Andy Dewis, VP International Solutions, Schneider Electric, Energy & Sustainability Services. This year’s Earth Day on Friday 22 April marks the official signing of the Paris Climate Agreement at the United Nation’s New York headquarters. The Paris deal paves the way for a new era of clean energy growth, providing a crucial policy signal for 195 countries to strive towards zero net emissions in the second half of this century.
Renewable energy spreads far and wide
Much of this relies on phasing out fossil fuels. In 2015, significant strides were made in the financing of renewable energy technologies. According to UN’s Environment Programme report Global trends in renewable energy investment 2016, 2015 saw record-breaking investment in renewables, totalling nearly $286 billion globally. Significantly, for the first time, more than half of the world’s new power generation capacity came from clean sources.
And it is developing nations that are leading the way. Emerging economies invested $156 billion in green power last year (19% up on 2014) compared to developed countries, which committed $130 billion (down 8%). China played a key role here – it scaled up its investment by 17% to $102.9 billion, accounting for 36% of the world’s total. Meanwhile India and Brazil raised investment by 30% last year to an all-time high of $36 billion.
But there are also several rising stars – countries such as South Africa, Mexico, Chile, Morocco and Turkey are looking to fast-track renewables, given the comparatively short build times they offer over fossil fuels. The falling cost of solar and wind technology has also made such projects viable for these resource-rich economies.
The UNEP report notes that Africa is one of the most promising markets for renewable energy over the next 10 to 20 years. This is due to a number of factors – its growing population, urgent need for new generating capacity, lack of electricity access in remote areas, and its abundant supply of sun, wind, biomass and geothermal.
Given the wider agenda of energy access – perhaps best illustrated by UN Secretary-General Ban Ki-moon’s Sustainable Energy for All initiative – this trend is very positive. The International Energy Agency’s World Energy Outlook Study 2015 estimates that in 2013, 1.2 billion people (17% of the global population) did not have access to electricity.
Making clean and affordable energy must be a priority
Businesses have a key role to play here in helping to widen energy access to those in remote areas and poorer communities, whether its through building local infrastructure, educating people about the benefits of clean energy to create market pull for such solutions, or establishing key partnerships with governments and NGOs to help finance micro-enterprise.
Making clean energy affordable lies at the heart of scale-up, whether it’s in Africa, Asia or the West. There are ongoing challenges, such as national electricity monopolies, the balance between supply and demand, and continued government support. But the outlook for renewables investment in the immediate future is looking rosy.
The UNEP study notes that the sliding price of oil has not damaged prospects for renewables so far. While fossil fuel costs have been falling, renewables – especially solar – have been getting more competitive. Going forward, new coal-fired plants may become more difficult to finance than those of cleaner technologies, given rising investor concern about exposure to stranded assets and the climate priorities of development banks.