Energy Technologies Scenarios to 2050

2. What are the different action scenarios considered?

• 2.1 ACT scenarios
• 2.2 BLUE scenarios
• 2.3 Benefits from investment
• 2.4 A more balanced oil market

2.1 ACT scenarios

The source document for this Digest states:

Technologies that already exist, or are in an advanced state of development, can bring global CO₂ emission back to current levels by 2050. Emissions need to peak between 2020 and 2030. The ACT Map scenario implies adoption of a wide range of technologies with marginal costs up to USD 50 per tonne of CO₂ saved when fully commercialized (All costs are in real 2005 US dollars). This level of effort affects certain energy related activities profoundly. It would approximately double the generating costs of a coal power station not equipped with CO₂ capture and storage. The marginal cost figure is twice that estimated two years ago in ETP 2006, mainly reflecting accelerating trends in CO₂ emissions and an approximate doubling of some engineering costs, in part due to the declining value of the dollar.

The task is difficult and costly. Additional investment needs in the energy sector are estimated at USD 17 trillion between now and 2050. This is on average around USD 400 billion per year, roughly equivalent to the gross domestic product (GDP) of the Netherlands, or 0.4% of global GDP each year between now and 2050.

Source & ©: IEA,  Energy Technology Perspectives 2008 :
Scenarios and strategies to 2050. Executive Summary. (2008), ACT Scenarios. p.2.

2.2 BLUE scenarios

The source document for this Digest states:

Reducing CO₂ emissions to 2005 levels is not enough to limit global warming to 2 - 2.4 °C.

But returning emissions to 2005 levels may not be enough. The IPCC has concluded that emissions must be reduced by 50% to 85% by 2050 if global warming is to be confined to between 2°C and 2.4°C. G8 leaders agreed at the Heiligendamm Summit in 2007 to seriously consider a global 50% CO₂ reduction target.

Reducing CO₂ emissions by 50% (from current levels) by 2050 represents a tough challenge. This scenario implies a very rapid change of direction. Costs are not only substantially higher, but also much more uncertain, because the BLUE scenarios demand deployment of technologies still under development, whose progress and ultimate success are hard to predict. While the ACT scenarios are demanding, the BLUE scenarios require urgent implementation of unprecedented and far-reaching new policies in the energy sector.

Based on optimistic assumptions about the progress of key technologies, the BLUE Map scenario requires deployment of all technologies involving costs of up to USD 200 per tonne of CO₂ saved when fully commercialised. If the progress of these technologies fails to reach expectations, costs may rise to as much as USD 500 per tonne. At the margin, therefore, the BLUE Map scenario requires technologies at least four times as costly as the most expensive technology options needed for ACT Map. However, the average cost of the technologies needed for BLUE Map is much lower than the marginal, in the range of USD 38 to USD 117 per tonne of CO₂ saved. Figure ES.1 shows how the marginal costs of CO₂ abatement in 2050 increase as the targeted CO₂ savings increase beyond those in ACT Map to reach the higher levels needed for BLUE Map.

Emission reduction costs, 2050
Source: IEA

Additional investment needs in the BLUE Map scenario are USD 45 trillion over the period up to 2050. They cover additional R&D, larger deployment investment in technologies not yet market-competitive (even with CO₂ reduction incentives), and commercial investment in low-carbon options (stimulated by CO₂ reduction incentives). The total is about USD 1.1 trillion per year. This is roughly equivalent to the current GDP of Italy. It represents an average of some 1.1% of global GDP each year from now until 2050. This expenditure reflects a re-direction of economic activity and employment, and not necessarily a reduction of GDP. While there will be impacts on global GDP, these are hard to predict and beyond the scope of this analysis.

Source & ©: IEA,  Energy Technology Perspectives 2008 :
Scenarios and strategies to 2050. Executive Summary. (2008), BLUE Scenarios. p.2.

2.3 Benefits from investment

The source document for this Digest states:

While the additional investments required for both ACT and BLUE scenarios are a measure of the task ahead, they do not represent net costs. This is because technology investments in energy efficiency, in many renewables and in nuclear power all reduce fuel requirements. In both ACT and BLUE scenarios, the estimated total undiscounted fuel cost savings for coal, oil and gas over the period to 2050 are greater than the additional investment required (valuing these fuels at Baseline prices). If we discount at 3%, fuel savings exceed additional investment needs in the ACT Map scenario, but not in the BLUE scenarios. Discounting at 10%, results in the additional investment needs exceeding fuel savings in both the ACT and BLUE scenarios.

Some investments, of course, are very cost-effective, particularly in energy efficiency. By contrast, at the high-cost end of the range required for the BLUE scenarios, some investments are only economic with a high CO₂ reduction incentive. Not all the necessary investments reduce fuel costs, however. Investment in CCS will increase the amount of coal needed for a given electrical output, because of the reduction in power station efficiency.

Source & ©: IEA,  Energy Technology Perspectives 2008 :
Scenarios and strategies to 2050. Executive Summary. (2008) Benefits from Investments. p.3.

2.4 A more balanced oil market

The source document for this Digest states:

In addition to their environmental benefits, the ACT and BLUE scenarios also show a more balanced outlook for oil markets. In the ACT Map scenario, demand for oil continues to grow. It rises by 12% between now and 2050, which is much less than in the baseline. The BLUE Map scenario shows a much more marked difference, with oil demand actually 27% less than today in 2050. However, in all scenarios massive investments in fossil fuel supply will be needed in the coming decades.

Source & ©: IEA,  Energy Technology Perspectives 2008 :
Scenarios and strategies to 2050. Executive Summary. (2008) A more balanced oil market. p.4.