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<20 <50 <100 <20 <50 <100 <20 <50 <100 <20 <50 <100 <20 <50 <100 <20 <50 <100 <20 <50 <100 <20 <50 <100

$US per t CO2e $US per t CO2e $US per t CO2e $US per t CO2e $US per t CO2e $US per t CO2e $US per t CO2e $US per t CO2e

Energy supply Transport Buildings Industry Agriculture Forestry Waste Total

Figure 11.23 Estimates of the economic potential for global mitigation in 2030 for different sectors as a function of carbon price in terms of $US per tonne CO2e. The ranges shown by the studies are indicated by vertical lines. Sectors used different baseline scenarios in between SRES B2 and A1B. Note that not all categories were included leading to an underestimation of the total economic potential of the order of 10-15%. Also electricity efficiency potentials were incorporated in the building and industry sectors. The three columns on the right combine the other columns into a total with a scale on the right-hand side.

are used for heating, industry and transport. It has already been mentioned that, currently, liquid fuels such as ethanol derived from biomass are significantly more expensive than those derived from fossil-fuel sources. Although there is an expectation that the processing of biomass will become more efficient - the rapid development of technologies in bioengineering will help - it is unlikely that the employment of biomass-derived fuels can occur on the scale required without the application of appropriate financial incentives.

There is a further crucial area where incentives are also required if renewable energy sources are going to come on stream sufficiently rapidly to meet the need. That is the area of research and development (R&D) - the latter is especially vital. Figure 11.22 illustrates how R&D fit into the normal process of technology development. Government R&D, averaged worldwide, currently runs at about $US10 billion per year or about 1% of worldwide capital investment in the energy industry of about $US1 trillion (million million) per year (about 3% of GWP). On average, in developed countries it has fallen by about a factor of 2 since the mid 1980s. In some countries the fall has been much greater, for instance in the UK where government-sponsored energy R&D fell by about a factor of 10 from the mid 1980s to 1998 when, in proportion to GDP, it was only one-fifth of that in the USA and one-seventeenth of that in Japan.59 It is surprising - and concerning - that such falls in R&D have occurred at a time when the need to bring new renewable energy sources on line is greater than it has ever been. Energy R&D needs to be substantially increased and carefully targeted so as to enable promising renewable technologies to be introduced more quickly. An increasing fraction of capital investment in the energy industry is also needed for new renewable sources. In the box above are listed some of the policy instruments that need to be applied for this revolution in the way we generate our energy to really get under way.

In a speech in 2003, Lord Browne, the Group Chief Executive of British Petroleum, emphasised the importance of actively planning for the long term. After explaining the steps to be taken to combat change in the energy sector and the major investments that will be required he went on to say:60

If such steps are to be taken, it is important to demonstrate the real value of taking a long-term approach which transcends the gap in time between the costs of investment and the delivery of the benefits. Political decisions are often taken on a very short-term basis and the challenge is to demonstrate the benefits of the actions which need to be taken for the long term ... The role of business is to transform the possibilities into reality. And that means being severely practical - undertaking very focused research and then experimenting with the different possibilities. The advantage of the fact that the energy business is now global is that international companies can both access the knowledge around the world and can then apply it very quickly throughout their operations.

Guide to Alternative Fuels

Guide to Alternative Fuels

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