TODAY’S STUDY: The Economics Of 100% New Energy

Global Energy System Based On 100% Renewable Energy; Power, Heat, Transport and Desalination Sectors

April 2019 (Energy Watch Group and LUT University)

A 100% Renewable Energy System is Cheaper than the Current Global Energy Supply Zero GHG Emissions from Power, Heat, Transport and Desalination Sectors is possible before 2050

Key Findings

A global transition to 100% renewable energy across all sectors – power, heat, transport and desalination before 2050 is feasible1. Existing renewable energy potential and technologies, including storage, is capable of generating a secure energy supply at every hour throughout the year. The sustainable energy system is more efficient and cost effective than the existing system, which is based primarily on fossil fuels and nuclear. A global renewable transition is the only sustainable option for the energy sector, and is compatible with the internationally adopted Paris Agreement. The energy transition is not a question of technical feasibility or economic viability, but one of political will.

The state-of-the-art scientific modelling of the “Global Energy System based on 100% Renewable Energy – Power, Heat, Transport and Desalination Sectors” study simulates a transition to 100% renewable energy of the entire world, structured in nine major regions and 145 sub-regions on an hourly resolution of 5-year time periods from 2015 until 2050. The modelling computes the cost-optimal mix of technologies, based on locally available renewable energy sources.

By 2050, the world’s population is expected to grow from 7.2 billion in 2015 to 9.7 billion. Final energy demand is expected to grow by about 1.8% annually, driven by energy services for higher level of living standard, and is accompanied by massive energy efficiency gains.

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Electrification and decentralisation lead to more efficiency

Electrification across all energy sectors is inevitable (see Figure KF-1) and is more resource efficient than the current system. Electricity generation in 2050 will exceed four to five times that of 2015, primarily due to high electrification rates of the transport and heat sectors. Final energy fuel consumption is reduced by more than 2/3 (68%) from 2015 numbers, as fossil fuels are phased out completely and remaining fuels are either electricity-based or biofuels. Electricity will constitute for more than 90% of the primary energy demand in 2050. This electrification results in massive energy efficiency gains when compared to a low electrification trajectory (see KF-1). Almost all of the renewable energy supply will come from local and regional generation.

Solar PV and wind energy lead the transition

Primary energy supply in the 100% renewable energy system will be covered by a mix of sources, with solar PV generating 69%, followed by wind energy (18%), biomass and waste (6%), hydro (3%) and geothermal energy (2%) by 2050 (see Figure KF-2). Wind energy and solar PV make up 96% of total electricity, and approximately 88% of the total energy supply, which will have a synergetic balancing effect.

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100% renewable energy is cheaper than the current energy system.

• The levelised cost of energy for a fully sustainable global energy system will be slightly cheaper than for the current system, reducing from approximately 54 €/MWh in 2015 to 53 €/MWh by 2050 (see Figure KF-3). When taking into account negative externalities of the current system, which have been cited in numerous other contemporary studies, the 100% renewable global energy system is a substantially cheaper option.

• A 100% renewable energy system provides a win-win for the global community at large; with both economical and environmental benefits.

• Major regions can realise a substantial cost reduction including Middle East and North Africa (-31%), North America (-22%), South America (-34%), and Europe (-15%), while achieving zero emissions by 2050. The levelised cost of electricity decreases substantially from around 78 €/MWh in 2015 to around 53 €/MWh by 2050, while the levelised cost of heat increases from around 39 €/MWh in 2015 to around 49 €/MWh by 2050.

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• It can be concluded from the results that the transition eliminates international energy dependencies and helps to solve energy-related conflicts.

• A trend develops where the levelised cost of energy becomes increasingly dominated by capital costs, as fuel costs lose importance through the transition period.

• Investments in the energy sector increase through the transition and are spread across a variety of technologies with major investments in solar PV, wind energy, batteries, heat pumps, and synthetic fuel conversion (see Figure KF-3).

The total annual transport energy costs decrease through the transition period from around 2.09 trillion euros in 2015 to about 1.9 trillion euros by 2050. Final transport passenger costs decline for road transport, whereas there is a marginal increase in costs for marine and aviation transport. Final transport freight costs decline in case of road, remain stable for rail and marine and increase slightly for aviation.

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Global energy-related greenhouse gas emissions can be reduced to zero by 2050, or sooner, across all energy sectors

• Annual global greenhouse gas (GHG) emissions in the energy sector decline steadily through the transition from approximately 30 GtCO2eq in 2015 to zero by 2050 (see Figure KF-4). The remaining cumulative greenhouse gas emissions are approximately 422 GtCO2eq from 2018 to 2050. Energy-related GHG emissions account for more than 60% of total global GHG emissions in 2015.

• In contrast to popular claims, a deep decarbonisation of the power and heat sectors is possible by 2030. The transport sector will lag behind, with a massive decline of greenhouse gas emissions from 2030 to 2050 (see Figure KF-4).

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A 100% global renewable energy system will support millions of local jobs in the power sector

• In 2015, the global power sector employed approximately 20 million people, with more than 70% in the fossil fuel sector (see Figure KF-4).

• A 100% renewable power system will employ 35 million people and solar PV emerges as the major job creating industry, employing more than 22 million by 2050, followed by battery, biomass, hydro and wind industries.

• The approximate 9 million jobs in the global coal industry of 2015 will be reduced to nearly zero by 2050 and will be overcompensated by more than 15 million new jobs in the renewable energy sector.

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Global renewable energy generation and storage capacities will improve efficiencies and create energy independence

• Approximately 96% of renewable electricity generation will come from solar and wind energy by 2050, and with a significant amount of local generation, the system will be more efficient.

• Energy storage will meet nearly 23% of electricity demand and approximately 26% of heat demand. Batteries will emerge as the most relevant electricity storage technology and thermal energy storage emerges as the most relevant heat storage technology by 2050.

Sustainable biofuels and natural carbon sinks will offset emissions

• Biofuels will be produced only in a sustainable way on degraded lands. Globally, around 6.7 million km2 of degraded arid lands are available, on which 263 million tons of sustainable Jatropha plant oil could be harvested up to 2050. The potential to offset emissions range from 1 to 15 tCO²/(ha·a). Up to 10 gigatons of annual natural carbon sinks might be created on jatropha basis on degraded land.

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Desalination

• By 2050, water desalination will be nearly 40 times the amount of 2015. This will require substantial desalination capacities and some water storage. Desalination will account for approximately 4% of total primary energy demand in 2050, which can be fully met with renewables.

• Eurasia, the Middle East and North Africa, SAARC with India, Northeast Asia and North America will demand 91% of the global energy used for desalination. Europe, Southeast Asia, Sub-Saharan Africa, and South America share just 9%.

Regional differences in electricity supply

• The energy transition will have some key regional renewable energy generation differences (see Figure KF-6). Almost all Sun Belt countries will use solar PV as their primary source of electricity.

• South Asia (SAARC)2 has a world record share of 95% solar PV electricity generation by 2050 in its costeffective generation mix.

• In Eurasia, onshore wind dominates electricity generation, with the highest shares worldwide. Onshore wind ranges from 61% in 2025 to 47% in 2050, with solar PV generation only gradually increasing towards 2050.

• Few regions have a diversified mix of renewables with solar PV, wind energy, and hydropower in their energy supply, such as: the Nordic region, Western Eurasia, Central China, Chile, and New Zealand.).

• By 2025, North America is set to have approximately 25% of the global wind energy provision. Towards 2050, the costs of electricity provision in North America can be reduced by more than a third. The transition will be accompanied by an increase in jobs from around 1.8 million to about 2.7 million by 2050.

• The diverse range of energy systems is induced by locally available resources, which enhances energy security around the world; this could lead to a more peaceful and prosperous global community.

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Policy Recommendations

To ensure a smooth, fast, and cost-effective transition to 100% renewable energy across all sectors, governments need to adopt national legislative acts that will ensure the swift uptake in the development of renewable energy, storage technologies, sector coupling, and smart energy systems. Frameworks should include favourable investment conditions for all actors, including businesses and communities. The following key political support measures will accelerate the energy transition:

• Policies and instruments focused on sector coupling and enabling direct private investment in renewable energy and other zero emission technologies.

• Feed-in Tariff laws should be adopted to enable investments (under 40 MW) from decentralised actors, such as small and medium enterprises, cooperatives, communities, farmers and citizens. Tendering procedures for large scale investors should only be applied for utility-scale capacities above 40 MW.

• A responsible phase-out of all state subsidies to fossil fuel and nuclear energy generation is necessary.

• Introduction of carbon, methane and radioactivity taxes.

• Incentives created to spur the growth of renewable energy technologies; such as tax exemptions, direct subsidies, and legal privileges.

• Policies and frameworks that promote research, education and information sharing on renewable energy and zero emission technologies.

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