How are costs calculated?

Total energy system cost

• Building and maintaining energy generation technologies;
• Heating and cooling technologies;
• Appliances, lightbulbs and non-residential equipment;
• Passenger and freight transport vehicles;
• Data centres;
• Transport infrastructure (such as roads and railways); and
• Clean technology used in manufacturing, as well as the fuels, such as fossil fuels and bioenergy, used to power these technologies.

Limitations

1. Costs are extremely uncertain. Projecting technology costs out twenty five years into the future is extremely uncertain. Users are encouraged to look at the high/low-cost ranges generated by the Calculator, rather than focusing on the central estimates.
2. Projected costs exclude possible energy security impacts, costs arising from the damaging impacts of climate change, other welfare costs, land and food, and wider macroeconomic impacts. The damage costs of climate change could be particularly significant. Costs also exclude any deployment subsidies or spending or research and development used to help technologies come down their learning curves. Pathways that use land and food choices to reduce emissions may look cheap but there would be costs associated with the actions behind these levers.
3. The Global Calculator is a user driven engineering model, rather than a market-based economic model. This means that the tool estimates a cost for the specified combination of technologies and actions, it does not take into account price interactions between supply and demand to determine what actions take place.
4. Costs are modelled as exogenous, and are not dependent on the level of technology deployment. For example, the cost of an electric vehicle in 2030 is fixed regardless of whether there is a high or low deployment of electric vehicles in that year.
5. Fuel costs are particularly uncertain. Average and marginal fossil fuel extraction costs and average tax rates levied by oil exporting countries in 2050 are extremely uncertain. This could result in actual fuel costs being significantly higher or lower than those estimated here.
6. The costs associated with newer emerging technologies are very uncertain. Similarly, the cost impact of increased efficiency is likely to be negligible. Due to this, the Global Calculator does not estimate costs for insulation, transport efficiency, appliance efficiency, fossil fuel efficiency and the engineered greenhouse gas removal solutions.
7. It is difficult to estimate the total energy system cost without double counting. The costs of a car, counted in the transport costs, will include the cost of electricity used in the production of the car. The cost of the electricity is also counted in the power sector costs. Due to the size and scale of the Global Calculator, excluding double counting would be highly complex, therefore an index of how costs change over time is presented.

Further detail