New Report: $12.1 Trillion Must Be Invested in New Renewable Power Generation over Next 25 Years to Limit Climate Change

To reach the level of investment in new renewable power generation needed to avert dangerous climate change, $12.1 trillion of investment will be needed over the next 25 years, which is $5.2 trillion above business-as-usual projections, a new report by Ceres and Bloomberg New Energy Finance concludes.

“Clean energy investment is poised for rapid growth,” wrote the report authors, citing the cost competitiveness of renewables such as solar and wind and escalating investor interest in financing climate solutions.  “While the scale of this new investment opportunity is massive, it is dwarfed by the capacity of global financial markets to unleash the needed investment.”

The report, Mapping the Gap: Road from Paris, was announced at the UN Investor Summit on Climate Risk, a gathering of 500 global investors this week organized by Ceres, the United Nations Foundation and the United Nations Office of Partnerships held in the wake of the historic climate agreement last month in Paris.

Among the report’s key highlights:

• Achieving the Paris climate agreement’s goal to limit global temperature rise to below 2 degrees Celsius will require $12.1 trillion investment in new renewable power globally over the next 25 years.  This includes an additional $5.2 trillion of investment in wind, solar, geothermal and other zero-emission power sources, or an extra $208 billion a year, above and beyond the $6.9 trillion under business-as-usual projections.
• A majority of this $12.1 trillion in new renewable power generation is expected to go to emerging markets in developing countries.
• The investment surge will require a greatly expanded use of investment vehicles supporting clean energy, including bonds, asset-backed securities, and others that commercial financiers, institutional investors and other capital market players can take advantage of.
• To put the renewable energy financing challenge in perspective, the average new annual global investment opportunity for new renewable energy is about the same amount as US customers borrow annually for car loans.

"The clean energy industry could make a very significant contribution to achieving the lofty ambitions expressed by the Paris Agreement,” BNEF Chairman Michael Liebreich said, citing the seven-fold growth in renewable energy installations in the past decade alone.  “To do so, however, 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.  That is what this report is about.”

The report highlights the critical role of supportive government policies that will enable more renewables investments, including the Paris climate accord’s “ratchet” mechanism, which will help ensure that every country’s commitments to reduce carbon pollution become more ambitious over time.

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