Holding average global warming to the interim target of 2°C set out in the Paris Agreement would cost only US$12.1 trillion over the next quarter-century, or $484 billion per year, Bloomberg New Energy Finance and Boston-based Ceres calculate in an analysis released last week.
And if present trends continue, the majority of that investment is already in place. Renewable energy attracted an estimated US$329 billion in global investments, and present trends suggest an annual average of $276 billion through 2040, leaving another $208 billion to be raised.
The BNEF/Ceres report appears not to have calculated the additional investment needed to meet the long-term target of 1.5°C average global warming. But the estimate for 2°C is paltry against the $5.3 trillion per year—more than $10 million per minute—that countries spend each year on fossil fuel subsidies, according to the International Monetary Fund.
“The clean energy industry could make a very significant contribution to achieving the lofty ambitions expressed by the Paris Agreement,” said BENF founder Michael Liebreich. However, “to do so, investment volume is going to need to more than double, and do so in the next three to five years. That sort of increase will not be delivered by business as usual. Closing the gap is both a challenge and an opportunity for investors.”
“Policy-makers worldwide need to provide stable, long-lasting policies that will unleash far bigger capital flows,” said Sue Reid, Ceres’ vice-president of climate and clean energy at Ceres. “The Paris Agreement sent a powerful signal, creating tremendous momentum for policy-makers and investors to take actions to accelerate renewable energy growth at the levels needed.”