Without early investment signals, Europe faces a ‘lost decade’ of climate and energy policy inaction between 2020-2030, culminating in a mind-bogglingly expensive sprint to decarbonise in the last two decades before 2050, according to a new report by the European association of electricity producers, Eurelectric.
The Eurelectric report, titled ‘Power Choices Reloaded’, models three decarbonisation scenarios – a reference scenario of current policies, a cost-optimal ‘Power Choices Reloaded’ scenario, and a ‘lost decade scenario’.
“We estimate that the full ‘lost decade’ perspective would cost two percentage points of GDP per annum throughout the time period until 2050 above the costs of optimal decarbonisation,” the report’s author, Pantelis Capros, told EURACTIV.
“It is barely realistic to decarbonise so quickly after 2030,” he added.
The ‘lost decade’ scenario involves delays to the roll-out of electric vehicle infrastructure, energy efficiency in buildings, grids, renewables and limited access to investment funds.
Europe’s climate policy is currently in crisis, with its centrepiece Emissions Trading System stagnant, UN climate talks talks stalled, clean technology trade wars threatening, and a ‘re-industrialisation’ agenda gaining ground that aims to knock climate change off the EU’s policy perch.
“The reality today is a mixture of economic crisis, morosity in financial resources and concern about impacts on [energy] prices,” Capros said. “The consensus is negative but one must consider the new opportunities for activity, growth, jobs, substituting for imported fossil fuels, and a way out of the current crisis.”
Yet as things stand, the renewable energy industry and infrastructure planners alike now routinely complain about a lack of clear signals feeding through to investor uncertainty, and funding bottlenecks.
At the same time, carbon dioxide emissions are rising, hitting a new high of over 35 billion tonnes last year, and stumbling over the 400 parts per million tripwire at the Manu Loa observatory in Hawaii on 10 May.
As such, the new study by Europe’s electricity association will stir unease in Brussels about the long-term direction – and cost – of its emissions reduction strategy.
“Carbon-neutrality by 2050 requires a radical transition through continuous investment by the power sector into new generation assets, new storage, smart technologies and new grids,” the report says. “But the case for investment and research in the power sector depends crucially on the strength of the carbon signal that European policy is giving to the economy as a whole.”