If the world is serious about halting the worst effects of global warming, the renewable energy industry will require US$12.1 trillion of investment over the next quarter century, or about 75 per cent more than current projections show for its growth.
Bloomberg newsagency reports that’s the conclusion of a report setting out the scale of the challenge facing policymakers as they look for ways to implement the Paris Agreement that in December set a framework for more than 195 nations to rein in greenhouse gases.
The findings from Bloomberg New Energy Finance (BNEF) and Ceres, a Boston-based coalition of investors and environmentalists, show that wind farms, solar farms and other alternatives to fossil fuels are already on course to get US$6.9 trillion over the next 25 years through private investment spurred on by government support mechanisms.
Another US$5.2 trillion is needed to reach the United Nations goal of holding warming to two degrees Celsius set out in the climate agreement.
“The clean energy industry could make a very significant contribution to achieving the lofty ambitions expressed by the Paris Agreement,” said Michael Liebreich, founder of BNEF, a London-based research group.
“To do so, investment volume is going to need to more than double, and do so in the next three to five years.
“That sort of increase will not be delivered by business as usual. Closing the gap is both a challenge and an opportunity for investors,” he added.
Renewable energy attracted a record US$329 billion of investment in 2015, BNEF estimated.
Bloomberg reports while the figures are large, they are not as eye-watering as the International Energy Agency’s (IEA) projection that it will cost US$13.5 trillion between now and 2030 for countries to implement their Paris pledges.
Those figures are not just limited to renewable energy: they also include energy efficiency measures.
Envoys from 195 nations sealed the first deal to fight climate change that binds all countries to cut or limit greenhouse gases at a UN summit in Paris in December.
“Policymakers worldwide need to provide stable, long-lasting policies that will unleash far bigger capital flows,” said Sue Reid, vice-president of climate and clean energy at Ceres, a non-profit group.
“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,” Ms Reid added,