2020, Wenz, Leonie, Weddige, Ulf, Jakob, Michael, Steckel, Jan Christoph

Transportation infrastructure is considered a key factor for economic development and poverty alleviation. The United Nations have explicitly included the provision of transport infrastructure access, e.g. through all-season road access, in their Sustainable Development Goal agenda (SDGs, target 9.1). Yet, little is known about the number of people lacking access to roads worldwide, the costs of closing existing access gaps and the implications of additional roads for other sustainability concerns such as climate change mitigation (SDG-13). Here we quantify, for 250 countries and territories, the percentage of population without road access in 2 km. We find that infrastructure investments required to provide quasi-universal road access are about USD 3 trillion. We estimate that the associated cumulative CO2 emissions from construction work and additional traffic until the end of the century amount to roughly 16 Gt. Our geographically explicit global analysis provides a starting point for refined regional studies and for the quantification of further environmental and social implications of SDG-9.1.

2016, Hirth, Lion, Steckel, Jan Christoph

Low-carbon electricity generation, i.e. renewable energy, nuclear power and carbon capture and storage, is more capital intensive than electricity generation through carbon emitting fossil fuel power stations. High capital costs, expressed as high weighted average cost of capital (WACC), thus tend to encourage the use of fossil fuels. To achieve the same degree of decarbonization, countries with high capital costs therefore need to impose a higher price on carbon emissions than countries with low capital costs. This is particularly relevant for developing and emerging economies, where capital costs tend to be higher than in rich countries. In this paper we quantitatively evaluate how high capital costs impact the transformation of the energy system under climate policy, applying a numerical techno-economic model of the power system. We find that high capital costs can significantly reduce the effectiveness of carbon prices: if carbon emissions are priced at USD 50 per ton and the WACC is 3%, the cost-optimal electricity mix comprises 40% renewable energy. At the same carbon price and a WACC of 15%, the cost-optimal mix comprises almost no renewable energy. At 15% WACC, there is no significant emission mitigation with carbon pricing up to USD 50 per ton, but at 3% WACC and the same carbon price, emissions are reduced by almost half. These results have implications for climate policy; carbon pricing might need to be combined with policies to reduce capital costs of low-carbon options in order to decarbonize power systems.