Investment in renewables has the potential to deliver the triple benefit of energy access, lowering global carbon emissions and making a profit, according to a new report by Christian Aid.
Christian Aid’s Senior Climate Advisor, Fran Witt, said a virtuous circle was starting to form:
“We have arrived at a tipping point, where not only is clean energy technically and economically viable, it is understood and increasingly embraced by institutional investors who, under the right conditions, are willing to invest at unprecedented levels.
“This is fuelling a virtuous circle, as clean energy scales up, costs continue to fall, making clean energy the least-cost choice in many circumstances. But the pace of investment, and the speed at which that virtuous circle spins, needs to accelerate rapidly if we’re to keep global temperature rise in check.”
She added that with 2017 showing the damage already being caused by climate change the profitability of renewables was arriving just in time.
“Clean energy is essential if we’re going to decarbonise the world’s energy system in time to avoid the worst impacts of climate change. It’s is needed both to reduce the high carbon economies of the rich world but crucially also to help poorer countries leapfrog a fossil fuel heavy development phase. All the while providing power to the more than a billion people without electricity.
“But to unlock this potential, greater investment is required. The good news is that technological and manufacturing advances have lowered the costs of renewables making them financially competitive, reliable and therefore investable.”
The justification for investing in polluting fossil fuels is increasingly thin. Analysis from the International Energy Agency recently showed that renewables will give more people access to electricity than coal.
Ms Witt said: “It is hard to justify a reason for new investment in primary fossil fuels for power generation – either by governments seeking to meet the energy needs of their citizens, or from investors. One only needs look at the declining value of coal producers and electric utilities dependent on coal to see that these are, or soon will be, stranded, lossmaking investments. In many cases, they already are.”
Pressure is also building on investors to ensure their portfolios meet certain ethical and sustainability thresholds.
Ms Witt said: “The search for cash-yielding investment and the technological breakthroughs in renewables coincides with the rise of sustainable and ethical investment objectives, including the growing fossil fuel divestment movement. The confluence of these trends has dramatically increased investor appetite for clean energy exposure.”
Virtuous Circle: scaling up investment in low carbon energy can be downloaded here: https://www.christianaid.org.uk/resources/about-us/virtuous-circle-scaling-investment-low-carbon-energy