Global investment in clean energy must reach $515 billion per year by 2030 — triple that of last year’s investment — in order to avoid “the catastrophic impact of climate change,” according to a report from the World Economic Forum and New Energy Finance. Released this morning in Davos, the 56-page document, “Green Investing: Towards a Clean Energy Infrastructure,” is the first such report to come out of a climate change project mandated by investors at last year’s meeting.
The report identifies eight emerging clean energy sectors with large-scale generating capacity expected to figure prominently in the world’s energy system by 2050, even if fossil fuels continue to power a substantial portion of the grid: onshore and offshore wind, solar thermal and photovoltaics, municipal solar waste-to-energy, sugar-based ethanol, cellulosic and next-generation biofuels, and geothermal power. Wind represents the most mature clean energy technology, while solar has the fastest growth.
The authors — Max von Bismarck and Anuradha Gurung of the World Economic Forum, and Chris Greenwood and Michael Liebreich of New Energy Finance — also note that investing in energy efficiency could produce returns in the range of 17 percent or more. Efficiency, plus carbon capture and storage, smart grids and energy storage technology represent four key enablers for the transition to a clean energy system.
In 2008, private investors poured a record-breaking $155 billion into clean technology. Over the next 18 months, President Barack Obama wants to inject $54 billion into renewable energy as part of a larger economic stimulus plan — but that’s a onetime investment. Without question, reaching the Davos investment target will be no easy task. While the report authors argue that every stimulus package should push the cleantech ball forward (with support for educating a new generation of engineers and rolling out a fully digital power grid, for example), they see a necessary partnership between the private and public sectors:
Policy-makers need to build frameworks which enable corporations and investors to make good returns by squeezing carbon out of the world’s economy. And investors need to understand the scale and nature of the investment opportunity presented by the world’s one-time shift to low-carbon energy.
At the very time when commentators are branding green investing as a luxury the world cannot afford, enormous investment in the world’s energy infrastructure is required in order to address the twin threats of energy insecurity and climate change. Waiting for economic recovery, rather than taking decisive action now, will make the future challenge far greater. As the cost of clean energy technologies decreases and policy support is put in place, the shape of the eventual energy system is emerging. But the investment demand is substantial. Despite the recent turmoil, the world’s financial markets are up to the financing challenge, but they will need continued action from the world’s policy-makers and leading corporations.