KEY MESSAGES

Effective action on the scale required to tackle climate change requires a widespread shift to new or improved technology in key sectors such as power generation, transport and energy use. Technological progress can also help reduce emissions from agriculture and other sources and improve adaptation capacity.

The private sector plays the major role in R&D and technology diffusion. But closer collaboration between government and industry will further stimulate the development of a broad portfolio of low carbon technologies and reduce costs. Co-operation can also help overcome longer-term problems, such as the need for energy storage systems, for both stationary applications and transport, to enable the market shares of low-carbon supply technologies to be increased substantially.

Carbon pricing alone will not be sufficient to reduce emissions on the scale and pace required as:

• Future pricing policies of governments and international agreements should be made as credible as possible but cannot be 100% credible.

• The uncertainties and risks both of climate change, and the development and deployment of the technologies to address it, are of such scale and urgency that the economics of risk points to policies to support the development and use of a portfolio of low-carbon technology options.

• The positive externalities of efforts to develop them will be appreciable, and the time periods and uncertainties are such that there can be major difficulties in financing through capital markets.