Cost of achieving zero CO2 emissions by mid-century: Approach and estimation for the world largest economies

Abstract

The article presents a methodological approach to assessing the cost of energy for the world economy in ambitious scenarios for reducing CO2 emissions associated with energy consumption. The approach takes into account that large-scale replacement of fossil fuels with electricity generated from renewable energy sources: a) should be accompanied by the grid development and the deployment of reserve storage capacities and hydrogen technologies; b) requires the use of mechanisms for projects payback, which are included in the final prices for electricity; c) will create the need to replace the shortfall in budget revenues from the production and consumption of hydrocarbon fuels. Forecast calculations show that the scenario of achieving zero emissions in the middle of the XXI century may turn out to be unstable, since it is characterized by increase in the cost of energy supply to the world economy by 40% compared to the current level, and the ratio of energy costs to GDP will exceed 13% in certain periods, and for some countries (including Russia) — 15%. For the global economy to remain within its solvency limits, hydrocarbons should play a decisive role in energy supply for another two decades, but the growth in energy demand can increasingly be met with the help of carbon-free solutions.