Scaling up low-carbon investments: Focus on renewable energy in Latin America

Rao S (2009). Scaling up low-carbon investments: Focus on renewable energy in Latin America. Working Paper. UNIDO Global Renewable Energy Forum "Scaling up Renewable Energy", 7-9 October 2009, Leon, Guanajuato, Mexico

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Abstract

This paper describes the current background and state of energy sector investments and examines the needs in the future to transition to a low carbon, globally accessible energy system. The discussion is global but the Latin America region is particularly highlighted.

Global greenhouse gas emissions need to peak within a decade or two and decline vigorously thereafter if we are to limit the climate change to 2 degrees C by the end of the century, thus highlighting the need for immediate investments into low carbon energy. It is necessary to effectively integrate these investments with development goals including access to energy, reduction of in-door air pollution, improvements of labour productivity and reduction of land degradation. Thus, low carbon development is a new paradigm for limiting climate change while at the same time enhancing development outcomes. The recent economic crisis, while impacting global investments has also lead to stimulus packages in many countries that are directed towards "green" development. It will be important to continue this trend to prioritize low carbon energy in development strategies and identifythe main recipients of energy investments in the next two decades.

A global energy system that can effectively limits climate change to 2 degrees C and provides access to energy is seen to require annual investments of 2-3 trillion US$ by 2030, less than 3% of the estimated global GDP in that year. Low carbon energy supply and energy efficiency improvements are identified as principal areas for investments in the next two decades. Renewable energy in particular is seen to be a major component of a low carbon energy strategy. However there will need to be an enormous scale up of current investment levels in these sectors in the next two decades and will entail massive restructuring of existing infrastructure. For Latin America and the Caribbean, this would involve annual investments of around 180 billion US$ in 2030 and lead to more than a 30 percent reduction of CO2 emissions from the energy sector compared to current levels. Renewable energy will need a major share of these investments (more than 50 percent of total investments), mainly in decentralized electricity and biofuels production, both of which would need to be enormously scaled up compared to current levels.

The scale-up of investments in the energy system will require continued public funding through innovative financing mechanisms and but private-public partnerships will be important. Establishing carbon markets will be essential to provide the necessary impetus for investments. Technology will need to be at the forefront of the climate debate and framework for a massive scaling up particularly of investments in energy research and development. Also, technological transfer and deployment would need to be clearly defined.

Item Type: Other
Research Programs: Energy (ENE)
Bibliographic Reference: Working Paper. UNIDO Global Renewable Energy Forum "Scaling up Renewable Energy", 7-9 October 2009, Leon, Guanajuato, Mexico
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Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:42
Last Modified: 10 Feb 2016 16:13
URI: http://pure.iiasa.ac.at/9029

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