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Capital investment requirements for greenhouse gas emissions mitigation in power generation on near term to century time scales and global to regional spatial scales

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  • Chaturvedi, Vaibhav
  • Clarke, Leon
  • Edmonds, James
  • Calvin, Katherine
  • Kyle, Page

Abstract

Our paper explores the implication of climate mitigation policy and electricity generation technology performance for capital investment demands by the electric power sector on near term to century time scales. We find that stabilizing GHG emissions will require additional investment in the electricity generation sector over and above investments that would be needed in the absence of climate policy, in the range of 15 to 29 trillion US$ (48–94%) depending on the stringency of climate policy during the period 2015 to 2095 under default technology assumptions. This increase reflects the higher capital intensity of power systems that control emissions as well as increased electrification of the global economy. Limits on the penetration of nuclear and carbon capture and storage technology could increase costs substantially. Energy efficiency improvements can reduce the investment requirement by 18 to 24 trillion US$ (compared to default technology climate policy assumptions), depending on climate policy scenario. We also highlight the implications of different technology evolution scenarios for different regions. Under default technology set, the heaviest investments across scenarios in power generation were observed in China, India, SE Asia and Africa regions with the latter three regions dominating in the second half of the 21st century.

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  • Chaturvedi, Vaibhav & Clarke, Leon & Edmonds, James & Calvin, Katherine & Kyle, Page, 2014. "Capital investment requirements for greenhouse gas emissions mitigation in power generation on near term to century time scales and global to regional spatial scales," Energy Economics, Elsevier, vol. 46(C), pages 267-278.
    • Handle: RePEc:eee:eneeco:v:46:y:2014:i:c:p:267-278
    DOI: 10.1016/j.eneco.2014.09.008
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    2. Ekundayo P. Mesagan & Wakeel A. Isola & Kazeem B. Ajide, 2019. "The capital investment channel of environmental improvement: evidence from BRICS," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 21(4), pages 1561-1582, August.
    3. Yuang He & Xiaodan Gao & Yinhui Wang, 2022. "Sustainable Financial Development: Does It Matter for Greenhouse Gas Emissions?," Sustainability, MDPI, vol. 14(9), pages 1-23, April.
    4. Chaturvedi, Vaibhav & Koti, Poonam Nagar & Sugam, Rudresh & Neog, Kangkanika & Hejazi, Mohamad, 2020. "Cooperation or rivalry? Impact of alternative development pathways on India’s long-term electricity generation and associated water demands," Energy, Elsevier, vol. 192(C).
    5. Leonidas Paroussos & Kostas Fragkiadakis & Panagiotis Fragkos, 2020. "Macro-economic analysis of green growth policies: the role of finance and technical progress in Italian green growth," Climatic Change, Springer, vol. 160(4), pages 591-608, June.
    6. Renato Passaro & Ivana Quinto & Giuseppe Scandurra & Antonio Thomas, 2020. "How Do Energy Use and Climate Change Affect Fast-Start Finance? A Cross-Country Empirical Investigation," Sustainability, MDPI, vol. 12(22), pages 1-23, November.

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    More about this item

    Keywords

    Integrated assessment modeling; Capital investment; Electricity generation; Energy scenarios; Climate policy;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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