$12.1 Trillion of Investment In Renewable Power Generation Needed To Avert Climate Change
(3BL Media/Justmeans) – Delivering on the promises of the historic Paris climate change agreement to avert the dangers of climate change will happen only if there’s more investment in new renewable power generation - that’s $12.1 trillion of investment! – over the next 25 years. This is $5.2 trillion above business-as-usual projections, where the majority of this $12.1 trillion investment is expected to go to emerging markets in developing countries. This conclusion and more is revealed in a new report by Ceres and Bloomberg New Energy Finance, Mapping the Gap: Road from Paris.
The report’s findings stress that clean energy financing will soon no longer be considered ‘alternative’ and will become mainstream. “Clean energy investment is poised for rapid growth,” say the authors, citing the cost competitiveness of renewables such as solar and wind and escalating investor interest in financing climate solutions. They say, “While the scale of this new investment opportunity is massive, it is dwarfed by the capacity of global financial markets to unleash the needed investment.” Moreover, the United Nations (UN) Climate Chief, Christiana Figueres has stated that she was looking to the Paris agreement to send a clear signal to the business community of a shift away from a fossil-fuel driven economy.
The report was released at the UN Investor Summit on Climate Risk, a gathering of 500 global investors in January, organised by Ceres, the UN Foundation and the UN Office of Partnerships, held in the wake of the important climate agreement in Paris last December. The investment surge will require a greatly expanded use of investment vehicles supporting clean energy, including bonds, asset-backed securities and others that commercial financiers, institutional investors and any other capital market players that can be used.
The clean energy industry could make a very significant contribution to achieving the lofty ambitions expressed by the Paris Agreement. However, to do so, heavy investment is required to more than double, and do so in the next three to five years. This increase will not be delivered by business as usual; closing the gap is both a challenge and an opportunity for investors. The report also flags up the critical role of supportive government policies that will enable more renewables investments, including the Paris climate accord’s “ratchet” mechanism, which will help ensure that every country’s commitments to reduce carbon pollution become more ambitious over time. To fully bridge the investment gap, policymakers worldwide need to provide stable, long-lasting guidelines that will unleash far bigger capital flows.
The Paris agreement sent a powerful signal, creating tremendous momentum for policymakers and investors to take actions to accelerate renewable energy growth at the levels needed. Global clean energy investment was a record $329 billion last year, according to Bloomberg’s and Cere’s New Energy Finance report. Investors are now seeing the opportunities of economic benefits that come with fighting climate change.
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