How will climate change affect Paris?

Press release

This is the conclusion reached by the study »Decreasing costs of renewables - Insights on energy sector planning and climate policy from three country case studies«. In it, researchers from Fraunhofer ISI, together with the NewClimate Institute, examined how falling costs in key technologies affect the so-called Nationally Determined Contributions (NDCs) of the countries.

The NDCs describe the individual contributions of the countries to the implementation of the Paris Agreement. In the Paris Agreement, the contracting states committed themselves to defining their own national climate targets in line with the global two-degree target and to communicating these internationally. In addition, they have committed to update the goals they have set themselves every five years and to increase their ambition in the process. The first deadline for this will expire at the end of this year.

Case study: fossil fuels often block the expansion of renewables

In the sense of the Paris Agreement, falling costs for renewables could lead to the signatory countries promoting renewable energies more strongly and accordingly formulating their climate targets more ambitiously in the next update. However, according to the study, this cannot be seen at least in the examples of Argentina, Indonesia and Mexico. Analyzes of the national strategies and planning processes of the countries have shown that fossil fuels continue to play a central role despite falling costs for solar systems and wind power systems.

Johannes Eckstein, coordinator of the project at Fraunhofer ISI, emphasizes: »Low costs are a good basis for expanding renewables. Nevertheless, we find a number of barriers in the countries that prevent the global cost reductions from having a local effect.«

»One of the main obstacles is often financial barriers«, says Jose Ordonez from the Global Energy Transition and Sustainable Development business unit at Fraunhofer ISI. »Projects based on renewables are often subject to higher interest rates than projects based on fossil fuels. This prevents implementation in some countries. In addition, many countries have large reserves of fossil fuels and interest groups from the fossil fuel environment often successfully oppose the integration of renewable energies.« There are often technical and regulatory barriers to this.

Energy policy largely decoupled from national climate targets

A central conclusion of the results: In the countries examined, national energy policy is largely decoupled from climate policy. In some cases it even contradicts the national climate targets. Countries continue to mine and use fossil fuels on a large scale. This inhibits the decarbonization of the electricity supply, which is the basis for a complete decarbonization of the entire energy sector.

»While the discussions in many European countries already revolve around how an infrastructure for green hydrogen can be created and sector coupling implemented, in some emerging countries even more fundamental topics about the integration of renewable energies in the electricity sector dominate«, says Marie-Jeanne Kurdziel from the NewClimate Institute. However, since the costs of renewable energies continue to fall in the long term, the weight of the arguments will shift more in favor of renewable energies, according to the authors of the study.