Renewables Are Soaring, Do We Even Need a Paris Agreement?

December 7, 2015 | 00:00
Renewables Are Soaring, Do We Even Need a Paris Agreement?
Renewables Are Soaring, Do We Even Need a Paris Agreement?
The great number renewable energy initiatives announced at COP21 such as the Global Solar Council, Mission Innovation and the African Renewable Energy Initiative add to the sense of optimism surrounding the climate conference. It shows the transition to low-carbon energy resources is gaining momentum, supported by a wide variety of stakeholders and backed by real commitments and actual investments. The mood is so jubilant some observers ask whether a Paris Agreement is even necessary anymore to ensure the growth of renewables. Is the energy transition at the point where it is carried by its own momentum?

During the Lima Paris Action Agenda Energy Day Press Briefing several stakeholders from business, government and the institutional sphere discussed the progress in the field of sustainable energy and all of them had a big announcement.

Extraordinary momentum in the renewable sector

“We see an extraordinary momentum in the renewable sector”, said Rachel Kyte, the new CEO of Sustainable Energy For All (SE4all). "You see it all coming together: The cost of solar has imploded. Really, it has come down by 70% or more in the last few years. The finance sector responding to that signal and understanding what the risk return profile is for new technologies. You can hear them talking about it here at the conference. The financial community is working out which financial models and what financial products can unlock the opportunity for returns in the renewable sector.

“We witness a remarkable deepening of the conversation about the need to remove harmful subsidies to fossil fuels. And there is a groundswell from the business community and governments in doing the one thing that helps create a level playing field more than anything else which is putting a price on carbon.

"You hear policymakers about putting the right regulation in place to allow the innovation of the business sector and the innovation of the technology to take off. And you see renewable energy technologies moving to center stage.

You can see it all happening here in a material way with real conversations with real money being put on the table. That is what different about this COP than any other I've seen."

Private sector adds scale

Jean-Marc Ollagnier, chief executive of Accenture's Resources Operating Group agreed the private sector is very engaged in this COP. Accenture is part of SE4all's We Commit campaign that has businesses commit to energy efficiency goals. “We started 6 month ago with We Commit and we aimed for a 100 participants but we are currently at 775. SE4all is a model where you get the private sector engaged to support an initiative that matters for the world. Solutions provided by the private sector can help to scale all the different things we have to do."

Double the renewable energy targets

Adnan Amin Director-General of the International Renewable Energy Agency (IRENA) announced it is possible to double the renewable energy targets for 2030. In preparation for the climate conference IRENA did an analyses of 27 to 30 energy intensive economies to find out whether it is possible to increase the projected level of renewable energy penetration. If the target would indeed be doubled it would result in half the emission reduction needed to keep to the 2°C pathway. “If you put that together with energy efficiency, we believe that is the most effective and economic and politically feasible way to remain under the 2°C threshold”, he said.

To get there investments in renewables need to be ratcheted up considerably, from the current $270bn a year to $500bn by 2020 and an annual $900bn between 2021 and 2030. “This is absolutely feasible”, said Amin.

He named three initiatives to support his position. The Lighthouse initiative which helps small island developing states transition to a sustainable energy future, has already raised $250bn in investments in the 18 months of its existence.

The second initiative is the Sustainable Energy Marketplace launched by IRINA today. It is a match making platform for renewable energy projects where investors, developers and technology companies can connect with each other. “If we are going to increase investments 5-fold, we need to create a framework through which we can generate a flow of reliable bankable renewable energy project opportunities in fast growing economies which can attract the kind of funding that we need”, said Amin.

The third announcement was the launch of the Global Geothermal Alliance by 36 countries and 23 international institutions. “The objective is to achieve a 500% increase in global installed capacity for geothermal power generation and a 200% increase in geothermal heating by 2030. Because if we are going to make the energy transition happen we need to use all sources of renewable energy available”, he said.

Policy risk

“In Africa we have the Sustainable Development Goals challenges, the climate change challenges and the poverty reduction challenges. Electricity access in Africa is only 30% on average. We must come out with a strategy to address all these challenges”, said Dr. Khaled Fahmy the minister of the environment of Egypt and chair of the African Ministerial Conference on the Environment (AMCEN).

“Together with the IRENA, the African Development Bank and the World Bank we have launched the African Renewable Energy Initiative which is African-led, African-owned and will be implemented by Africans”, he said. The aim of AREI is to improve access to electricity from 32% to 72% by 2030. 10 GW renewable energy capacity will be added in 2020 and an additional 300 GW in 2030. The first phase of the project till 2020 will cost $10bn. Half of that amount has already been mobilized with help of the French and German governments, said Fahmy.

But that is actually the easy part, he said. The real challenge is to realize the policy reforms and institutional set ups that will lead to the swift and quick implementation of such an initiative. The phase-out of fossil fuel subsidies for example, will meet a lot of opposition in African countries.

“But Africa is on the road. We know our challenges, we will do our part. But at the same time we would like to remind the rest of the world that we can not do that without the transfer of the know-how and capacity building and the finance. These issues are at the core of the negotiations here at COP21”.

100% renewable power

Steve Howard, IKEA's Chief Sustainability Officer said the company had decided to aim for energy independence some 4 years ago. “With 23 wind farms, 700.000 solar panels and large biomass power stations we're 76% of the way there.” Ikea is part of RE100 a campaign led by the Climate Group. The 53 large multinationals that are a member have pledged to go 100% renewable. “Collaboration is key”, said Howard. The campaign facilitates that the companies can exchange ideas and to enter into a dialogue with policymakers. “Any business anywhere can join. If every business made this sort of commitment we could take out 10 to 15% of global CO2 emissions. From a business point of view, there is energy security here, energy independence. There is no peak sun, no peak wind. We have an infinite amount of clean energy reserves and you can invest against that.”

Do we even need a Paris Agreement?

The positive vibe coming from the panelists on the stage led one observer to ask if we still need a Paris Agreement or whether renewables will conquer the world on their own.

“It is extremely important that we see progress in the negotiation here”, answered Anan. “It will give a sense of confidence to governments, investors and others that we are making process in addressing some of the key sticking points to the transition to a sustainable future. That includes progress on international cooperation, progress on exchange of technology, progress in future financing flows. And that does not necessarily mean huge amounts of public resources. It needs to be public resources leveraging private investment. We are very vested in a strong outcome in Paris and we are optimistic at this stage of how it is going.”

The Egyptian minister added: “The main obstacle to success of the Africa initiative is policy reform and institutions. We know that in a lot of African countries energy is subsidized. Politically it is socially sensitive to remove subsidies. If you subsidize fossil fuels than renewables will always seem expensive. Policy reform is at the center. You cannot address renewables without policy reform.”

“Policy risk is still massive”, said Ikea's Howard. “We want a strong message from Paris and we want countries to boldly set out with legal policy frameworks. Then business will deliver the innovation and investment required to get us to scale.”

The panel's moderator ended with: “We would not be where we are today if we had not had 20 years of this effort at the COPs: to get the world to move on climate change through international agreements.”

Image: Nesjavellir Geothermal Power Station. By Gretar Ívarsson. CC-BY licence
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