The IEA Calls for $45 Trillion In Investment to Curb Emissions - Bodes Well for Clean Tech Sector

Jun 06, 2008
Author: SCP Editor

June 6, 2008 – The International Energy Agency released a report this morning calling for $45 trillion in investment to deal with global warming issues through 2050 and to attain a target 50 percent cut in emissions by that time. The report argues that emissions need to be cut by this level in order to avoid an increase in world temperatures of between 3.6 and 4.2 degrees above pre-18th century levels. The report lined out two key scenarios:

1.     Emissions are reduced to 2005 levels by 2050 -

2.     Emissions are reduced to half of 2005 by 2050 – would require about $45 trillion (1.1 percent of global GDP) in investment and aggressive shifts to renewable sources of energy, as well as accelerated deployment of carbon capture and storage technology to address coal-powered plants (about 35 coal powered plants and 20 gas powered plants would have to be fitted with carbon capture technology each year between 2010 and 2050). Moreover, there would need to be an additional 32 new nuclear plants constructed each year, and wind-power turbines would have to be increased by 17,000 units annually.  

All of the proposals in the second scenario would reduce oil demand to 27 percent of 2005 demand. At the current rate, and without any of these proposals being factored in, we can expect a 130 percent increase in carbon dioxide emissions by 2050, according to the report.

The proposed cut is being supported by the environment ministers of the Group of Eight (G-8) and are expected to formally endorse it in July at the G-8 Summit. Of the $45 million forecasted investment required, the IEA calls for $27 trillion from developing countries which are expected to account for two-thirds of emissions through 2050.

Regardless of the fact that the proposal’s design and intent are right on, we are skeptical that the full $45 trillion in investment is reasonably attainable – especially if the U.S. does not play a leadership role here and the way that the Lieberman Warner debates are going down on the Senate floor is indicative of the fact that the U.S. commitment to emission reduction will be plagued by its partisan commitments to the oil lobby.

What is clear and what we do think we can bank on, is that investment and focus on the issues of warming and emission reduction will only continue to increase at a aggressive pace relative to what has come heretofore. That being said, the benefactors will clearly be leading renewable energy and clean tech companies operating in the wind, solar, biofuel, geothermal and energy efficiency sectors.

Here are our favorite companies in each sector:

Solar – LDK Solar (NYSE:LDK); First Solar (Nasdaq:FSLR); SunPower (Nasdaq:SPWR) and Yingli Green Energy (NYSE:YGE).

Energy Efficiency and Clean Tech – Fuel Tech (Nasdaq:FTEK); Echelon (Nasdaq:ELON); EnerNOC (Nasdaq:ENOC) and A-Power (Nasdaq:APWR)

Geothermal – Ormat (NYSE:ORA) and Raser Technologies (NYSE:RZ)

Wind – A Power (Nasdaq:APWR)

Biofuel – Verenium (Nasdaq:VRNM); Comanche Clean Energy (in registration)



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