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Ceres and UN Call for $1 Trillion in Clean Energy Investments by 2030 – Is It Feasible?

| Friday January 24th, 2014 | 1 Comment

2014 Investor Summit on Climate Risk Sometimes all you need is just the right framework to keep moving forward and reach your goals. This might also be the case in the fight to limit the increase in global temperatures to 2 degrees Celsius, the threshold experts  agree will avoid the worst effects of climate change.

The framework, which was presented last week at the Investor Summit on Climate Risk at the U.N. was quite simple: All we need to do is to add $1 trillion in clean energy investment per year through 2050. According to the International Energy Agency (IEA) such an increase in clean energy investment will significantly increase the chances of maintaining the 2 °C limit.

But how do we do it exactly? This was one of the main issues on the agenda of 550 leading investors from all over the world who came to the U.N. to this biannual summit co-hosted by Ceres and the U.N. Foundation.

As the investors learned from Michael Liebreich, CEO of Bloomberg New Energy Finance this might be more of a challenge given the current levels of investment in clean energy and the trends we see in the last two years. In 2013, he told the audience, global investment in clean energy (low-carbon clean energy resources and energy efficiency technologies) was $254 billion – down 12 percent from 2012 ($289 billion), where we saw a decline of 9 percent in investments comparing to the record year of 2011 ($318 billion).

As you can see we’re now at about quarter of the investment needed according to the IEA. Whether it means that this glass is three-quarters empty or one-quarter full depends on your point of view, but the gap between what we need and what we have is there. We need to close it no matter what.

To do so, Ceres issued a new report entitled Investing in the Clean Trillion: Closing The Clean Energy Investment Gap, providing 10 recommendations for investors, companies and policymakers on the ways to reach the ‘clean trillion’ goal. Before getting into the recommendations it might be worth mentioning the timeline set up by the report authors – the goal is to double the annual clean energy investments to $500 billion by 2020 and reach $1 trillion annual investments by 2030. This means that even if these goals are met, we’ll still need to see an annual average increase of 5 percent in the total investments between 2030-2050 to meet the IEA’s goal: $36 trillion by 2050.

So, how do we get there? As mentioned, the report offers 10 recommendations that are divided to three groups: mobilizing investor action to scale up clean energy investment, promoting green banking and debt capital markets and reforming climate, energy and financial policies.

If there was one thing you could learn from last week’s summit it was that these recommendations make sense to both policymakers and financial leaders. After al,l recommendations such the ones calling to develop capacity to boost clean energy investments, elevate scrutiny of fossil fuel companies’ potential carbon asset risk exposure, or support government policies that result in a strong price on carbon pollution seem to go hand in hand with long-term thinking, fiduciary responsibility and better diversification and risk mitigation.

Yet, it was also clear from the summit that understanding the problems as well as the solutions is not necessarily the issue. Speakers said time and again that we need to act now on climate change and increase investments in clean energy. I also bet most attendees agreed with the notion that, “with responsible investing we can create a stronger economy for everyone,” as Thomas DiNapoli, New York State Comptroller, who manages that state’s $160.7 billion pension fund and oversees its employee retirement system, put it.

The issue is that is seems very hard for an economic system that is heavily based on fossil fuel and on a short-term financial system to make systematic changes that to some extent undermine the way it has been operating for a very long time. The current system seems to be just too involved in ‘business as usual’ to enable the pivoting to clean energy investments and climate change policymaking that participants see as so essential.

Take for example Richard Trumka, the AFL-CIO President representing more than 12 million workers who was very clear, just like two years ago that we need to act now to fight climate change. “While we play the politics of denial, physics persists,” he said, calling business and investors not to stay on the sidelines. At the same time he voiced his support for the Keystone XL pipeline project and said only a day before the summit that “anything that makes sense and creates jobs and is sound environmental policy as well, we will be doing it. [With respect to] the XL pipeline, there’s no environmental reason that it can’t be done safely while at the same time creating jobs.”

I’m quite sure that with most speakers and participants in the summit the situation is quite similar: Clear rhetoric on climate change and clean energy will somehow be combined with actions that are much more likely to reflect business as usual incremental change at best.

Will the ‘clean trillion’ framework change that? Will it be enable the financial sector to stand up now and make the necessary shifts in capital, as Christiana Figueres, Executive Secretary of the U.N. Framework Convention on Climate Change urged it to make? It’s hard to tell, but while it’s easier to think why it wouldn’t work, I’d like to adopt the overall positive spirit of the summit and believe that $36 trillion clean energy investments is actually nothing but possible.

[Image credit: Office of the NYS Comptroller Thomas P. DiNapoli]

Raz Godelnik is an Assistant Professor of Strategic Design and Management at Parsons The New School of Design. You can follow Raz on Twitter.


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  • RAL

    There are a couple of relatively simple tests to assess the validity of proposals such as the one made by Ceres. Would you, today, invest your retirement account in the underlying technology? Would you, today, invest that same money as a wager that the overall proposal will succeed?
    The problem with “If only” proposals (if only capitalism would transform itself, if only fossil fuels would remain in the ground, etc.) is that their success is typically predicated on changes to technology, markets, government and human behavior for which there is little or no precedent. Optimism is a virtue in many circumstances but less so when evidence indicates it to be foolhardy