Learning rates, green energy deployment, and feasible climate agreements


International climate negotiations. However, individual countries have implemented various policies related to emission reduction including promotion of renewable energy. This paper uses observed deployment and costs of solar photovoltaics (PV) to infer policy-makers’ preferences for green energy in four regions, the EU, China, the USA, and the Rest of the World (ROW). The historical learning rate of 22%, slowing to 11% after three doublings of output, is used to model the effect of deployment on cost reduction. These preferences then imply that PV deployment will be scaled up sufficiently to drive the cost of green energy down to parity with new fossil energy within three decades (in our reference scenario with constant fossil-fuel prices and myopic behavior). It is shown that a stable (in a welldefined sense) international agreement on deployment of solar PV is feasible and would result in significantly faster deployment and cost reduction. In the reference scenario under cooperation, PV accounts for 25% of world electricity output after 32 years. With a modest increase in fossil-fuel prices, this fraction can be considerably higher. A similar conclusion follows even if an agreement is not reached as long as limited forward-looking behavior is triggered by the negotiation process.

International Energy Workshop, Cape Town, 2012