Energy Blue Print
Archive 2008

Moving from principles to action for energy supply that mitigates against climate change requires a long-term perspective. Energy infrastructure takes time to build up; new energy technologies take time to develop. Policy shifts often also need many years to take effect. In most world regions the transformation from fossil to renewable energies will require additional investment and higher supply costs over about twenty years

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future costs of electricity generation

Figure 27 shows that the introduction of renewable technologies under the Energy [R]evolution Scenario slightly increases the costs of electricity generation compared to the Reference Scenario. This difference will be less than 0.2 cents/kWh up to 2020. Note that any increase in fossil fuel prices beyond the projection given in Table 6.1 will reduce the gap between the two scenarios. Because of the lower CO2 intensity of electricity generation, by 2020 electricity generation costs will become economically favourable under the Energy [R]evolution Scenario, and by 2050 generation costs will be more than 5 cents/kWh below those in the Reference Scenario.

Due to growing demand, we face a significant increase in society’s expenditure on electricity supply. Under the Reference Scenario, the unchecked growth in demand, the increase in fossil fuel prices and the cost of CO2 emissions result in total electricity supply costs rising from today’s $1,750 billion per year to more than $7,300 bn in 2050. Figure 28 shows that the Energy [R]evolution Scenario not only complies with global CO2 reduction targets but also helps to stabilise energy costs and relieve the economic pressure on society. Increasing energy efficiency and shifting energy supply to renewables leads to long term costs for electricity supply that are one third lower than in the Reference Scenario. It becomes clear that pursuing stringent environmental targets in the energy sector also pays off in terms of economics.