We Have To Start Now
The choice of when to start this massive transformation involves a trade-off. Much of our energy infrastructure is durable, often lasting 50 to 100 years. If we continue to install fossil fuel facilities, we are likely to have to retire some facilities early, effectively throwing them away. But clean energy is has been getting cheaper over time. If we wait, we might be able to install cheaper clean energy in the future, savings costs.
We cannot be sure of the best timing for transition because we do not know what types of energy technology will be invented in the future. Instead, we have to think about what sorts of bets we want to make.
On the one hand, we can delay switching to clean energy in the hopes that the costs will go down in the future. We can think of this bet as going full steam ahead and then slamming on the brakes at the last minute, replacing the then existing infrastructure with a hoped-for cheap source of clean energy. Everyone will get their own Mr. Fusion generator that runs on garbage.
The cost of losing this bet is that we will have installed massive new fossil fuel facilities that have to be thrown away. Calculations by the International Energy Agency show that these costs will be high.
The IEA estimated that 80% of the cumulative CO2 emissions between 2009 and 2035 will come from existing capital stock.12 We have power stations, buildings, factories, refineries, vehicles, furnaces, and the like that exist now or are under construction. These facilities will emit almost all of the allowable emissions under the 1 trillion ton cap. That is, if we simply replace this infrastructure as it wears out with clean energy sources, we still will have used up almost all of the global carbon budget.
Delay allows more infrastructure to be built, locking in more emissions. The same estimate (written in 2011) showed that if we delay emissions reductions until just 2015, around 45% of the global fossil fuel capacity would have to be retired early or refurbished. For every $1 of investment in the power sector that we do not make before 2020, an additional $4.30 would need to be spent later to compensate for delay. If we follow the strategy of delay, the only way to avoid these sorts of costs is to find a dramatically cheaper source of clean energy.
On the other hand, we can start now and go slowly. Starting now means replacing the existing fossil fuel infrastructure with clean energy gradually as the existing infrastructure wears out. And it means meeting new demand with clean energy rather than installing long-lived fossil fuel infrastructure that have to be scrapped.
Gradual replacement not only means we avoid the costs of scrapping perfectly good power plants, refineries, tankers, and other parts of the fossil fuel infrastructure. It also extends the time until we have to stop emitting CO2 as compared to a full-steam ahead strategy. Reducing emissions now means that we use up less of the total cap, saving more for later.
And starting reductions now actually increases the chance that we have cheap clean energy in the future. The reason is that most of the cost declines in clean energy come in the field, from engineering improvements, not from magical new technologies developed in the lab, like the forthcoming Mr. Fusion. Efficiency improvements come from practice.
We don’t know the precise cost-minimizing timing of reductions, but we can think about what sorts of bets we want to make. Starting now and going slowly is the best bet. Perhaps there is a dramatically cheaper source of clean energy just over the horizon, but perhaps not. Unless we are confident that there is, we need to start transitioning now.