How Decreasing Renewable Energy Costs Can Help Increase Ambition

On the last day of COP25 this year, I got to attend a side-event called “Accelerating Energy Transitions and Raising Ambition Based on Decreasing the Goals of Renewables.” This talk was super interesting, because it bridged the gap between technological advances and policy implementation. We know that the Nationally Determined Contributions (NDCs) pledged by countries in 2015 were nowhere near the levels that are needed to meet our Paris goals. This talk specifically talked about how we can use the decreasing cost of renewable energy technology to help facilitate our energy transition and phase out of coal.

The price of renewable energy systems is decreasing quickly, particularly that of wind and solar. This is hopeful, since decreased technological costs can provide a lower barrier to entry for many countries. One of the panelists at this side event spoke specifically how there can be a potential positive impact in Argentina as renewables keep declining in cost. In 2016, Argentina updated their NDCs to focus on reaching 20% of renewable energy by 2025. While this might not seem like a lot, Argentina is not a big emitter, so an increase to 20% would result in significant reductions. Moreover, Argentina currently only gets 2% of their electricity from renewables, so meeting these goals in just 10 years is pretty ambitious.

Studies show that dropping prices in renewable technologies would have an overall positive impact on the shift away from fossil fuels. The speaker put it simply: the decreased cost of renewable energy would allow for overflow budgeting that could then be re-invested into the energy systems until the goals are met. Additionally, decreased technological costs can lead to large capacity additions if initial investment volumes are maintained. Since 2015, renewable energy action prices have significantly decreased, and investment costs are modelled to continue to decline over time. The reports that were published before the announcement of NDCs predicted a much higher cost.

The new decreased costs of renewable energy could increase Argentina’s total possible share of renewable energy from around 42-53% by 2030, when the original NDC for Argentina was 30% by 2030. Additionally, along with increased shares of renewable energy, lower costs could increase the amount of electric vehicles in the country to approximately 700,000 which would decrease emissions further. However, the projected outlooks for electric vehicles is based on the projection costs of electric vehicles worldwide, since that information is not available for Argentina specifically.

The main take way that the speaker was trying to emphasize is that the decreased costs of renewable energy need to be strongly considered in the NDC revision process in order to increased ambition. If costs for renewables are going down, countries like Argentina need to harbor the decreased costs to increase their renewable energy shares and further decrease emissions. That being said, there are other barriers to this implementation in countries like Argentina. Firstly, countries with similar profiles have a high amount of social issues, which tend to be on the forefront of policy and government attention. Additionally, corruption is a big issue as well, and there is no guarantee that overflow revenue will be re-invested into energy programs. Despite this, there is hope that decreased costs do incentivize investment into energy programs, as they can be used to help balance social grievances and boost the economy.

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