Two years after 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, according to findings by research firm Bloomberg New Energy Finance, which shows slowing investment from OECD countries and limited policy-making follow-through in non-OECD nations.
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% from 2015 levels. The data was collected as part of BNEF’s annual Climatescope project focusing on clean energy activity in developing countries.
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.
At the UN Climate Change Conference held in Copenhagen in December 2009, the world’s wealthiest nations promised to make $100 billion per year available to less developed nations to address the impacts of climate change. The figure was intended to include all forms of climate-related investment. Based on totals calculated by BNEF in Climatescope, there is little to suggest that clean energy finance will make a sufficient contribution to ensure the headline goal will be achieved. 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, BNEF found. This figure is inclusive of both public finance (largely in the form of development bank and export-import institutions) and entirely private capital.
A faster-paced clean energy scale-up will be required if the worst impacts of climate change are to be avoided. 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°C, the figure required to keep the worst potential impacts of climate change in check.
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% have established domestic CO2 containment goals. However, only two thirds (67%) have introduced feed-in tariffs or auctions to support clean energy projects, and only 18% have set domestic greenhouse gas emissions reduction policies.
“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.”
The Copenhagen $100 billion pledge was reiterated in the 2015 Paris Agreement. In response, some developing countries pledged to meet emissions targets only on the condition that sufficient financial and technical assistance was provided. Twenty-five nations examined through Climatescope pledged to achieve more aggressive CO2 reduction goals if the wealthiest nations followed through entirely on the Copenhagen promise. Another 19 countries said they would cancel their commitments altogether if sufficient assistance was not provided.
The Paris Agreement brought 195 countries together to agree on the urgency of addressing climate change. The accord showed its resilience when world leaders collectively condemned plans by the USA to withdraw from the pact. Yet Paris can only be judged a success when its signatories follow through on their promises. For wealthier nations, says BNEF, this means fulfilling the promise first made at Copenhagen to provide financial assistance to lesser developed countries. For non-OECD nations, it means adopting detailed clean energy policy measures shown to build investor confidence.
BNEF’s annual Climatescope project <www.global-climatescope.org>