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UN: Climate Change Mitigation Could Require Additional US$88B Annual Investment in Global Transport Sector in 2030

Greeneun
World transportation energy use under the mitigation scenario is still dominated by petroleum. Click to enlarge. Source: Greene (2007)

The additional investment in the global transport sector required under a scenario for mitigating climate change by rolling back emissions in 2030 to current levels could reach US$88 billion annually by 2030, according to a new report issued this week by the Secretariat of the United Nations Framework Convention on Climate Change (UNFCCC). Of the $88 billion, $9.2 billion is for biofuel production and the balance mainly for more costly hybrid electric vehicles.

The report estimates that total additional global investment and financial flows across all sectors required by the mitigation scenario will reach US$200–210 billion in 2030.

Overall, the report concludes that addressing climate change over the next 25 years will require significant changes in the patterns of investment and financial flows amounting to between 1.1 to 1.7% of global investment (or about 0.3-0.5% of estimated global GDP) by 2030.

Additional financial flows needed in 2030 for adapting to climate change impacts amount to several tens of billions of dollars, in particular in sectors and countries that are already highly dependent on external support such as the health sector in least developed countries or for coastal infrastructure in developing countries vulnerable to sea level rise.

The study shows us that a conscious effort to shift from traditional investment to more climate-friendly alternatives will require governments to adopt new policies and change the way they use their funds. The required shift in future investment and financial flows needs a combination of actions by the intergovernmental process under the UNFCCC and national governments.

—UNFCCC Executive Secretary Yvo de Boer

Transportation. In 2004, transport consumed 1,969 Mtoe of energy—a quarter of the world’s final energy consumption—and was responsible for about 14% of global GHGs, 5.8 Gt CO2 eq in 2004 nearly all of which was CO2. Transport accounts for one-fifth of energy-related CO2 emissions.

Road transport, including passenger and freight, is responsible for almost three quarters (73%) of the sector’s energy use and CO2 emissions, followed by air transport (12%), marine transport (10%), rail (4%) and all other modes (1%).

The volume of road transport and its mode distribution varies widely across regions. In 2000, North America and Western Europe had 50% higher miles per vehicle of road travel than the rest of the world combined. This situation is changing rapidly, the authors note, as vehicle ownership increases in developing and transitional economies.

Under the business as usual scenario (the reference scenario), total energy consumption in the transport sector is projected to be 3,111 Mtoe in 2030, an increase of 58% in 25 years.  Transport CO2 emissions increase from just over 5.5 Gt CO2 in 2005 to 8.7 Gt CO2 in 2030—also an increase of 58%.

Under the mitigation scenario, total transport energy consumption drops to 2,664 Mtoe in 2030—an increase of 35%—with CO2 emissions projected to be 6.7 Gt—an increase of 22%.

The mitigation scenario relies on increased use of hybrid electric vehicles and biofuels, and further vehicle efficiency improvements, including ongoing advances in the combustion engine. In a detailed background paper prepared for the analysis of this sector, David Greene (ORNL) pointed out that:

Substantial opportunity exists to improve the energy efficiency of conventional vehicle technology, based on internal combustion engines utilizing liquid hydrocarbon fuels. Engine efficiency improvements on the order of up to a 20% reduction in fuel consumption should be achievable over the next decade or so by taking advantage of a variety of proven or near market-ready technologies (e.g., direct injection, turbo-charging with engine downsizing, variable valve timing and lift, variable displacement, engine-off-at-idle, friction reduction, etc. See, e.g., EEA, 2006; NRC, 2002; WBCSD, 2004).

Near-term improvements to transmissions (e.g., 6-7 gear automatic transmissions, automated manual transmissions, continuously variable transmissions) have the potential to improve fuel economy by 5-10%. Making use of all conventional technologies EEA estimates a potential reduction in greenhouse gas emissions of 20-25%. The IEA (2006b) estimates that the fuel economy of gasoline vehicles could be improved by 40% by 2050.

Increased market penetration of hybrid vehicles is a key component of the Mitigation Scenario.

The market share for hybrid vehicles rises from 18% under the reference scenario to 60% under the mitigation scenario, along with a doubling of biofuel use and further improvement on efficiency of internal combustion engine.

Petroleum remains the projected dominant source of energy for transportation under the mitigation scenario, with an 83% share, according to the report.

Nearly all additional transport investment needed under the mitigation scenario is for the purchase of motor vehicles and production of transport fuels; most of this investment will be made by the private sector. There will be no significant change to large transport infrastructure investments between the reference and mitigation scenarios, such as roads, transport systems, airports, and ports, in which governments usually invest in.

Increased use of bio-fuels as blends with conventional fuels will need to be driven by policies. Biofuel, production and consumption are likely to be co-located, as a general rule.

The shift to hybrid vehicles projected under the mitigation scenario will require government policies such as vehicle efficiency standards or other policies to raise the market share of hybrid vehicles. Vehicle buyers are unlikely to voluntarily pay the added cost, about USD 1,000 per vehicle. Given the rapid growth of vehicle ownership in non-Annex I Parties, they will need to adopt such policies as well. Many developing economies will not have domestic capacity for vehicle production but will record increased spending on vehicle purchases under such policies. These countries will also require investment in physical and human capital for repairing and maintaining advanced technology vehicles.

—Background Paper, pp. 66-67

In his background paper, Greene notes that in addition to vehicle efficiency and the use of lower-carbon fuels:

Significant other options exist for mitigating transport GHG emissions via pricing of transport, efficiently operating transport systems, influencing the level of demand and modal structure of transport via infrastructure investments and land use planning and regulation.

The report concludes that while efficiency improvements for vehicles and increased use of biofuels are likely to require government policies, the investment will come mostly from the private sector.

The analysis in the report does not provide for an estimate of total cost of climate change mitigation or of the total cost of adaptation to impacts of climate change. The analysis covers only the investment and financial flows needed in 2030, that being an appropriate time period for an analysis of investment flows, according to the authors. The level of detail available from published scenarios declines sharply as the time horizon is extended beyond 2030.

The report is designed to help delegates meeting for the United Nations Climate Change Conference in Bali (3 to 14 December) in assessing the financial architecture needed for a post-2012 agreement, for which negotiations are expected to be launched this year.

Resources:

  • Report on the analysis of existing and potential investment and financial flows relevant to the development of an effective and appropriate international response to climate change

  • Background paper on Analysis of existing and planned investment and financial flows relevant to the development of effective and appropriate international response to climate change

  • Detailed analysis by sectors prepared for background paper

  • David L. Greene (2007), “Opportunities for Greenhouse Gas Mitigation in Transport and Implications for Investment

  • Comments

    jack

    Less than the US alone spends in present-day dollars on the Iraq War? I call that a bargain.

    Rafael Seidl

    The $88 billion number looks very big but it reflects the global total, not just for the US. It's not peanuts but entirely manageable, especially if those are 2030 dollars rather than today's.

    In addition, predictions are always wrong, especially about the future. Assumptions about future technology are almost always too conservative, while assumptions about the future geopolitical situation can easily be over-optimistic. For example, who knows if the turmoil in Iraq can be contained indefinitely or spill over its borders? Who knows if and when Chinese leaders decide environmental protection is more important than explosive growth if they want to keep their cushy jobs?

    So, please take any assertions about the cost of policies in 2030 with a large grain of salt. The predictions could easily be off by 20%, perhaps more.

    Kevin h

    With the balance of probability of global warming and peak oil continuously moving towards the downside, this is real investment money that needs to be spent now.

    I am a Brit who lives in the US, and am sometimes quite saddened that the US reputation for innovation and thought leadership has been lost by politicians and home grown auto manufacturers alike. Innovation is the very thing that has made the US successful in the last 150 years

    critta

    "Petroleum remains the projected dominant source of energy for transportation under the mitigation scenario.."

    Looks like someone forgot to tell them about peak oil. Bureaucracies seem to completely ignore the fact that peak oil will totally change the game. Their 25 year predictions are meaningless while they continue to ignore the fact that oil demand is growing while supply is even now starting to plateau.

    So the cost to avoid the burning of petroleum will be 88B$. But what would be the benefit ? If you pay a few billion $ to american companies to build greener cars and powerplants, a lot of that money goes to american people and consequently back to the treasury.
    Macro-economically, paying 2b$ to buy saudi oil is more expensive for America than paying 5b$ to american companies.
    A dollar doesn't always equal a dollar.

    Stan Peterson

    Goo and dribble.

    The chart supplied gives the game away; it is way too smooth to predict any real change in technology. Such a change, as we all on these pages know, is but a few years off, from occurring.

    Increasing the CAFÉ from 27 to 35 MPG, is not what will really happen; consumptive technological progress will get that much; but we all know that the PHEVs/BEVs will take CAFÉ to 400-500 MPGe. That is a discontinuous change that should be reflected in the chart as a dramatic non-continuous break in the function, and not a smoothly rising consumption graph.

    The only concession this "non-study" study makes, is to Hybrids like micro, mild, or Prius type HEVs, that do no fossil energy substitution.

    The US is already committed on a course that will power all those electric substituted LDVs, by falling water, splitting nucleons, and eventually fusing them, instead; along with a minor contribution from so-called renewables. Fission generation is already committed, in NRC COL license applications, and will rise to 40%, in the US, and more elsewhere. Hydro will stay at 16% in the US; and renewable will get to as much as 2%. More significant is that a decreasing share will come from even clean fossil coal.

    Oil demand is already programmed for a coming demand but not supply collapse, (Sorry Peakists). That demand collapse (and price collapse), will arrive in the '20s, if not sooner. When 70-90% of the ground transport energy comes from electrons, the need for high priced oil will collapse. Oil is essentially a one application commodity, much like the buggy whip.

    The pollution mitigation problem will have long been solved, and the technology to do that will be progressively cheaper and optimized. Cost for the residual cleanup equipment, will be lower than today from that factor, and the reduced usage of fossil sources.

    Like I said, a "study" generated to reach the pre-desired conclusions. But done to sound "pseudo-scientific", but really phony as hell.

    Garbage IN, Garbage OUT.

    Stan Peterson

    Kevin h,

    I fear you do recognize that America profits from the technological advance of NOT ONLY its own manufacturers. To a large degree, its market openness is a strategic weapon of great significance and even greater benefit to the USA.

    If an American or a Japanese, German or even, Korean engineer builds a better transportation mousetrap, it ends up in the US marketplace, improving the cost structure of US businesses that have a cost function attributed to transport. In practice, that means virtually everybody.

    The other unappreciated fact is the open US market invites LDV manufacturers worldwide, to improve their technology and processes to compete for a share of that enormous, profitable market, here.

    For example, If a Japanese manufacturer proves the efficacy of a HEV; others will follow, and the open market opportunity of the US, forces that adoption of matching innovation on both domestic US and other foreign vendors whether they desire it or not. (Does Ford and Nissan use Toyota's Hybrid Synergy Drive?)

    If China wants to export cars to the USA, its manufacturers must be able to build high quality, pollution-controlled vehicles for export. Old time communist, "non-quality standards" don't apply, at least for long. Having done so, it is easy for its own government to mandate these benefits to its own populace, on vehicles sold internally.

    It used to be fairly common for the Western automakers, American, or EU, to sell their antiquated designs and tooling to some third world cesspool, to manufacture and assemble antiquated vehicles. That is more the exception than the rule today.

    Why? Because, that antiquated tooling can't compete with the third world's own manufacturers who are building to meet current USA specs for export to the USA.

    In essence the world technological level is ratcheted to a much higher US plane, by the genius of the American economic system. Rather than lament the US fading manufacturers, you might consider a novel idea, instead.

    You might take proper wonder at the genius of having had the world manufacturers become in essence, quasi-American manufacturers, adopting changes that benefit America, usually before benefit to their own populace.

    Only incidentally, and Oh-by-the-way, the rest of the world, as well. Think of it as a painless, inducement to ""virtually-nationalize" all the world's advanced manufacturers as if they were American companies in America's "virtual 51st" State.

    Kevin h

    Stan

    I wonder if Henry Ford would be happy with your answer, I think not. It is great that the US market size and previous success and therefore wealth allows it to drive global improvements, but why do you think that GM is worth $17Bn, Apple $116Bn and Toyota $205Bn.

    As I said in my earlier post, innovation drives success and value, and therefore wealth, you can pretend to be as free market as you like but the dollar is sinking (a value of the US government?) and Toyota could buy GM with its balance sheet cash.

    All I ask for is for the auto industry and the government to step up, I like most of the people on this board, would love the US auto industry to be successful. i

    jack

    In essence the world technological level is ratcheted to a much higher US plane, by the genius of the American economic system.

    You mean the system where the Feds need to dangle tens of billions of dollars in subsidies for the "market" to finally get tepidly behind nuclear power?

    Yeah - that's real genius there, Stan. You got that right.

    So - do you believe in the genius of the market or not, Stan? Because it rejected nuclear power.

    Stan Peterson

    Jack,

    I along with my fellow environmentalists helped make America look at the commercial nuclear business as it was constituted then, glowing promises, and the warts and all.

    Construction standards were very uneven; often good, but some times abysmal.

    Safety standards of second generation designs were unproven.

    The designs required active safety systems and careful "driving" by the plant operators to prevent problems. The relatively primitive plant control systems made that careful "driving" a potentially difficult proposition,in some circumstances.

    No test to destruction for LOC had been done. It was all paper studies.

    No one had applied rigorous scientific methods as developed in the Apollo programs, to determine the true probabilities of a LOC accident.

    Worse, no one was minding the store, as the AEC was both chief regulator and chief cheerleader. You can do one or the other, but not both.

    Opponents reasonably said lets pause and improve. I am proud that I was one such. Opponents succeeded in stalling construction long enough to make partially completed plants much more expensive than fore casted, due to all the legal stalling.

    Finally, mobilizing a mass movement to insist on reviews and quality assessments, caused certain excess propaganda and to recruit some dimwits, to join the movement, but they really didn't even know why.

    Ironically, Three Mile Island and the response to it, answered the prayers of all sides.

    Three Mile Island was that de facto multi-billion dollar test to destruction,that no one wanted to pay for. It was the very test for LOC accident safety, that we critics demanded. The LOC safety systems worked.

    It created the need for technical Apollo type reviews; forced the regulatory changes; mandated a new method for quality assured construction; defanged the stalling tactics of opponents; forced the Apollo-type "man-rating" calculations.

    These calculations showed the need for an advanced generation of Plant designs, two, now-measurable, magnitudes safer, before regulatory approvals could be routinely granted. Meeting the needs revealed in the Three Mile Island requirements, is the basis for the Gen III+ plant designs.

    To accomplish all this took time and money and leadership to cajole the changes and investments needed. America had it. In the interim, even the biggest but rational opponents were forced to their own review of the alternatives. Facile answers, proved just that facile, and non-existent. Wind, wave, solar and "virtual efficiency power", were but a few years away in 1970, and in 2007 still are but a few years away. The easy efficiency changes have been adopted.

    Thoughtful environmentalists like Moore, and Lovelock (and yes, even my humble self) paused, reflected, and endorsed the changed situation. We are endorsing a nuclear power generation system, that is not at all the same thing that we rejected then. It is incomparably better. And a difference in kind, not merely a difference in degree.

    The rational questions we posed, now have been asked and answered. The need has been documented, and met. The ramp up to the resumption of Nuclear electrical energy production has taken on the magnitude of an oncoming Tsunami. The Nuke pipeline is now full of orders for standardized Gen III+ plant designs. More such orders are in abeyance waiting the first experiences, in construction and regulatory outcomes.

    Just building that committed pipeline of site-specified plants and the standard plants programed to be built on those designated sites, will double the proportion of nuclear generated energy to about 40% in the US. These plants will come on line between 2015 and 2020 when the PHEV revolution will really be achieving mass production numbers.

    I feel sorry for you, Jack. You remind me of the mindless "No Nuke" sign carriers, who never really knew what they were protesting about, save it was away to meet "chicks". And of course, to have a little fun, and revolution for the hell of it, who are now feeling betrayed.

    All your braying is finding you to be virtually alone and with little support. Yes, hardheaded American capitalism and rational human beings have made their decisions, and moved on.

    Yes Jack, the open reasonable people have spoken. Hardheaded businessmen, using their own dollars, are ordering the clean safe, Nukes, that we all wanted originally; but weren't getting, then.

    kevin h

    Stan,

    sad that you did not respond to my post, it is what the country is feeling, at least I think so.

    jack

    I love your blowhard speeches, Stan. They start off seeming rational and intelligent, then start to unravel into gibberish more and more, ending with copious personal insults at the end.

    All your braying is finding you to be virtually alone and with little support. Yes, hardheaded American capitalism and rational human beings have made their decisions, and moved on.

    Yes Jack, the open reasonable people have spoken. Hardheaded businessmen, using their own dollars, are ordering the clean safe, Nukes, that we all wanted originally; but weren't getting, then.

    "Hard-headed capitalism," Stanley, doesn't involve 10s of billions in SOCIALISM -- big old handouts from the government to your supposedly perfect solution. These aren't hardheaded businessmen -- it's WELFARE-LOVING SOCIALIST LACKEYS at the feeding trough of government money.

    All that pissing and moaning about "watermelon environmentalists" and every other form of red baiting, yet here you are proclaiming the nuclear industry as some great victor in some great capitalist world, yet it's precisely the kind of economic loser that a free market actually refuses to support (even when money is dirt cheap!) and it needs SOCIALISM and FEAR-MONGERING to ATTEMPT to revive it.

    As for "being alone," here's reality (which you are clearly disconnected from, you nutty old fart):
    "A new 18-country opinion survey sponsored by the International Atomic Energy Agency (IAEA) found that "while majorities of citizens generally support the continued use of existing nuclear reactors, most people do not favour the building of new nuclear plants."

    Indeed, the findings of the survey, conducted by Globescan Inc. show that "six in ten citizens (62%) overall believe that existing nuclear reactors should continue to be used, yet six in ten (59%) do not favour new nuclear plants being built."

    So, despite the well-funded and unceasing lie campaign by nuclear lackeys such as yourself (who want the big government teat to save them), the majority of people don't want new plants.

    You're a poor historian, you're a poor analyst of present conditions, and you're a poor prognosticator who is going to lose US$100,000 to me in 2012. But for someone so consumed with racism and various forms of hatred (as evidenced by those necrophilic fantasies of your from Volokh) and left behind by the times, it's really not surprising. I mean, what could be funnier than someone with such great intellectual conceit who actually believes that global warming is a massive conspiracyy of international communists, that global corporations are do-gooders, and that CO2 concentrations have not increased in the past 150 years.

    Bray on, buddy. We love the entertainment you constantly provide.

    jack

    % change in net generation, past 12 months, OECD countries:

    Nuclear -4.9%
    Renewables +17.8%

    What is $88B on the world energy scale? Not much at all, but....

    Under the current administration, USA has chosen to fight useless oil wars at a cost of well over $500B instead of actively supporting national creativity and innovations.

    Had USA invested (in the last 7 years) the same $500+B in ground transport electrification and other means of replacing fosil fuel, oil imports would be going down already and probably reduced to zero by 2020.

    How long will it take future adminstrations to catch up? Eight years + $500+B is a very large gap to fill, even for USA.

    High energy density, quick charge/discharge lithium battery & super capacitor factories could already be running at high speed.

    The Big-3 could already be mass producing 5+ million PHEVs and BEVs a year by 2010. GM would certainly still be No. 1 with 10+ different PHEVs & BEVs on the roads.

    Bad choices have been made and are still being made every day. Correcting the delays will certainly cost a lot more than $88B and even $500B in direct and indirect cost.

    Kevin

    I think it is facinating (read sad, sick, perverted, obtuse, offensive)that we have a president who will go to war on such little evidence, but will not lift a finger to combat global warming with so much evidence!

    jack

    I think it is facinating (read sad, sick, perverted, obtuse, offensive)that we have a president who will go to war on such little evidence, but will not lift a finger to combat global warming with so much evidence!

    That comes from a morality/viewpoint which values the greatest good over the private benefit of a few, and where collective rationality would be important. Those people don't function that way -- they're thieves, nothing more.

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