Blog Post

Getting better all the time: The benefits of learning for decarbonisation

The technological development will dramatically impact decarbonisation cost. In this blog post, the author suggests that national decarbonisation strategies should put a special emphasis on the benefits of learning.

By: Date: April 16, 2019 Topic: Energy & Climate

This blog post is based on the publication put together in the framework of the COP21 RIPPLES project.This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 730427.

Technological improvements are seen as a physical law that will substantially contribute to reducing the cost of global decarbonisation efforts. Hence, the expected learning rates built into models that assess the cost of decarbonisation are substantial. The climate strategy proposed by the European Commission assumes, for example, that the cost of solar photovoltaics will fall by 36% and the cost of wind turbines will fall by 27% between 2020 and 2050. The good news is,  these forecasts are rather conservative compared to the observed cost reductions in the past decade. According to the International Renewable Energy Agency (2018) cost of solar power generation fell by 70% between 2010 and 2017 while onshore wind projects installation cost fell by 19% between 2010 and 2016.

Learning matters

The technological development will dramatically impact decarbonisation cost. Research in the framework of the COP21Ripples project shows that a 50% lower learning rate for wind and solar technology alone would induce a 19% increase in total decarbonisation cost. On the other hand, a 50% higher learning rate could reduce energy system cost by 17%.

Learning depends largely on deployment, and early deployment yields additional value

Learning-by-doing was seen as a key driver of the reduction of technology cost in the past. Research in the framework of the COP21Ripples project indicates that technology cost developments for certain technologies can be relatively accurately predicted based on the rate of their deployment. In a scenario with a 30% increase in annual deployment, the cost of new installations drop by 17% for solar and 13% for wind compared to a medium deployment scenario (10% annual growth).

This indicates that countries should start to develop and deploy low-carbon technologies early as technology cost reductions accumulate and allow a sooner switch from fossil to low-carbon technologies. Hence the total cost of decarbonisation might be reduced if early deployment is rewarded.

Making regional specialisation productive for speeding up learning

Keeping global temperature increase below 2°C will require an almost complete decarbonisation of our energy system in the foreseeable future (early in the second half of this century). There will therefore be a growing market for all sorts of low-carbon technologies (vehicles, power plants, appliances, batteries…) that will replace the existing stock of high-carbon technologies. Policies to develop and deploy corresponding technologies might not only speed up the necessary learning but also enable the development of comparative advantages. These advantages typically develop in industrial clusters and not all regions have the potential to excel in all low carbon technologies. Hence, it might be sensible for regional and national policymakers to make educated guesses on what type of support might fall on the most fertile ground in their jurisdiction. Regions with a strong car industry might, for example, benefit more from aggressive low-carbon vehicle deployment programs, while regions with a successful semiconductor industry might benefit more from public support for research in photovoltaics.

Success of policies depends on whether they target the national innovation system

Support policies for specific low-carbon technologies will only deliver if the addressed stakeholders actually shift their activities accordingly. Thus, policies should be clearly targeted at the specific national innovation system. For example, a case study conducted for the COP21Ripples project in Brazil highlighted a relatively positive experience with well-designed local content provisions for the wind industry. Given Brazil’s significant market size as well as the pre-existing technological capabilities, they seem to have contributed to the development of a local wind industry.

By contrast, the full potential of the solar thermal energy industry in South Africa has not yet been exploited as it was not possible to involve relevant stakeholders – especially the national electricity company – into this process.

Hence, national decarbonisation strategies should put a special emphasis on the benefits of learning.


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

View comments
Read about event More on this topic

Past Event

Past Event

How do national energy policies fit into EU decarbonisation plans?

Through considering several different national perspectives, we discuss how to reconcile the EU Climate Strategy targets with national energy and climate policies.

Speakers: Aleksandra Gawlikowska-Fyk, Christian von Hirschhausen, Carole Mathieu and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 15, 2019
Read article More by this author

Blog Post

Is an electric car a cleaner car?

An article published by the Ifo Institute in Germany compares the carbon footprint of a battery-electric car to that of a diesel car, and argues a higher share of electric cars will not contribute to reducing German carbon dioxide emissions. Respondents rejected the authors’ calculations as unrealistic and biased, and pointed to a series of studies that conclude the opposite. We summarise the article and responses to it.

By: Michael Baltensperger Topic: Energy & Climate, Innovation & Competition Policy Date: May 13, 2019
Read about event More on this topic

Upcoming Event

Jun
5
11:00

Ahead of 2020: socio-economic implications of NDCs

The event is a policy dialogue organised under the project, ‘COP21: Results and Implications for Pathways and Policies for Low Emissions European Societies’. The COP21 outcome represents an important new strategic context for EU climate policy. Analysing the implications of this new context requires an interdisciplinary approach, combining analysis of the evolution of the international […]

Speakers: Michel Colombier, Teresa Ribera, Artur Runge-Metzger, Henri Waisman and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More on this topic More by this author

Blog Post

Elections must put Europe on a path to a green future

We are at a pivotal moment for the future of Europe. It is an opportunity to reflect on the fundamental values and visions underlying the European project, and on the future direction of this common journey. Climate change should be at the centre of this reflection.

By: Simone Tagliapietra Topic: Energy & Climate Date: May 8, 2019
Read article More on this topic More by this author

Opinion

The geopolitical implications of the global energy transition

Energy has traditionally played an important role in global geopolitics, contributing to the rise of great powers, the formation of alliances and, in many cases, also to the emergence of wars and conflicts. Every international order in modern history has been based on an energy resource. This piece discusses how the ongoing low-carbon energy transformation could reshape global geopolitics in the future.

By: Simone Tagliapietra Topic: Energy & Climate Date: March 7, 2019
Read article More by this author

Opinion

The case for green realism

The transition to a carbon-neutral economy is bound to make us worse off before it makes us better off, and the most vulnerable segments of society will be hit especially hard. Unless we acknowledge and address this reality, support for greening the economy will remain shallow and eventually wane.

By: Jean Pisani-Ferry Topic: Energy & Climate, Global Economics & Governance Date: March 7, 2019
Read article More on this topic More by this author

Opinion

China's strategy: Growth, alliances, and tech acquisition

Despite the pause in the US-China trade war, the US and China are strategic competitors, and will continue to be so for the foreseeable future. China realizes that there is little room to settle long-term disputes and, as a result has shifted towards a strategy that focuses on sustaining growth at any cost, expanding alliances, and advancing its technology.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: February 27, 2019
Read article More by this author

Podcast

Podcast

Backstage: The next decade of European energy transition

This episode of 'The Sound of Economics' features Bruegel research fellow Simone Tagliapietra in conversation with Sir Philip Lowe and Alberto Pototschnig about the progress of the European energy transition as we prepare to enter the third decade of the 21st century.

By: The Sound of Economics Topic: Energy & Climate, European Macroeconomics & Governance Date: February 26, 2019
Read article More by this author

Blog Post

The Economists’ Statement on Carbon Dividends and the Green New Deal

In the last month two prominent policy proposals that aim to combat climate change have been presented in the United States. The Green New Deal calls for the deployment of substantial government resources to combat climate change. The Economists’ Statement on Carbon Dividends, suggests a market-based and budget-neutral approach through a carbon tax. Michael Baltensperger reviews reactions to both.

By: Michael Baltensperger Topic: Energy & Climate, Global Economics & Governance Date: February 25, 2019
Read article More on this topic More by this author

Blog Post

Greening monetary policy: An alternative to the ECB’s market-neutral approach

The ECB’s market-neutral approach to monetary policy undermines the general aim of the EU to achieve a low-carbon economy. An alternative tilting approach would foster low-carbon production, accelerating the transition of the EU to a low-carbon economy, and could be implemented without undue interference with the chief aim of price stability.

By: Dirk Schoenmaker Topic: European Macroeconomics & Governance Date: February 21, 2019
Read article More on this topic More by this author

Podcast

Podcast

Deep Focus: A greener monetary policy approach for the ECB

Bruegel fellow Dirk Schoenmaker walks Sean Gibson and 'The Sound of Economics' listeners through his latest working paper, focusing on how to make monetary policy in Europe more climate-friendly

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: February 21, 2019
Read article Download PDF More by this author

Working Paper

Greening monetary policy

The author proposes a tilting approach to steer the allocation of the Eurosystem’s assets and collateral towards low-carbon sectors, which would reduce the cost of capital for these sectors relative to high-carbon sectors. Central banks have already started to look at climate-related risks in the context of financial stability. Should they also take the carbon intensity of assets into account in the context of monetary policy?

By: Dirk Schoenmaker Topic: Energy & Climate, European Macroeconomics & Governance Date: February 19, 2019
Load more posts