Two years since the signing of the Paris climate agreement and eight years after Copenhagen, countries on both side of the rich-poor divide are falling short on promises made to address climate change through clean energy investment, say a new research firm Bloomberg New Energy Finance (BNEF).
Total new clean energy investment in non-OECD countries fell by $40.2 billion to $111.4 billion in 2016 from $151.6 billion in 2015. While China accounted for three quarters of the decline, new clean energy investment in all other non-OECD countries also fell 25 percent from 2015 levels.
Beyond the drop seen 2015-2016, the longer-term trend is also potentially disconcerting for policy-makers.
The number of non-OECD countries globally that have recorded clean energy asset finance of $100m or more per year ̶ approximately the cost of one large onshore wind or solar PV power plant ̶ has stagnated at around 27 since 2010.
The findings from BNEF’s Climatescope, the basis of this research, reveal that funds specifically deployed from the world’s wealthiest OECD nations to the non-OECD countries to support clean energy build fell to $10 billion in 2016 from $13.5 billion in 2015. This figure is inclusive of both public finance (largely in the form of development bank and export-import institutions) and entirely private capital.
A swifter pace of clean energy scale-up will no doubt be required if the world is to avoid the worst impacts of climate change. BNEF estimates that a total of $8.7 trillion will be invested in zero-carbon emitting energy projects through 2040 under the firm’s long-term New Energy Outlook estimates. However, an additional $5.4 trillion will be needed to keep the total temperature rise at 2-degrees Celsius – and to keep the worst potential impacts of climate change in check.
In terms of the $100 billion per year promise, the UNFCCC Standing Committee estimates non-clean energy climate-related investment totaled $60.5 billion in 2014. Had BNEF’s “north-south” figure for clean energy flows for that year been included in that analysis, the total would have come to $71.3 billion.
Given the $10 billion deployed from wealthier to less developed countries for clean energy in 2016, unless all other forms of climate-related investment have risen very sharply since 2014, the $100 billion goal appears far from reach with only three years to go until 2020, the report said..
Two years ago at the UN Climate Change Conference in Paris, nearly 200 countries pledged to address CO2 emissions through “nationally determined contributions”. While these promises varied in ambition and scope, virtually all required countries to undertake additional domestic policy-making to meet their internationally-stated goals. In that regard, the Climatescope survey suggests developing countries have substantial work to do.
Of 71 nations researched in detail by BNEF, 76 percent have established domestic CO2 containment goals. However, only two thirds (67 percent) have introduced feed-in tariffs or auctions to support clean energy projects, and just 18 percent have set domestic greenhouse gas emissions reduction policies. These detailed, technical regulations have proven critical to attracting private capital in developing countries clean energy and facilitating scale-up.
“The figures highlight the gap between talk and action when it comes to addressing climate and supporting clean energy,” said Ethan Zindler of BNEF. “Wealthier countries have been slower to ramp investment than might have been expected, given the promises made eight years ago at Copenhagen. But poorer nations have in many cases not built the policy frameworks needed to build investor confidence and attract clean energy investment.”