Figure 3.36: The value of improved technology.

Note: Modelling studies enable experts to calculate the economic value of technology improvements that increase particularly drastically with increasing stringency of stabilization targets (750, 650, 500, and 450 ppmv, respectively) imposed on a reference scenario (modelling after the IS92a scenario in this particular modelling study). Detailed model representation of technological interdependencies and competition and substitution is needed for a comprehensive assessment of the economic value of technology improvements. Left panel: cost savings (billions of 1996 US$) compared to the reference scenario when lowering the costs of solar photovoltaics (PV) from a reference value of 9 US cents per kWh (top) by 1, 3, 4, and 6 cents/kWh, respectively. For instance, the value of reducing PV costs from 9 to 3 cents per kWh could amount to up to 1.5 trillion US$ in an illustrative 550 ppmv stabilization scenario compared to the reference scenario in which costs remain at 9 cents/kWh). Right panel: cost savings resulting from availability of an ever larger and diversified portfolio of carbon capture and sequestration technologies. For instance, adding soil carbon sequestration to the portfolio of carbon capture and sequestration technology options (forest-sector measures were not included in the study) reduces costs by 1.1 trillion US$ in an illustrative 450 ppmv stabilization scenario. Removing all carbon capture sequestration technologies would triple the costs of stabilization for all concentration levels analyzed.

Source: GTSP, 2001.