Investment is the lifeblood of the global energy system. Individual decisions about how to direct capital to various energy projects – related to the collection, conversion, transport and consumption of energy resources – combine to shape global patterns of energy use and related emissions for decades to come. Government energy and climate policies seek to influence the scale and nature of investments across the economy, and long-term climate goals depend on their success. Understanding the energy investment landscape today and how it can evolve to meet decarbonisation goals are central elements of the energy transition. Around two-thirds of global greenhouse gas (GHG) emissions stem from energy production and use, which puts the energy sector at the core of efforts to combat climate change.
The signing of the Paris Agreement in December 2015 was rightly hailed as a truly historic moment in the fight against climate change. It marked the start of the most important race in our existence – the race to curb global greenhouse gas (GHG) emissions so that global temperature rise remains below 2 degrees Celsius and, ideally, below 1.5 degrees Celsius.
2016 marked the start of a new era in global action against climate change, with the entry into force of the Paris Agreement on November 4, less than a year after its adoption. The Marrakech Action Proclamation, issued at the end of the 22nd Conference of the Parties (COP 22) to the United Nations Framework Convention on Climate Change (UNFCCC) in November 2016, reaffirmed the Parties’ commitment to the implementation of the Paris Agreement and encouraged the ratification of the Doha Amendment to the Kyoto Protocol.
Multilateral climate funds play a key role in using public finance to help drive the economic and societal transformation necessary to address climate change. There is growing pressure for policymakers to make the architecture of funds more effective and coherent. This report examines seven key multilateral climate funds and recommends operational and architectural reforms to improve their ability to deliver low-emissions and climate-resilient development.
Whether it is air pollution in China, haze in Singapore, or water scarcity in India, the evidence that environmental and social issues present growing risks to economic growth is mounting across Asia. Global banks and international institutional investors have begun to address these issues in their financing and investment decision-making processes.
A dramatic drop in the price of clean technologies and the rise of smart policies are driving businesses to climate-smart investments. 2015 was another record-breaking year for investment in new wind power, solar power, and hydropower plants: 152 gigawatts (GW) of renewable energy became operational, and global investment in clean energy increased to $348.5 billion – more than twice as much as coal- and gas-fired power generation.
The call for a 100% renewable energy future is gaining widespread support. It is a clear and simple concept, which expresses perfectly the ambition signaled by countries in signing of the 2015 landmark Paris Agreement. Holding global average temperature rise well below 2°C, not to mention a much safer limit of 1.5°C, requires nothing short of the complete decarbonisation of the energy sector. But the world is a complex place; what works in one country doesn’t necessarily work in another. Finding solutions for some sectors is easier than for others. The stakes are high – financially, environmentally and socially – and as the transition progresses, there will be clear winners and losers.
87 of the world’s leading companies are now members of RE100, creating demand for around 107 Terawatt hours (TWh) of renewable electricity – around the same amount of power consumed by the United Arab Emirates or The Netherlands. 34 leading businesses have joined RE100 in the last year, reflecting an increasing recognition of the business case, and the vital role that companies play in expanding the market for renewable energy. While growth has historically been focused around the US and Europe, 2015-16 saw RE100 welcome members from China and India, with favorable policy environments opening up new opportunities for corporate leadership in these regions.
Renewable energy set new records in 2015 for dollar investment, the amount of new capacity added and the relative importance of developing countries in that growth. All this happened in a year in which prices of fossil fuel commodities – oil, coal and gas – plummeted, causing distress to many companies involved in the hydrocarbon sector. So far, the drivers of investment in renewables, including climate change policies and improving cost-competitiveness, have been more than sufficient to enable renewables to keep growing their share of world electricity generation at the expense of carbon-emitting sources.
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19 September 2017
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