Report: $12.1T must be invested in new renewable power generation over next 25 years to limit climate change
To reach the level of investment in new renewable power generation needed to avert dangerous climate change, $12.1 trillion of investment will be needed over the next 25 years—$5.2 trillion above business-as-usual projections—according to a new report by Ceres and Bloomberg New Energy Finance.
The report, Mapping the Gap: Road from Paris, was announced at the UN Investor Summit on Climate Risk, a gathering of 500 global investors this week organized by Ceres, the United Nations Foundation and the United Nations Office of Partnerships.
Among the report’s key highlights:
Achieving the Paris climate agreement’s goal to limit global temperature rise to below 2 degrees Celsius will require $12.1 trillion investment in new renewable power globally over the next 25 years. This includes an additional $5.2 trillion of investment in wind, solar, geothermal and other zero-emission power sources, or an extra $208 billion a year, above and beyond the $6.9 trillion under business-as-usual projections.
A majority of this $12.1 trillion in new renewable power generation is expected to go to emerging markets in developing countries.
The investment surge will require a greatly expanded use of investment vehicles supporting clean energy, including bonds, asset-backed securities and others of which commercial financiers, institutional investors and other capital market players can take advantage.
The average new annual global investment opportunity for new renewable energy is about the same amount as US customers borrow annually for car loans.
The report highlights 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.
The report’s findings underscore that clean energy financing will soon no longer be considered alternative and will begin to more fully resemble other, more established infrastructure sectors such as transportation or real estate, from a financial structure perspective. As clean energy moves firmly into the mainstream, it will inevitably account for expanding and significant shares of infrastructure investors’ portfolios.