Research from ISR provides insight for World Bank in annual World Development Report

Every year the World Bank produce a report on international development, the World Development Report. The report is important because it provides research evidence to policymakers in middle-income countries and financial institutions – those that are making long-term infrastructural decisions to mitigate the risks of carbon lock-ins and ultimately reduce emissions by investing in clean technology alternatives.

In 2024 the World Bank explored the challenges of economic growth in middle income countries. Research evidence produced by ISR’s Research Fellow Yaroslav Melekh, Professor Michael Grubb and Research Assistant James Dixon, 'Energy Technologies for Low-Carbon Development in Middle-Income Countries: Assessment and Implications', was used as one of the background papers for the 2024 World Development Report (to be published August 2024).

The research aim

The paper aimed to address the role of different energy transition technologies and possible implications for middle-income countries that are already making long-term infrastructural decisions.

What was looked at

Melekh, Grubb and Dixon critically interrogated the technologies that are often considered plausible in decarbonisation, such as natural gas and carbon capture and storage (CCS). In the background paper they particularly looked at:

• the feasibility of the transition from coal to gas,
• the role of carbon capture in the power and industrial sectors and its competition with energy storage and hydrogen, and
• access to climate finance and international collaboration on manufacturing standards.

The study scrutinised the economic and environmental challenges of transitioning from coal to gas, noting the vulnerability of gas to geostrategic perturbations and methane leakage, which could undermine its potential climate benefits.

“We put on not only the economic lenses but also looked at the actual sustainability of different technologies, the risks of carbon lock-ins, should investments in so-called abated fossil-fuel technologies take place as well as moral hazards of crowding out investments from clean energy storage.” – Yaroslav Melekh

The findings

Despite recent emerging narratives about the importance of CCS in the transition, the paper found power generation to be impractical for most middle-income countries due to:

• significant costs,
• high infrastructural barriers, and
• crowding-out investments in electricity storage which has demonstrated significant cost reductions.

More than that, the transition to natural gas and CCS will inevitably lead to carbon lock-in in the power sector. However, CCS can play a role in hard-to-abate sectors in middle-income countries that account for a significant share of the young fleet of blast furnaces and cement kilns such as China and India. At the same time, commissioning new blast furnaces will likely expose global net-zero targets, and instead, the paper investigated the role of hydrogen as a potential solution in the steel sector, acknowledging just transition challenges in middle-income countries.

Materials

• Read the full paper by Melekh, Grubb and Dixon
• Read the 2024 World Development Report (to be published August 2024) 
• Explore the background papers

Image credits

Cover image: Unsplash: Sasha Pleshco

Chart: EEIST: Grubb et al. 2024, building upon Grubb, Hourcade, and Neuhoff 2014.