On Wednesday, a new report United Nations report urged governments to pour money into renewable energy to pull us out of economic depression driven by the coronavirus and jumpstart the transition away from fossil fuels.
The analysis was undertaken by the United Nations Environment Program, the Frankfurt School-UNEP Collaborating Centre, and BloombergNEF, which looked at investment pledges for renewable energy for the next decade as well as investment trends in the renewable sector in 2019. Their findings show that countries need to do more to transition to renewables, but that doing so now is a better investment than ever. The analysis follows in the footsteps of industry groups, all of which have implored governments to use recovery from the coronavirus to also address the climate crisis.
“The chorus of voices calling on governments to use their covid-19 recovery packages to create sustainable economies is growing,” said Inger Andersen, Executive Director of UNEP, in a statement. “This research shows that renewable energy is one of the smartest, most cost-effective investments they can make in these packages.”
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The 80-page paper compares companies’ and countries’ clean energy commitments and uncovers some disappointing figures. Globally, there’s been commitments to build 826 gigawatts of renewable energy capacity by 2030 — enough to power some 600 million homes — which would cost about $US1 trillion ($1.4 trillion). That’s $US1.7 trillion less than the world spent on renewables in the 2010s. And unfortunately, that planned investment isn’t nearly enough to meet the goals of the Paris Agreement and keep the Earth’s warming below 2 degrees Celsius.
Doing so would require an additional 3,000 gigawatts of renewable power by the end of the decade. The world needs to commit to spending trillions more dollars by the end of the decade just to avoid crossing 2 degrees Celsius–and it would be far preferable to stay below 1.5 degrees, which requires even more investment.
The good news is that thanks to improvements in efficiency and various market forces, the cost of installing sustainable energy is decreasing. The report estimates that two-thirds of the world’s population now live in countries where either solar or wind is the cheapest electricity option and prices are likely to keep falling.
The world added 184 gigawatts of clean energy capacity — the largest annual addition ever — in 2019. That’s 12 per cent more sustainable energy than the world added in 2018, but the researchers estimate it cost just 1 per cent more. That makes current investments in clean energy can get more bang for the buck than ever.
“Due to the continuous cost reduction of the renewable energy, more energy capacity can be delivered with the same amount of investment,” Françoise d’Estais, head of the finance unit of the Energy, Climate and Technology Branch of the UNEP, told Gizmodo in an email.
The cost of clean energy had been on the decline long before 2019, but the report shows that it’s recently been falling more steeply. In the past 10 years, the cost of onshore wind energy decreased by 49 per cent — 10 per cent of which happened between 2018 and 2019 alone. Even more notably, onshore wind prices dropped by 51 per cent from 2009 to 2019, and 32 per cent of that dip has occurred since 2018. Solar has fallen even further, with installation costs falling 83 per cent in the past decade.
Meanwhile amid the coronavirus pandemic, the fossil fuel sector has reached a crisis point. Demand for coal- and gas-fired electricity has dropped dramatically, and the price of oil hit an almost absurd all-time low. Though it’s recovered a bit, it’s still in a slump. But these industries weren’t doing well even before the crisis began, so even from a purely economic standpoint, throwing them a lifeline makes no sense. And if we’re going to avert catastrophic climate breakdown and long-term economic peril, we have no choice but to make the transition away from dirty fuels. With economies hurting and the need for a transition clear, now is the time to make that transition happen.
“The stakes are high,” the report says. “If this chance is missed, it may be even more difficult to find the funding to decarbonize the energy system in a post-covid-19 global economy characterised by elevated government debt and squeezed private sector finances.”