Environmental Engineering Reference
In-Depth Information
on his capital. This period can be long in renewable energy - making the
valley of death seem alarmingly wide and giving the investor a financial
panic attack.
That's partly why the Carbon Trust, a body set up by the UK govern-
ment to act as a corporate midwife to low-carbon companies, cautions
that the cost of sustaining and deploying low-carbon technologies and
getting them through the valley of death can be up to forty times that of
the initial R&D phase.
The recession made credit scarcer for renewable entrepreneurs. But
another problem for renewable technologies is that they are very capital-
intensive. Not necessarily more expensive than other projects. Indeed,
because the fuel is often free wind, sun, tide, wave running costs are low.
But this means that almost a hundred percent of the overall cost is in the
capital equipment, which must be paid for upfront. New ways will have to
be found of coping with this.
One way might be for financiers to put up the capital expenditure and
be repaid by the project revenue. This is working with the most tried and
tested of the renewable technologies - onshore wind. A turbine company
called Wind Direct has formed a joint venture with HgCapital to erect tur-
bines for industrial energy-users and to split the revenue with the energy
user. HgCapital, the funders, are a large renewable-energy investor, with
controlling interests in 35 European renewable energy projects. It's likely
that we will be seeing similar large renewable investors emerging over the
next decade.
The table overleaf, adapted from the IEA's
Energy Technology
Perspectives
, demonstrates the scale and cost of the low-carbon challenge
before us. The first column of figures gives an idea of how much CO
2
(in
gigatonnes, or billions of tonnes) a range of technologies that already exist
or are in advanced development would save in a scenario where the goal
was to bring global emissions back to 2005 levels by 2050. This is not a
very ambitious target.
On the money side, the assumption was that these technologies would
not incur or be used in such a way as to incur top marginal costs of more
than $200 per tonne of CO
2
saved or avoided. So the total cost of the bill
for using these 13 technologies (note that nothing is expected from hydro-
gen fuel cells in cars) would be between $3.7 trillion and $4.5 trillion.
Hardly spare change, but not, in a global context, exorbitant.
But now look at the cost of doing what we think we know we have to do
by 2050 - halve today's (or 2005) level of emissions by 2050. This would
require utilizing, in the IEA's words, “technologies still under development,
