In the lead up to COP21, the Paris Climate Change Conference in December last year, each country involved was asked by the United Nations to prepare an Intended Nationally Determined Contribution (INDC). A report published last month by UK-based energy consultancy Ecofys shows that achieving the emission reductions nominated in a subset of these INDCs is heavily reliant on international financial support.

The report entitled ‘Pathways to Paris’ was commissioned by the Energy Transitions Commission. Ecofys was asked to analyse INDCs from the European Union (28 countries combined) and 16 other countries including China, the United States, India and Japan. Among these 16 non-EU countries are eight of the world’s top 10 emitters that accounted for 78% of global energy-related carbon dioxide emissions in 2012.

According to the United Nations, countries have two main options for emission reductions associated with their energy supply

According to the United Nations, countries have two main options for emission reductions associated with their energy supply. The first is to decarbonise it by increasing the share of low carbon sources, including hydropower, bio-energy and solar energy. This can be complimented by shifting the supply mix to less carbon intensive fossil fuel sources. The second option is to reduce total energy demand by improving energy productivity. More efficient production techniques, technologies and behaviours will be required to achieve this reduction in demand. Regardless of which way a country chooses to counter their energy emission levels, significant changes in their power, construction, transport, industry and agricultural sectors will be required.

As innovation will bring improved low carbon energy technologies and policies, it is likely that future INDCs will include more significant decarbonisation. Since the submission of the current INDCs late last year, there have already been a number of positive developments with respect to decarbonisation, especially in developing countries. China’s 13th Five Year Plan is one example – under their plan, China’s solar and wind capacity are expected to increase to 500 Gigawatts and 400 Gigawatts respectively by 2030.

In developing their INDC, each country was not limited in defining their targets or by the methods through which they seek to achieve them. As a result, it is difficult to compare one country’s INDC with another. Ecofys’ analysis focuses on the priorities countries identified to reduce their emissions as part of their INDC, the changes they expect in their power generation capacity by 2030, and policies they may want to emphasise in their next INDC submission due in 2018.

Ecofys identified the following trends in the INDCs submitted to the UN last year by the participating 28 European Union and 16 non-EU countries:

A dramatic expansion in renewable energy (especially in developing countries)

  • The planned increase in renewable energy generation by 2030 is more than double than that from fossil fuels. This increase will raise the percentage of renewables in the worldwide energy supply mix from the current 20% to approximately 33% by 2030. Approximately 66% of the increase in renewable energy generation will be installed in developing countries
  • The increase in renewable energy generation in China will be greater than for the European Union, the United States and Japan combined
  • More than US$2 trillion dollars will need to be invested worldwide over the next 15 years to realise the planned increases in renewable energy generation

Limited growth in natural gas power generation in developed countries and significant growth in coal generated power in developing countries

  • Natural gas is often discussed as an alternative to coal, as it is capable of delivering significant emissions reductions. According to the INDCs, natural gas-fired energy generation will increase by approximately 1,600 TWh by 2030 – with 70% of this installed in developing nations
  • To shift towards natural gas, each country’s energy strategies and resultant infrastructure will need to be compatible with future progress to even lower and eventual zero carbon emissions

Very limited measures to decarbonise energy supply beyond the power sector

  • According to the submitted INDCs, the anticipated increases in renewable energy capacity are significant. However, on average, power currently accounts for only 33% of global primary energy consumption
  • Very few INDCs outline a plan to decarbonise energy supply to their transport, building or industry sectors. Decision makers will need to develop policies that facilitate total decarbonisation of these sectors. Such decarbonisation should proceed when it is technically feasible and cost effective compared with further power sector decarbonisation or energy efficiency improvements

The average energy productivity will increase by 1.8% annually however there will be significant variations

  • Improved energy efficiency and a shift to less energy intensive sectors in China and India are expected to drive most of this annual increase
  • INDCs rarely specify how different sectors can achieve energy efficiencies. There are many opportunities to achieve such efficiencies through improved policies (e.g. standards, energy pricing) and new technologies. Countries will need to learn from each other and better coordinate their efforts

One fifth of total global emission reductions depend on international financial support

  • The extent to which emission reductions depend on international finance ranges from between 30-50% in Argentina, Indonesia and Mexico; to 100% in Ethiopia and India
  • Multilateral development banks and specialised climate finance mechanisms are critically important. Development banks can provide technical support for the development of sustainable infrastructure sector plans as well as long term finance that can mitigate investment risk

Read the Ecofys ‘Pathways to Paris’ report here

The Ecofys report should prompt some reflection among Government officials worldwide, regardless of whether or not their INDC was analysed in this report. While financial support is obviously critical to ensuring the emissions reductions that countries have pledged in their INDC are realised, I believe there are two key finance-related messages in the report that Governments should focus upon. The first is that mechanisms accompanying finance or facilitated by that finance (e.g. technical support for policy creation/implementation) are as equally important to realising emissions reductions as purely providing the funding itself. The second is that attention clearly needs to be focused beyond achieving emission reductions in the power sector.

This is not to say that reductions in the power sector aren’t important – they absolutely are, given that the power sector consumes approximately 33% of global energy. Rather, I am alluding to the comment in the Ecofys report regarding the need to decarbonise the transport, building and industry sectors. Given that achieving emission reductions is heavily reliant on international financial support, it stands to reason that funding bodies are likely to expect Governments to include all sectors that consume energy in their emission reduction scenarios for which they are requesting funding.

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