The “emissions gap” is the difference between “business-as-usual” greenhouse gas emissions, which continue to rise, and the level such emissions actually need to fall to in order to keep average global warming below 2 degrees C (3.6 degrees F) — the goal that was internationally agreed to at the Cancun climate talks in 2010.

To keep warming below that level, we’d have to have achieved a cut of 12 billion tonnes of greenhouse gas emissions by 2020. That’s the gap we must bridge.

In spite of the tremendous effort by the United Nations Framework Convention on Climate Change Secretariat, negotiations to start reducing global greenhouse gas emissions are going through a difficult stretch. The negotiations have increasingly turned into “I will only accept limitations on my economy if I’m absolutely sure you will do the same for yours,” obscuring the fact that many emissions reduction measures have multiple benefits. Attention is shifting to a treaty that takes effect from 2020, and the country commitments for the period 2012-2020 would close half of the gap, at the very best.

So how do we bridge this gap? There are plenty of realistic steps we can take. At least a third of them involve energy efficiency. And many of these measures have environmental and economical benefits, beyond their reduction of greenhouse gas emissions. Front-running companies, cities, and individual citizens are taking climate action on their own, demonstrating that the potential and the benefits are real.

As it has become apparent in recent years that top-down approaches alone would not work, many have urged a bottom-up plan. But so far, no concrete proposals for this on a global scale have been put forward.

Our “Wedging the Gap” paper proposes such a bottom-up approach, building on all the rapid developments in technology and implementation and on the great initiatives in many places to bridge the global emissions gap.

It consists of amplifying the actions of front-runners in 21 types of activity by applying them on a large scale, under the leadership of organizations already active in the field.

Bringing together all these initiatives in a grand scheme with a major collective impact will serve as a catalyst for individual action.

We have selected the 21 “wedges” by applying the following criteria:

• Already moving: Ongoing activity, allowing for major scaling up before 2020

• Win-win: Significant additional benefits beyond reduction of greenhouse gas emissions

• Leadership: There are organizations that can lead a global initiative

• Impact: The initiative has the potential to reach an emissiosn reduction in the order of 0.5 billion tonnes of CO2-equivalent by 2020

Worldwide, over 30 leading companies have entered into Climate Savers agreements with the World Wildlife Fund, reducing their emissions significantly below business-as-usual. Many of them found that doing so was easier than expected, cost less, reduced their exposure to energy price risks, and helped build their reputation. Together, these companies reduced their CO2 emissions by over 100 million tonnes over the past 12 years.

A recent analysis by Ecofys has shown that taking this approach to major corporations in the 16 business sectors where the program is active could reduce global emissions by 0.5 billion to 1 billion tonnes of CO2 per year by 2020. Many other companies are making similar pledges already — a perfect starting point for a “companies wedge.”

Wind energy has made big strides over the past decades. By the end of last year, 238 gigawatts of installed capacity already provided 2-3 percent of the world’s electricity. The Global Wind Energy Council has published an “advanced scenario,” showing that wind power capacity could grow to 1,070 gigawatts (i.e., a terawatt) by 2020. Doing so would reduce dependence on fossil fuels, improve air quality, and provide an additional emissions reduction of 1.2 billion tonnes of CO2 by 2020, compared to the reference scenario.

Many cities have ambitious climate programs, combining the creation of new cleantech jobs with improvements in housing and infrastructure, lower energy cost, and better air quality. Organizations like C40 and ICLEI are leaders in these efforts. If the 40 megacities in C40, or an equivalent sample of other cities, reduce their emissions to 20 percent below business-as-usual by 2020, this would already result in an emissions reduction of 0.7 billion tonnes of CO2-equivalent.

Add up the total emissions reductions from all 21 of the wedges in our study and you’re cutting 10 billion tonnes from global emissions — which gets us most of the way across the 12 billion-tonne gap.

All wedges are shown in the figure below. Of course, there will be some overlap: Companies and cities may use wind turbines as part of their emission reduction programs. Taking that into account, we estimate the total emission reduction of the first 19 wedges to be 10 billion tonnes of CO2-equivalent per year, achievable by 2020. Adding up the climate benefits of 2 wedges addressing classic air pollutants, including efficient cookstoves in rural areas, would bring us very close to what is needed to keep the world on track for an average global warming of 2 degrees C.

For a long time, the holy grail of solar photovoltaics (PV) has been “grid parity,” the point at which it would be as cheap to generate one’s own solar electricity as it is to buy electricity from the grid. And that is indeed an important market milestone, being achieved now in many places around the world. But recently it has become clear that PV is set to go beyond grid parity and become the cheapest way to generate electricity.

Whenever I say this I encounter incredulity, even vehement opposition, from friends and foes of renewable energy alike. Apparently, knowledge of the rapid developments of the last few years has not been widely disseminated. But it’s happening, right under our noses! It is essential to understand this so that we can leverage it to rapidly switch to a global energy system fully based on renewable energy.

A hundred solar cells, good for 380 watts of solar PV power.Photo: Ariane van DijkWorking on solar PV energy at Ecofys since 1986, I have seen steady progression: efficiency goes up, cost goes down. But it was only on a 2004 visit to Q-Cells‘ solar cell factory in Thalheim, Germany, that it dawned on me that PV could become very cheap indeed. They gave me a stack of 100 silicon solar cells, each capable of producing 3.8 watts of power in full sunshine. I still have it in the office; it’s only an inch high!

That’s when I realized how little silicon was needed to supply the annual electricity consumption of an average European family (4,000 kWh). Under European solar radiation, it would take 1,400 cells, totaling less than 30 pounds of silicon.

Of course, you need to cover the cells with some glass and add a frame, a support structure, some cables, and an inverter. But the fact that 30 pounds of silicon, an amount that costs $700 to produce, is enough to generate a lifetime of household electricity baffled me. Over 25 years, the family would pay at least $25,000 for the same 100,000 kilowatt-hours (kWh) of electricity from fossil fuels — and its generation cost alone would total over $6,000!

At a very large scale, the cost of manufacturing anything drops to just above the cost of its base materials. As scale goes up, per-unit costs come down. This is known as a “learning curve” — the price per unit of capacity comes down by x percent for every doubling of cumulatively installed capacity. For solar PV modules, the learning rate has been exceptionally high, averaging 22 percent for the past two decades. The cost of the “balance of system,” i.e., all other components needed, follows this trend line closely. So this is what we see happening now in PV:

Learning curve for silicon-based solar PV modules. Note the logarithmic scales. Colored lines represent various technologies.Image: Wim Sinke, ECN. Sources: Navigant Consulting, EPIA

To unleash the power of a steep learning curve, you need a market driver when costs are still high; we should all be grateful to Germany for playing that role since the introduction of a feed-in tariff there in the year 2000.

Under the German renewable energy scheme, a family or company investing in a solar PV system receives a fixed amount per kWh of solar electricity supplied to the grid. The additional costs are distributed over all users of the grid, nationwide. Successive governments, in varying coalitions, have kept the principle alive, continuously lowering the tariffs as scale went up and cost came down. Contrary to what some believe, competition on the German PV market has always been fierce, which of course is a driving factor behind the ensuing cost (and price) reductions.

In 2004, the feed-in tariff was $0.77 per kWh. For 2012, the tariff for large, ground-based systems is already down to $0.23 per kWh, in spite of eight years of inflation. Expectations are that, even at this low tariff, between 3,500 and 5,000 megawatts of new PV capacity will be installed in Germany next year. This means that the PV supply chain and investors can earn a living at $0.23 per kWh, including operation and maintenance cost, margins, and return on capital.

But that’s in Germany. The funny thing is: Germany is not very sunny! Average annual solar radiation in the sunniest parts of the country, where most PV systems are installed, is 1,000 to 1,100 kWh per 10.8 square feet, measured on a horizontal plane. The world map below shows that this is substantially less than in most of the world. In a sunnier region, like the southwestern U.S., solar radiation is double Germany’s, so the same installed capacity (in watts) will produce twice as much solar electricity (in kWh). As a consequence, the cost of a solar PV kWh in Arizona is only half of the cost in Germany, i.e., already below $0.12. That’s right now, without any subsidies or tax breaks.

Solar radiation map of the world.Image: Meteotest

But what of the competition? Aside from PV, the bulk of new power plants these days are either natural gas-fired, coal-fired, or wind energy. Nuclear is a would-be competitor, but so little of it has been built in recent decades that real cost data are scarce; the trend seems to be sharply up, however, and little is known about the cost of additional post-Fukushima safety measures.

Costs vary per country, and fossil fuels mostly don’t get the right costs allocated for their CO2 emissions, but let’s take two recent studies for the U.S. here. The Brattle Group published the Connecticut Integrated Resource Plan [PDF] in 2008. They found levelized cost per kWh for natural gas-fired power plants to be $0.076 to $0.092, and for coal, $0.086, both without carbon capture and storage. And in 2009, MIT issued its Update on the Cost of Nuclear Power [PDF], in which they found levelized cost per kWh for nuclear’s competitors of $0.062 (coal) and $0.065 (natural gas), without any charge for CO2 emissions.

The cost of wind energy is already close to competitive with gas and coal. The recent Global Status Report [PDF] by REN21 states its kWh-cost for suitable locations as $0.05 to $0.09, for an average of $0.07. Wind power cost is still decreasing, due to learning effects, but at a much lower rate than the cost of PV.

It is highly unlikely that fossil fuels will get away without any charge for CO2 emissions in the long run. In a growing number of countries, such as the 27 countries of the European Union and Australia, this market distortion has already (mostly) come to an end. But let’s assume that the cost of solar PV electricity needs to drop to below $0.06 per kWh to live up to the claim that it’s the cheapest source of electricity. In sunny regions, we will need to halve the cost of PV power again to make that happen. Three doublings of cumulative capacity will do, since, according to PV’s rapid learning curve, every doubling of capacity leads to a cost reduction of 22 percent. After three doublings the cost will be multiplied by 0.78 * 0.78 * 0.78 = 0.47.

Cumulative installed PV capacity globally was 40 gigawatts (GW) at the end of last year. Three doublings mean this has to grow
by a factor of eight, to 320 GW, to achieve the necessary halving of cost. From 2005 to 2010, PV capacity installed annually grew by an average of 49 percent per year. Even if this slows down to 25 percent per year in the near future, we will reach 320 GW in 2018 — that’s only seven years from now!

To be sure, that was starting from a present PV kWh cost of $0.12, valid for sunny regions like the Southwest U.S. As can be seen from the solar map above, the regions with at least comparable solar radiation include most of Latin America, Africa, the Middle East, Australia, and large swaths of Asia, including all of India. For all those regions, PV will be the cheapest option by 2018. After that, further increases in cumulatively installed capacity will drive PV cost further down, making it grow swiftly in the regions in which it is the cheapest option to generate electricity.

This development does not, in itself, make life easy. Developing a world energy system that runs on 100 percent renewable energy by 2050 is a major and complex global effort, involving large investments in energy efficiency, renewable energy, and infrastructure, as we have shown in “The Energy Report” [PDF]. But it sure helps a lot!

But is it possible? And when? At Ecofys, we’ve been working for 25 years on our mission: “a sustainable energy supply for everyone.” Two years ago, we figured it was about time to bring all our experts together to find out whether that really makes sense. Excited by our first findings, we found WWF willing to commission an in-depth study. And since today, the word is out! Or actually, 250 pages of it, in what’s now called “The Energy Report.” And the good news is: it’s possible indeed, by 2050.

We started out by charting expected developments (population, economy) in 10 world regions. Global tempering of consumption is an easy way out for a scenario builder, but not very acceptable in the real world. And trying to keep up with the present growth in energy demand makes catching up with renewables practically impossible. So we went for maximum materials and energy efficiency, and looked for all available ways to provide the rising demand for services and goods with as little input of energy as possible. And there’s a huge potential out there, given the fact that 95 percent of present energy consumption is waste, if one really looks at the end service provided (such as useful light).

Applying all those measures in industrial processes, buildings, and transport, and taking into account feasible implementation rates, leads to global energy demand stabilizing around 2020, and then slowly going down to just below 2000 levels, in spite of economic activity tripling by 2050.

When going over the renewable options available to supply that energy, one finds that the real bottleneck is in the fuels part of demand. Unless we can move to new fuels (like hydrogen) on a massive scale, which we did not consider likely for this period, much of that will have to come from biofuels. And for biofuels, we have to be very strict on avoiding competition with food production, dependence on irrigation (aggravating water supply problems), and destruction of forests.

So it makes a lot of sense to focus on electrification first: urban transport can be moved from fuel to electricity, and so can a lot of domestic heat demand. After stringent insulation of the home, and a solar heater for domestic hot water, an electric heatpump can be an efficient source for the remaining heat demand. These measures, combined with a strong growth in (energy efficient) appliances, lead to a growing fraction of electricity, for which a host of renewable options is available, like wind, solar, and geothermal power. Of course we’ll need smart grids to accommodate a growing fraction of supply-driven sources; 25 percent is no problem in present grids, but we’ll need to go to 60 percent by 2050.

After that, bio-energy comes into play, especially for fuels in shipping and aviation. Here we start with maximizing the use of residues from the forest and field, the food industry, and household waste. Then we introduce a limited amount of bio-crops, applying strict sustainability criteria. In the meantime, we phase out traditional biomass that is now used for cooking, often unsustainable. And from 2030, biomass from algae enters the scene: technology is available now, but needs to go a long way to become cost-competitive.

The resulting development looks like this:

If you watch the graph closely, you will see that we’ve actually found 95 percent of the solution. The remaining part is in processes for which we found no suitable renewable technologies available now. But hey, it’s only 2011! Continued strong technological development can be expected in the decades to come.

Economically, following this road means that the world needs to divert up to 3 percent of GDP to investments in materials and energy efficiency, renewable energy, and necessary infrastructure. But savings on fossil fuels grow larger year by year, and the net cash needed peaks at 2 percent of GDP, before turning around into net savings by 2035. In 2050, we’ll leave behind a system with immensely lower operating cost than the “business-as-usual” fossil-based system.

In the meantime, the effort will bring energy-related greenhouse-gas emissions down by 80 percent compared to their 1990 levels, providing a reasonable chance to limit average global warming to below 2 degrees C (3.6 F), as generally deemed necessary. This will obviously have big advantages in avoided climate change damage and adaptation costs.

And it will have a host of other benefits, like reduction of environmental pollution.

So yes, it can be done! What’s necessary is strong leadership from both governments and companies. And hard work by all of us.

The Energy Report can be downloaded (16 MB) here.