Renewable energy investment set a new world record in 2015, with emerging economies led by China topping the investment of developed nations for the first time, according to a United Nations-backed report unveiled Thursday.
Last year, the world invested $286 billion in green energy — some 3 percent more than the last record set in 2011 — mostly on wind and solar, according to the report, put together by the Frankfurt School and United Nations Environment Program (UNEP). On the other hand, coal and gas-fired electricity generation drew less than half the investment made in solar, wind, and other renewables.
“China is by far in the lead, but you also have quite a few others,” Eric Usher, head of UNEP Finance Initiative, told ThinkProgress. “In the lead table of the top 10 countries, six of them are in developing countries … so we see a transition taking place.” China, the world’s largest emitter of greenhouse gases, is responsible for about a third of worldwide investment, or $102.9 billion. The United States, the second largest emitter, is a distant second with $44.1 billion — 20 percent less than it invested in 2014.
Other countries in the top 10 list include Chile, Mexico, South Africa, Brazil, and India. Were it not for renewables — excluding hydro energy — annual global CO2 emissions would have been about 1.5 metric gigatons higher in 2015, the report notes. Global CO2 emissions were projected to be 15 metric gigatons, Climate Central reported. “The policy environments have been getting more solid and investors are responding,” Usher said.
The report comes at a time of increased attention to renewable energy and points to a shift in investing trends. Many see renewables as the main way for energy-hungry nations to maintain economic growth and at the same time curtail dangerous CO2 emissions that contribute to climate change. Though the agreement in Paris boosted the case for renewables, this transition is not necessarily driven by ideology as much as by opportunity and need. China’s embrace of wind and solar, for example, has come as the country faces deadly pollution levels. Other developing countries like India, Brazil, and Mexico are juggling similar problems in their megacities. Moreover, emerging economies face fast-rising electricity demands at a time when renewable energy technology is getting cheaper.
Meanwhile, forecasting organizations say a peak in power sector CO2 emissions this decade is unlikely, and there’s doubt about a peak in emissions happening even early in the next decade. So while the report and experts reached say the investing trend is promising, much more is needed to make a dent in climate change — particularly since European nations, known as the early adopters of renewable energy, invested less in 2015 than in the past nine years. Moreover, renewable energy growth isn’t coping with expected global energy demand, according to the report. Electricity from renewables in 2015 was about 10 percent of global generation.
“I think it’s almost like there are two different stories happening. In the U.S., we’ve seen very robust deployment, but Europe is stagnating, and that is worrisome,” said Rachel Cleetus, lead economist of the Union of Concerned Scientists, in an interview with ThinkProgress. “We need to do a lot more, a lot faster.”
Just this week a new study by James Hansen, the father of climate change awareness, said the current global target of 2°C (3.6°F) total global warming “could be dangerous” to humanity. And last month, a Potsdam Institute for Climate Impact Research study found with unprecedented confidence levels that sea level rise will likely be as much as 50 inches by the end of the century unless greenhouse gas emissions are rapidly reduced.
For its part, the report says that fossil fuel power plant capacity has to decline or be left idle to be consistent with the goal of zero greenhouse gas emissions in the second half of the century. That’s a difficult thing to do as fossil fuel power plants have long operational lives and renewables — excluding large hydro plants — represent one-sixth of the world’s power capacity; a figure that is, however, climbing quickly, according to the report. Fossil fuels are also highly subsidized. In fact, a recent study found that governments have been subsidizing polluting industries instead of giving cleaner industries a chance to grow. In 2014, some $600 billion went to subsidies for fossil fuels, while renewable energy received slightly over $100 billion.
Amar Bhattacharya, senior fellow at the Global Economy and Development Program at the Brookings Institution, said that emerging markets are poised for the most growth, so meeting the climate agenda “will very much depend on whether these investments are low carbon or not.” To lock a low carbon future, Bhattacharya said fossil fuel subsidies need to end and carbon taxes should become the norm.
“A carbon tax couldn’t be more timely because fossil fuel prices are so low,” Bhattacharya told ThinkProgress, adding the cost of financing in developing countries has to be addressed, too, since financing in emerging markets is costly while interest rates worldwide are at record lows. That comes as it’s still risky to invest in volatile places like Africa or South America.
All experts reached agreed that financing tools need to improve for renewable energy to grow as much as the climate needs it to. These tools could be new types of loans, said Scott Sklar, adjunct professor at George Washington University, similarly to what happened when the secondary mortgage loans came to life, allowing the United States to reach record home ownership levels. “We are beginning to create these tools in developing countries, but we are in the infancy,” Sklar, chair of the Department of Commerce’s advisory committee on renewables and efficiency, told ThinkProgress.
Some in Congress don’t feel the same, though. This week, 26 Republican senators wrote to the U.S. Senate Appropriations Committee, which oversees the use of international climate finance, asking it to stop future transfers of funds to the UN-led Green Climate Fund.
Yet experts agreed that policy matters in incentivising renewable energy. And all said policymakers should further support this transition as it is poised to produce economic and social benefits that outweigh costs. Cleetus noted the surge in renewable energy is happening against the background of economic growth — albeit sluggish — as well as low fossil fuel prices.
“So clearly renewables are cost competitive,” said Cleetus. “The solutions are there, we can do it, we have the technologies, now we just need to double down and accelerate this trend with strong policies.”