Adopting policies to promote cost-effective solutions
To help speed the application of practical and cost-effective solutions across the entire energy system, open and informed discussions will help clarify the potential and relative value of available options. Further, policy frameworks that promote better transparency on the costs and benefits of various options and rely on market-based solutions should be pursued. As the IEA has noted, clear price signals have advantages, including that “higher prices stimulate consumers to reconsider their energy consumption and make savings where this can be done most cheaply, whereas regulation through mandatory standards may not be the least-cost or most effective approach.” 8
The long-term nature of the climate challenge promises an evolution of available solutions. Therefore, policies that promote innovation and flexibility afforded by competition and free markets will be critical to ensuring the world pursues the most cost-effective opportunities.
Investing in research and development to advance technology
Ongoing research and development to spark technological advances will also be important to help minimize the costs of reducing emissions. This will preserve limited financial resources for other needs, including helping to ensure universal access to reliable and affordable energy.
Advancing the application of cost-effective technology solutions around the world will likely be critical to pursue a 2oC pathway, while helping keep energy reliable and affordable for an expanding population. As the chart above shows, expanding technology options through ongoing research and development efforts remains important to accelerate the options that can play a role in meeting people’s energy needs while reducing the risks of climate change. Such technologies include those related to carbon capture and storage (CCS), advanced biofuels and battery technology. Without robust development of such technology options, the stringency of policies and their related costs to society will prove more burdensome.
Keeping options open
Transformation of the world’s energy system as envisioned by a 2oC scenario is unprecedented. Therefore, it is understandable that governments, businesses and individuals exercise care in weighing its potential implications. A key consideration is the significant value for society in not prematurely foreclosing options or negating reliable, affordable and practical energy systems that billions of people depend upon.
Practical solutions to the world’s energy and climate challenges will benefit from market competition as well as well-informed, well-designed and transparent policy approaches that carefully weigh costs and benefits. Such policies are likely to help manage the risks of climate change while also enabling societies to pursue other high priority goals around the world – including clean air and water, access to reliable, affordable energy, and economic progress for all people.