Cost of not acting on climate change $44 trillion: Citi

Up to $44 trillion could be going up in smoke if the world does not act on climate change, according to the latest piece of research from U.S. banking giant Citigroup.

The report – Energy Darwinism II: Why a Low Carbon Future Doesn’t Have to Cost the Earth — has forecast that spending on energy will hit around $200 trillion in the next 25 years.

The study then examines two scenarios: one that Citi describe as an “‘inaction’ on climate change scenario”, and another that looks at what could happen if a low carbon, “different energy mix” is pursued.

Luiz Filipe Castro | Moment | Getty Images

“What we’re trying to do is to take an objective view at the economics of this situation and actually look at what the costs of not acting are, if the scientists are right,” Jason Channell, Global Head of Alternative Energy and Cleantech Research at Citi, told CNBC Tuesday.

“And those are rather alarming numbers in themselves,” he added. “I mean, the central case we have in the report is that the costs in terms of lost (gross domestic product) GDP from not acting on climate change can be $44 trillion dollars by the time we get to 2060.”

“So it’s not a sort of a zero sum game, there is a cost to not doing this, and although there is a cost to acting, what we’re trying to do is to actually weigh up the different costs here.”

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Fossil Fuels Just Lost the Race Against Renewables

The race for renewable energy has passed a turning point. The world is now adding more capacity for renewable power each year than coal, natural gas, and oil combined. And there’s no going back.

The shift occurred in 2013, when the world added 143 gigawatts of renewable electricity capacity, compared with 141 gigawatts in new plants that burn fossil fuels, according to an analysis presented Tuesday at the Bloomberg New Energy Finance annual summit in New York. The shift will continue to accelerate, and by 2030 more than four times as much renewable capacity will be added.

“The electricity system is shifting to clean,” Michael Liebreich, founder of BNEF, said in his keynote address. “Despite the change in oil and gas prices there is going to be a substantial buildout of renewable energy that is likely to be an order of magnitude larger than the buildout of coal and gas.”

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The U.S. wind energy boom couldn’t be coming at a better time

Wind energy provides roughly 5 percent of U.S. demand.
Photo by: Ron Antonelli/Bloomberg

The Obama administration’s Clean Power Plan, released last week, requires the country to use a lot more renewable energy by the year 2030 — and a lot less coal. And right on time, two new reports published Monday by the Department of Energy find that one key renewable sector — wind — is booming, a development that can only help matters when it comes to reducing carbon emissions.

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Buffett Scores Cheapest Electricity Rate With Nevada Solar Farms

Warren Buffett’s Nevada utility has lined up what may be the cheapest electricity in the U.S., and it’s from a solar farm.

Berkshire Hathaway Inc.’s NV Energy agreed to pay 3.87 cents a kilowatt-hour for power from a 100-megawatt project that First Solar Inc. is developing, according to a filing with regulators.

That’s a bargain. Last year the utility was paying 13.77 cents a kilowatt-hour for renewable energy. The rapid decline is a sign that solar energy is becoming a mainstream technology with fewer perceived risks.

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The global addiction to energy subsidies

ENERGY prices have been falling for a year. Over the last month that trend has accelerated. On July 24th, the price of a barrel of oil in Americareached a low of $48. In spite of this, governments are still splurging on subsidies to prop up production. Fossil fuels are reaping support of $550 billion annually, according the International Energy Agency (IEA), an organisation that represents oil- and gas-consuming countries, more than four times those given for renewable energy. The International Monetary Fund’s estimates are substantially higher. It said in May that countries will spend $5.3 trillion subsiding oil, gas and coal in 2015, versus $2 trillion in 2011. That is equivalent to 6.5% of global GDP, and is more than what governments across the world spend on healthcare. At a time of low energy prices, high government debt and rising concern over emissions there is scant justification for such spending. So why is the world addicted to energy subsidies?

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This will give you hope: Developing countries are racing to install wind and solar

“Emerging markets can deploy solar, wind  and other renewable technologies without costly grid infrastructure, making it possible for developing countries to leapfrog the 20th-century model of energy service provision and employ the 21st-century solution of distributed service delivery, as they have done successfully in the telecommunications sector,” notes the report.

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Hawaii Votes to Go 100% Renewable

…For Japan’s Fukushima prefecture, which set itself a 2040 deadline for relying solely on renewables, the switch is about rebuilding hope in the future. When I visited Koriyama, Fukushima’s commercial center, last year, the mayor, Masato Shinagawa, described renewable power as a “must-succeed mission” to rebuild a region shattered by the nuclear reactor meltdowns at TEPCO’s Daiichi nuclear plant in 2011. He called the resurgence of solar power in Japannothing less than the “Prometheus of the 21st Century.”

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