Senior Project Manager Tom Yankos looks back at a decade of ClimateWorks modelling. He finds that the global trend for technology to outperform expectations is also relevant to climate research. Even our most ambitious scenarios – that pushed the boundaries of what we could expect from the technological solutions required for decarbonisation – have consistently been surpassed by the actual speed of technological advancement. And when some technologies fall short of expectations, others step up.
But what does this mean for decision-makers who are looking at how to decarbonise? This trend, Tom finds, means even our boldest future scenarios have been outpaced by technological leaps and bounds we’ve seen so far, and governments and businesses can afford to be even bolder when investing in climate solutions.
Technology has a track record of outperforming expectations when deployment takes off
In 1980, McKinsey & Company was asked by the American telco AT&T to investigate the potential of mobile phones. Leveraging all the tools and expertise available – to arguably the world’s most influential management consulting firm – McKinsey projected a market of about 900,000 users by the year 2000. When 2000 rolled around, 109 million people were mobile phone users. McKinsey’s estimated total of 900,000 is currently the number of people that join mobile-phone services, globally, every three days.
You don’t need to look far to find other examples of technologies which have gone from unknown to essential within a generation. Less than 10 per cent of US households owned a refrigerator in 1931. By 1963, ownership had reached 99 per cent. The internet was adopted even faster, from less than 10 per cent of US households in 1993, to 88 per cent in 2016.
There have also been rapid changes in how things are made and distributed. At the turn of the 20th century, factories relied on steam engines to run machinery. By 1930 these were nearly completely replaced with electric motors. Farmers markets remain, but their prominence pales in comparison to the convenience of online shopping and delivery of the widest assortment of goods from your local supermarket – a market now 10 times the size of when online grocery sales became widely available to Australians in the mid-2000s.
Decarbonisation research and cautious optimism
Time and time again, innovation shifts technology forward and changes the future outlook. Decarbonisation scenarios are no different.
In 2010, ClimateWorks published the Low Carbon Growth Plan for Australia, working with McKinsey. It was the first economy-wide emissions reduction cost-curve developed for Australia with roadmap actions. It mapped emissions reduction potential by cost and volume out from 2010 to 2020, and to 2030.
In 2014, with CSIRO and Australian National University, we published Pathways to Deep Decarbonisation in 2050: how Australia can prosper in a low carbon world. This report considered a much longer timeframe than the Low Carbon Growth Plan, working backwards from the goal of net zero by 2050. It was cautiously optimistic, identifying economic opportunities across the economy that hadn’t featured in the earlier work.
The following year saw the ratification of the Paris Agreement, leading to the formal adoption of net zero emissions as the central goal. Five years on we worked with CSIRO to update the net zero pathways for Australia and in April 2020 published Decarbonisation Futures. The report showed that Australia can still forge a path to net zero in keeping with the Paris Agreement goal – and added pathways aligned with limiting global temperature rise to 1.5 degrees, as well as 2 degrees.
Decarbonisation solutions are exceeding our predictions
The ambition of the reports grew with each iteration, as did the science-based necessity for acting at such scale and urgency. Fortunately, the possible pace of decarbonisation also became more rapid. The Low Carbon Growth Plan foresaw a 25 per cent emissions drop on 2000 levels by 2020. Ten years later, Decarbonisation Futures plotted for net zero in 15 years. A reason for this shift is that the rate of technological change increased between the reports, which facilitated lower potential emissions in key sectors.
One of the most familiar examples of this is solar. When first introduced, solar photovoltaic modules were extremely expensive. As a result, they were only used for niche applications where expense was no barrier – such as in satellites; or where the product could be used so sparingly it justified costs, such as in calculators. Since these first applications, solar has experienced a massive rise in uptake. Why? A confluence of energy crises, strong policy, investments and improved manufacturing practices. Our Low Carbon Growth Plan expected price reductions to taper off given the above factors had not combined by 2010 – but they did soon after, and cost improvements continued as deployment expanded.
A more recent example of technology outperforming expectations is batteries. Costs have decreased fast – already batteries are 90 per cent cheaper in 2020 than they were in 2010.
In the Low Carbon Growth Plan, there were only modest assumptions of electric vehicle (EV) uptake – around five per cent by 2020. By the time Pathways to Deep Decarbonisation in 2050 was published in 2014, the data had shifted projections to 35 per cent of the market by 2050, with an additional share of hybrid vehicles. Six years later, when Decarbonisation Futures was published, this projected share of the market was brought forward two decades to 2030. And now, while we’re far from any meaningful uptake of electric vehicles in Australia, anticipated costs are on the move – and trending downwards. In Decarbonisation Futures our assumptions reflect this downward trend, where cost parity with internal combustion engines was expected to be reached in the mid 2020s. The expected performance of batteries has increased too, such that up to 60 per cent of heavy vehicles are expected to be fully electric by 2050 – at least double the amount estimated in Pathways To Deep Decarbonisation in 2050.
Based on 2010 data and projections, batteries weren’t expected to be used at all for power system energy storage or grid stability. The 2014 update with CSIRO and Australian National University used data that showed a mix of renewables for system stability and security, with a small role for batteries in a 100 per cent renewable power system scenario. This changed significantly in our latest research. The data now shows batteries playing a much larger role in supporting the generation mix, storing and dispatching energy from a grid made up of predominantly solar and wind.
What changed to create a supercharged outlook for batteries? Elon Musk and Mike Cannon-Brookes played a role in advancing the conversation around storage – the deployment of the Hornsdale Power Reserve in South Australia undoubtedly benefited from the now infamous 100-day bet between the two. But upscaling of production efficiencies and continual technological improvements have also enabled increased deployment, and future price drops can be expected.
The potential of a new technology is rarely clear cut
Technology sometimes finds a wider application than what it was originally intended for.
Driverless trucks have been used in the mining industry for thirteen years, hauling huge quantities of material safely and efficiently. Closed roads and regular circuits are ideal settings for automation, but the technology has potential for wider application.
Driverless cars didn’t feature in either our 2010 or 2014 reports. But in our latest research, we included uptake of up to 40 per cent of light vehicles by 2050 (20 per cent for private use and rideshare respectively). Assuming the vehicles are electric and charged from a renewable grid, they aren’t expected to have a direct emissions impact. Rather, they could fundamentally change commute options, as they would be cheaper than traditional rideshare and offer more privacy. Owners of shared driverless cars would recoup costs from purchase quickly, the car could nearly always be running. For private users, the valuable time freed by autonomous vehicles will outweigh the upfront cost.
Less exciting, but no less illuminating, Light Emitting Diodes (LEDs) are now ubiquitous in our homes and at work. They couldn’t exist as we know them today without technological development and a policy win. A sales ban and phase out of inefficient incandescent light bulbs, with a labelling and education campaign, transformed the lightbulb aisle and ceilings irreversibly. Thanks to economies of scale and continual innovation, customers are now presented with a wider choice of products and prices. Our Low Carbon Growth Plan was cautious in its expectation, limiting uptake to 50 per cent of non-living areas. By the time we created Pathways To Deep Decarbonisation in 2050, all lights would probably be replaced with LED or efficient fluorescent. Just how significant has the uptake been? Global LED use has risen from a market share of 5 per cent in 2013 to nearly half of global lighting sales in 2019, overtaking fluorescent sales for both residential and commercial use.
Of course, sometimes technology development goes the other way. Carbon capture and storage, promising for electricity generation and a necessity for industrial use, has proven to be more complicated and expensive than anticipated. Solar thermal power generation has also developed more slowly than expected, with cost reductions stalling. Both of these are larger scale units that lack the benefit of very large scale deployment rollout markets which provide opportunities for rapid learning and cost reductions through millions of production cycles. As explained in Decarbonisation Futures, technology is only one of the tools available to reduce emissions. New technologies need to be supported, or even stimulated by, government policy and regulation. Furthermore, the actions of businesses and individuals cannot be understated in creating or demanding cleaner products and services.
Technology trends indicate decision-makers can raise their ambition
Overwhelmingly, disruption and breakthroughs – while sometimes hard to foresee – lead to technology outperforming projections. What’s more, the technologies that outperform expectations can fill the gaps from those technologies that fail along the way.
Our own modelling of decarbonisation pathways produced across the past decade demonstrates this trend. These pathways have been consistently outpaced by the sum total of technological advances. This is even with our scenarios being widely held to be at the more ambitious end of the scale.
And if we can expect technology to be faster than even our most ambitious scenarios, decision-makers can be more ambitious in their actions. The world certainly needs them to be.