In order to limit global warming to below 2°C and avoid the worst effects of climate change, the world needs to invest more than an additional $1 trillion per year in clean energy through 2050 – the “Clean Trillion.” Reaching the Clean Trillion and putting the world on a path to climate stabilization will require shifting capital away from high carbon fossil fuels – the majority of which must remain in the ground – and into clean energy.
Meeting the Clean Trillion goal will be a tremendous challenge, but it is achievable if businesses, investors and policymakers join forces. Progress is being made toward increasing clean energy investment and reducing capital expenditures for fossil fuels, although there is an urgent need to increase the speed and scale of global clean energy transition.
The Role of the Electric Sector in Achieving the Clean Trillion: Mapping The Gap
Achieving the Clean Trillion will require clean energy transition across all sectors, including electric power, buildings and transportation, among others. Ceres and Bloomberg New Energy Finance (BNEF) have teamed up to release Mapping the Gap: The Road from Paris, which seeks to underscore how the global transition to clean electric power can be financed. Findings include:
- The global renewable energy investment opportunity in the electric sector is massive, at $12.1 trillion over the next 25 years. Investment in clean power projects must grow rapidly.
- There is a $5.2 trillion “gap” between the ramped up renewable energy investment that is projected under current scenarios and what is actually needed for the electric sector to meet its share of carbon emissions reductions needed to achieve the Clean Trillion.
- A world working to meet the goals of the Paris Climate Agreement (to limit temperature change to 2ºC or below) means investment in new renewable power generation will increase 75% above business-as-usual.
- While the scale of this new investment opportunity is enormous, it is dwarfed by the capacity of global financial markets to unleash the needed investment capital, creating extensive new opportunities for commercial financiers, institutional investors and others.
Businesses can help reach the Clean Trillion by investing in clean energy solutions throughout their operations and supply chains. Review Ceres’ corporate sustainability benchmarking report, Roadmap for Sustainability, to check the progress many companies already are making to:
- Reduce greenhouse gas emissions by 25% by 2020
- Improve the energy efficiency of operations by at least 50% by 2020
- Reduce electricity demand by at least 15% by 2020
- Obtain at least 30% of their energy from renewable sources by 2020
Businesses also play a critical role in closing the clean energy investment gap by supporting policies that expand investment in clean energy.
- See the principles that members of Business for Innovative Climate & Energy Policy are advocating for in the development of U.S. energy and climate policy
Investors can continue to accelerate the transition to a clean energy economy, helping to reach the Clean Trillion by:
- Managing climate risks in their portfolios. Learn more about investors’ Carbon Asset Risk Initiative
- Investing in clean energy opportunities that offer competitive risk-adjusted returns across asset classes
- Engaging with companies to improve their practices on clean energy and climate change. Check which issues have been included in shareholder resolutions filed by investors
- Supporting policies that expand investment in clean energy
For detailed recommendations related to clean energy investment, download Ceres’ paper Investing in the Clean Trillion.
Policymakers should level the playing field by adopting policies that accelerate and expand investment in clean energy. Companies and investors should advocate for:
- Policies that stimulate investment in energy efficiency, renewable energy and clean transportation
- Policies that put a limit & price on carbon, and phase out subsidies for high-carbon fuels
- Implementation of the Paris Climate Agreement, including by ‘ratcheting’ the ambition of national climate commitments and plans over time
More than 1000 global companies have signed the Climate Declaration, calling for national action on climate change.