The Need for Speed in the Shift from Fossil Fuels to Clean Energy
By Christopher N. Fox
One key takeaway from the recent Investor Summit on Climate Risk at the UN was the need for speed: the world must accelerate the shift from fossil fuels to clean energy. “Where capital goes over the next five years,” UN Framework Convention on Climate Change Executive Secretary Christiana Figueres said, “is absolutely critical and will determine whether we are actually able to address climate change.”
The 500 investors with $22 trillion in assets that joined forces at the Investor Summit in January heard a clear message: the Paris climate talks were not an end point, but rather a turning point. Now that all world governments have agreed on a universal, flexible and durable climate change agreement, the stage is set like never before for a massive expansion of investment clean energy worldwide.
In 2015 global investment in clean energy reached a record $329 billion. The good news: investment in clean energy rose last year despite falling oil and gas prices, and clean energy sources such as wind and solar have now shed their “alternative energy” moniker. The bad news: the overall level of global investment – $329 billion – is still far short of the Clean Trillion goal – the additional $1 trillion per year in clean energy investment needed to limit global warming to below two degrees Celsius.
In his Summit remarks UN Secretary-General Ban Ki-moon challenged investors “to double – at a minimum – their clean energy investments by 2020.” Throughout the day leading investors and financial market leaders from the U.S., Europe, China, and India highlighted actions they are taking to expand investment in clean energy in both developed and emerging/developing economies. For his part, former New York City Mayor Michael Bloomberg, chairman of the Financial Stability Board's new Task Force on Climate-related Financial Disclosures (TCFD) focused his remarks on how improving corporate climate risk disclosure “will help drive more financing to projects that reduce carbon pollution.”
At the Summit Ceres and Bloomberg New Energy Finance released a new report, Mapping the Gap: The Road from Paris. The report identifies the $12.1 trillion opportunity, and reasonable finance pathways, for global investment in renewable electric power under a scenario limiting global temperature rise to no more than two degrees Celsius – requiring approximately $5.2 trillion increased investment over business-as-usual projections in this key sector. The report also underscores that extensive and expanding renewable energy investment opportunities are available now, yet in order to increase investment at the scale and speed required further policy actions will be needed.
One action step that many Summit speakers noted could speed up the shift to clean energy is carbon pricing. Charging those who emit carbon encourages polluters to reduce their emissions, and makes investment in low-carbon, clean energy even more attractive. Four hundred investors with more than $24 trillion in assets backed carbon pricing in a recent statement, and hundreds of businesses and dozens of governments are using carbon pricing too. As Christiana Figueres noted at the Summit, advocating for a price on carbon is “the most urgent measure that we can all take in 2016.”
Bold, urgent action by investors, businesses and governments from now to 2020 – expanding clean energy investment, improving climate risk disclosure, and supporting carbon pricing, among many other measures – will provide a crucial boost toward achieving the Clean Trillion and meeting the objectives of the Paris climate agreement.
My Ceres colleagues and I welcome your thoughts and questions on Ceres’ Clean Trillion campaign. Please feel free to connect with me at email@example.com or on twitter @ChristopherNFox and follow Clean Trillion on twitter @CleanTrillion.