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 article More on this topic More by this author

Podcast

Podcast

Deep Focus: Energy transition in the next EU institutional cycle

Bruegel fellow Simone Tagliapietra speaks to Sean Gibson in this instalment of 'The Sound of Economics', on the matter of the European energy transition and how the EU should proceed in the new institutional cycle.

By: The Sound of Economics Topic: Energy & Climate Date: July 10, 2019
Read article Download PDF More on this topic

Policy Brief

The European Union energy transition: key priorities for the next five years

The new members of the European Parliament and European Commission who start their mandates in 2019 should put in place major policy elements to unleash the energy transition. It is becoming economically and technically feasible, with most of the necessary technologies now available and technology costs declining. The cost of the transition would be similar to that of maintaining the existing system, if appropriate policies and regulations are put in place.

By: Simone Tagliapietra, Georg Zachmann, Ottmar Edenhofer, Jean-Michel Glachant, Pedro Linares and Andreas Loeschel Topic: Energy & Climate Date: July 9, 2019
Read article More on this topic More by this author

Opinion

Faut-il s’endetter pour le climat?

Jean Pisani-Ferry, soutient qu’il ne faut pas s’interdire de financer une partie du coût de la transition écologique par l’endettement.

By: Jean Pisani-Ferry Topic: Energy & Climate Date: July 2, 2019
Read article More on this topic More by this author

Opinion

EU urgently needs to reverse its climate neutrality failure

Immediate action is necessary to ensure the EU can become carbon-neutral by 2050 and thus limit global warming. The rapid rise in support of this target in the last month suggests it is attainable, but the momentum must not be lost.

By: Simone Tagliapietra Topic: Energy & Climate Date: June 28, 2019
Read article Download PDF More on this topic

Policy Brief

A strategic agenda for the new EU leadership

Memo to the presidents of the European Commission, Council and Parliament. 'A strategic agenda for the new EU leadership' by Maria Demertzis, André Sapir and Guntram Wolff is the first of our 2019 Bruegel memos to the new presidents of the European Commission, Council and Parliament. Focusing on the most important economic questions at EU level, these Bruegel memos are intended to be a strategic to-do list, outlining the state of affairs that will greet the new Commission.

By: Maria Demertzis, André Sapir and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: June 13, 2019
Read article More on this topic More by this author

Podcast

Podcast

Director’s Cut: A strategic agenda for the incoming EU presidents

In this Director’s Cut of ‘The Sound of Economics’, Bruegel’s Guntram Wolff and Maria Demertzis talk through their memo to the new presidents of the European Commission, Council and Parliament, outlining the specific measures that should be implemented in order to tackle the most formidable challenges arising in the next five years.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: June 12, 2019
Read about event More on this topic

Past Event

Past Event

Brussels Policy Dialogue: Insights for EU and Member States’ Climate Agenda

The event is a policy dialogue organised under the project, 'COP21: Results and Implications for Pathways and Policies for Low Emissions European Societies'.

Speakers: Petya Icheva, David Morales, Artur Runge-Metzger, Oliver Sartor, Marta Torres-Gunfaus, Vincent Van Steenberghe and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 7, 2019
Read article More on this topic More by this author

Podcast

Podcast

Deep Focus: Striving for research excellence with Horizon Europe

In this episode of 'The Sound of Economics', Reinhilde Veugelers speaks about her recent Bruegel paper, requested by the European Parliament, on using public resources to improve the EU's potential to be a global centre of excellence for research in the next decade.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: June 4, 2019
Read article Download PDF More on this topic

External Publication

Europe – the global centre for excellent research

This report, requested by the European Parliament's Committee on Industry, Research and Energy, analyses the EU’s potential to be a global centre of excellence for research as a driver of its future growth in a complex global S&T landscape, and how EU public resources can contribute to this.

By: Michael Baltensperger and Reinhilde Veugelers Topic: Innovation & Competition Policy Date: May 22, 2019
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 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
Load more posts