A report released by the World Economic Forum during its annual meeting in Davos warns that to have a chance of limiting the average increase in global temperatures to 2°C, a level which an increasing number of experts already considers unsafe, at least US$515 billion per year will need to be invested in clean energy globally between now and 2030.
The report, Green Investing: Towards a Clean Energy Infrastructure, published in collaboration with New Energy Finance, identifies eight significant, emerging, large-scale clean energy sectors: onshore wind, offshore wind, solar photovoltaic, solar thermal electricity generation, municipal solar waste-to-energy, sugar-based ethanol, cellulosic and next generation biofuels, and geothermal power.
The report’s authors, Max von Bismarck and Anuradha Gurung from the World Economic Forum, and Chris Greenwood and Michael Liebreich from New Energy Finance, argue that “enormous investment in energy infrastructure is required to address the twin threats of energy insecurity and climate change. In light of the global financial crisis, it is crucial that every dollar is made to ‘multi-task’ to create a sustainable low-carbon economy.”
Clean energy opportunities have the potential to generate significant economic returns. The report shows that even after a tumultuous 2008, an index of the world’s 90 leading clean energy companies had a five-year compounded annualized return of almost 10%, unmatched by the world’s major stock indices.
Other highlights from the report include:
Clean energy investments increased from around US$30 billion in 2004 to more than US$140 billion by 2008. Investments in 2008 exceeded expectations at US$155 billion (the report is based on projections for 2008—which suggests that US$ 142 billion would be invested by year-end).
Investment in clean energy has not only increased, but has also diversified geographically. Developing countries attracted 23% (US$26 billion) of asset financing in 2007, compared to 13% (US$1.8 billion) in 2004.
Four key enablers for a shift to clean energy will be energy efficiency, smart grids, energy storage, and carbon capture and storage.
Well-developed conditions for innovation, markets for clean energy through public procurement, energy efficiency standards and stable and simple policies are essential to meet the climate change challenge.
Speaking at a press conference at the World Economic Forum Annual Meeting 2009 in Davos, Yvo de Boer, Executive Secretary of the UNFCCC, Connie Hedegaard, Minister of Climate and Energy for Denmark, and Lord Nicholas Stern, among many others—including senior business and NGO representatives and Members of the World Economic Forum’s Global Agenda Council on Climate Change—issued a statement urging the link of the economy and climate agendas in 2009. They warn against complacency in the UN climate talks, due to conclude in December in Copenhagen to replace the Kyoto Protocol.
Their statement suggests using some of the money available from fiscal stimulus packages to invest in activities that can provide jobs as well as create low emission options. They say that linking the economy and climate discussions in this way can create a “diplomatic opportunity” in 2009.