These investments and other emission-reducing projects will require a massive $10 - 100 billion a year R&D push over the next 15 years.
The report’s focus on CCS and nuclear technologies is likely to raise hackles, especially in the U.S. where the former is considered prohibitively expensive and untested while the latter is viewed with suspicion by many politicians and environmentalists. Nuclear energy may not prove as problematic in Europe, where several countries, particularly France, have made nuclear a central component of their energy industry.
On the other hand, nuclear energy could receive a boost under a McCain administration; the senator from Arizona has often expressed his strong support for the industry, most recently in his climate address. The 2008 Climate Security Act, which died in the Senate today, would have allocated a portion of permit proceeds to fund public-private CCS partnerships and low-carbon (i.e. nuclear and renewable energy) projects. The $45 trillion figure implicitly recognizes that both technologies would be very costly to implement on such a large scale.
Such a large sum, were it to be allocated, could entice much more investment in the CCS sector, which has seen little interest from most companies and private investors. Most large-scale projects are taking place in other countries, such as Norway and Sweden. GreenGen, a Chinese state-supported company, has said it is will begin construction of a 400 megawatt generation plant with CCS technologies in 2013.
In the U.S., the DOE recently committed $126.6 million to two sequestration projects in California and Ohio. It is now funding a total of six projects. Exxon Mobil is one of the few American firms to have used CCS technologies in one capacity or another over the last 25 years. More investments will likely need to wait until at least 2009, when the next president, be it John McCain or Barack Obama, unveils his climate agenda. Both have called for a cap-and-trade system.
Neither technology is likely to live up to the IEA report’s claims, however. CCS remains as expensive and risky as ever and, at best, would only account for a relatively small reduction in emissions. The costs of building new nuclear plants — already high — could increase further as rising oil prices push global demand for uranium and other nuclear components ever higher. Then, of course, there is the problem of how to dispose of all that waste.
If the money does eventually start to flow, startups like Calera, a company that uses captured CO2 to make cement, and Hyperion Power Generation, which makes portable nuclear reactors, could reap substantial rewards. In the end, opposition to both technologies could help make safer, reliable renewable energies like solar, wind and biofuels the big winners. A significant R&D boost, alongside the continued support for renewable tax breaks, would also go a long way toward ensuring a long, sustained period of growth in the renewable sector.
