“There is no single ‘silver bullet’ solution that can provide low-emission energy for our expanding economies,” says the WRI report. Instead, a whole variety of measures across the economy is needed. In 2004, Princeton researchers Socolow and Pacala introduced the Wedge Model that serves to split up the task of reducing CO2 emissions into seven ‘wedges’. Each wedge would reduce CO2 emissions by 1 gigatonne per year by 2050 in comparison to the business as usual scenario. The WRI now takes up the Wedge Model and studies the technology, the investments and the policies needed to make it happen.

Most of the climate wedges rely on existing technology, for example more efficient buildings and vehicles, CO2 capture and storage, replacing coal plants with nuclear power or wind parks. The technologies need to be scaled up from niche markets, through demonstration setups, to commercial deployment. The authors of the WRI report argue that private money is needed to scale up and optimise the technology and that investments will be attracted by clear price signals for future technologies. Government-funded R&D should focus on longer term horizons and investigate riskier options.

Investment in low-carbon technologies is an emerging trend. Clean technology investments totalled roughly 2 billion Euros in 2006, an 80% increase over 2005 and a 140% increase over 2004. Clean technology funds now rank the fourth most popular type of fund behind software, biotech and medical devices. Many low-carbon technologies are currently ready for large scale and rapid deployment and therefore require financing from players in the market, as public resources will prove insufficient funding to meet the present financing requirements of low-carbon technologies, says the WRI report.

In order to stimulate the investments needed for the required scaling up, policies should be ‘loud, long and legal’. Meaning politicians should command public confidence, they should provide relative certainty to investors over longer periods of time (typically one or two decades) and the policies should be both legal and enforceable.

The report authors would prefer policy to be technology-neutral. Politicians should limit themselves to setting the goals and should let the market decide over the best technology. They mention the EU emissions trading system (EU ETS) as an example, of which they think “something like this will feature strongly in an emergent international system.”

Once the target is set, policies can and usually do take different forms: cap & trade, taxes, subsidies, technology standards or performance standards. A variety of policies is inevitable, says the report. It’s the likely permanent state of any market.

So here we are. The technology exists, and the capital is there, but how to get investors to put their money in low-carbon technology at a sufficient scale? The authors say that financial and political communities need to broaden their horizons. Also, obstacles to deploying low-carbon technologies and smarter infrastructure on a large scale must be overcome. But how exactly, even these bright minds cannot tell.

More information:

World Resources Institute: ‘Scaling Up: Global Technology Deployment to Stabilize Emissions’ by Fred Wellinton, Rob Bradley, Britt Childs, Clay Rigdon and Jonathan Pershing. Free for download from this page.