Selections from BP Energy Outlook: 2019 edition:

In the ET scenario, the costs of wind and solar power continue to decline significantly, broadly in line with their past learning curves.

To give a sense of the importance of technology gains in supporting renewables, if the speed of technological progress was twice as fast as assumed in the ET scenario, other things equal, this would increase the share of renewables in global power by around 7 percentage points by 2040 relative to the ET scenario, and reduce the level of CO2 emissions by around 2 Gt.

The impact of these faster technology gains is partly limited by the speed at which existing power stations are retired, especially in the OECD.

If, in addition to faster technological gains, policies or taxes double the rate at which existing thermal power stations are retired relative to the ET scenario, the reduction in emissions is doubled.

This suggests that technological progress without other policy intervention is unlikely to be sufficient to decarbonize the power sector over the Outlook. The ‘Lower carbon power’ scenario described below considers a package of policy measures aimed at substantially decarbonizing the global power sector.

The extent to which the global power sector decarbonizes over the next 20 years has an important bearing on the speed of transition to a lower-carbon energy system.

In the ET scenario, the carbon intensity of the power sector declines by around 30% by 2040. The alternative ‘Lower-carbon power’ (LCP) scenario considers a more pronounced decarbonization of the power sector.

This is achieved via a combination of policies. Most importantly, carbon prices are increased to $200 per tonne of CO2 in the OECD by 2040 and $100 in the non-OECD – compared with $35-50 in OECD and China (and lower elsewhere) in the ET scenario.

Carbon prices in the LCP scenario are raised only gradually to avoid premature scrapping of productive assets.

There is one gloomy projection. Despite the progress on the world scene,

If that were to come true, in the context of these other changed, it is possible the United States would be regarded a pariah state and have economic sanctions imposed upon it. But … these projections have several built-in assumptions. Recall, BP is a bit like the U.S. Energy Information Administration and the world IAEA in that they are an established bureaucracy of forecasters. Both EIA and IAEA have systematically underestimated the acceleration in solar and wind adoption over the last decade.

Also, it is telling that BP’s assessment regarding the slowness with which wind and energy displace fossil fuel generation is because of the capital costs of retiring existing generation and replacing it. There are two points here.

First, the incremental capital costs for substituting solar+wind+storage for the same unit of fossil fuel energy is much smaller, as long as the accounting is done correctly. In particular, the costs to society are not just the generating plant, but the capital infrastructure needed to mind and bring the fuel to the point of combustion. There are also tremendous Sankey losses associated with Carnot cycle energy production. (See also.) That’s wasted money.

Second, the BP analysis clearly assumes the market and business structure for providing such energy remains intact. That assumption is big, one akin to assuming the there will always be a Sears and always be a Kodak. If, in fact, there are energy sources available at much lower costs per kWh or BTU, the market isn’t going to care about the sunk costs of existing players. It will go around them, and they will either seek government subsidies to remain intact, or economically die.

So, the “pariah state” outcome for the United States is too gloomy. I, instead, see a United State whose economic productivity might be increasing assaulted by challenges from climate change, including impacts to personal wealth and, so, unwillingness to consume at rates comparable to before, direct damage to productive capacity, including extensive damage to supply chains within country, and to basic infrastructure that permits people to get to their jobs, and costs in insurance and of doing business. But, I also see a hunger for cheaper everything, especially energy, and a thriving market willing to supply that with wind and solar and storage, widely distributed, overcoming zoning and other objections because many people have abandoned suburbs due to affordability and proximity to work, and because the gap between cost of energy from zero Carbon sources is so huge, a tenth of the comparable cost from fossil fuel sources.

It’s one thing to be a zealot for fossil fuels. It’s something else to ignore paying but 10% of the cost of something if zealotry is pursued.