Preventing the worst effects of global warming without harming economic growth requires doubling annual investments in renewable and low-carbon energy to $500 billion a year by 2020, according to the World Economic Forum.
Government policies must expand development of clean energy sources such as solar panels and wind turbines to limit a global temperature increase of 2 degrees Celsius (3.6 degrees Fahrenheit) from pre-industrial levels, a goal that environmental groups and scientists say is needed to halt the adverse impact of a warming planet.
Clean energy investment last year surged 30 percent to a record $243 billion, the WEF said today in a report based on data from Bloomberg New Energy Finance. That’s less than half of what is needed to prevent catastrophic warming that would melt polar ice caps and raise sea levels, it said.
“In this era of fiscal austerity, policy makers need to ensure that the supports they put in place drive sustained long- term growth,” co-authors Anuradha Gurung and Max von Bismarck said in the report.
Government stimulus commitments of $194 billion worldwide since 2009 have spurred private investment and driven down costs, especially in China, which invested $47.3 billion in the sector. The U.S. accounted for $20.7 billion of global clean energy spending.
A drop in the cost of solar power led drove investments in sun-powered projects, boosting global installed capacity of photovoltaic systems to 18.4 gigawatts from 7.6 gigawatts in 2009, the report said.
China’s dominance in clean energy was fueled by a 39 percent increase in investment to a record $54.4 billion last year. That made it the world’s largest manufacturer of wind turbines and solar modules, and helped it overtake the U.S. in terms of installed renewable energy capacity.
Solar, wind and geothermal energy projects cost more up front than coal and natural gas plants, and cost more to finance, the report said. That’s largely because coal and natural gas costs aren’t included in fossil plant construction, whereas fuel for renewable energy is free.
“As investors and lenders grow more comfortable with the risk profile of clean energy projects, they are more likely to offer capital at lower cost,” the authors said.