Annual investments of a minimum $515 billion would be required to develop a clean energy infrastructure and move towards a low-carbon economy, according to a report published by the World Economic Forum and New Energy Finance.
The report - Green Investing: Towards a Clean Energy Infrastructure – released at the World Economic Forum in Davos today, warns that unless at least $515 billion per annum is invested in clean energy between now and 2030, carbon emissions will reach a level deemed unsustainable by scientists, causing temperatures to rise by two degrees globally.
The report identifies eight emerging, large-scale clean energy sectors that are expected to significantly contribute in the move to a clean energy infrastructure of the future - onshore wind, offshore wind, solar photovoltaic, solar thermal electricity generation, municipal solar waste-to-energy, sugar-based ethanol, cellulosic and next generation biofuels, and geothermal power.
The report, authored by Max von Bismarck and Anuradha Gurung of the World Economic Forum, and Chris Greenwood and Michael Liebreich of New Energy Finance, says ''enormous investment in energy infrastructure is required to address the twin threats of energy insecurity and climate change. In light of the global financial crisis, it is crucial that every dollar is made to 'multi-task' to create a sustainable low-carbon economy.''
Clean energy opportunities have the potential to generate significant economic returns, the report says, citing the fact that even after a tumultuous 2008, an index of the world's 90 leading clean energy companies had a five-year compounded annualised return of almost 10 per cent, which far exceeds the performance of world's major stock indices.
Other highlights from the report include:
- Clean energy investments increased from around $30 billion in 2004 to over $140 billion by 2008. Investments in 2008 exceeded expectations at $155 billion (the report is based on projections for 2008 – which suggests that $142 billion would be invested by year-end).
- Investment in clean energy has not only increased, but has also diversified geographically. Developing countries attracted 23 per cent ($26 billion) of asset financing in 2007, compared to 13 per cent ($1.8 billion) in 2004.
- In addition, four key enablers for a shift to clean energy will be energy efficiency, smart grids, energy storage, and carbon capture and storage.
- Well-developed conditions for innovation, markets for clean energy through public procurement, energy efficiency standards and stable and simple policies are essential to meet the climate change challenge.
Earlier, speaking at a press conference at the WEF annual meeting, Yvo de Boer, executive secretary of the UNFCCC Connie Hedegaard, minister of climate and energy for Denmark, and Lord Nicholas Stern, among others as also senior business and NGO representatives and members of the World Economic Forum's Global Agenda Council on Climate Change issued a statement urging the link of the economy and climate agendas in 2009.
They also warned against complacency in the UN climate talks, due to conclude in December in Copenhagen to replace the Kyoto Protocol.
Linking the economy and climate discussions in this way can create a ''diplomatic opportunity'' in 2009, they said and urged business, governments, experts and civil society groups to come together to design ''win-win'' projects and collaborations – projects that are good for the economy in the short term and that help to tackle climate change in the longer term.