The world is at a transformative moment in terms of how we produce and use electricity. Global powers are experiencing a major shift in how their electricity is being produced. The traditionally fossil fuel dominated electricity marketplace is being replaced by new low carbon sources, and many developing countries are also capitalizing on these innovations. Development of distributed clean energy solutions are allowing nations to leapfrog generations of outdated technologies. There is a similar trend in the telecommunication industry, where developing nations are able to utilize cell phones while skipping the cost prohibitive infrastructure of landlines with wires and poles running through the country. Clean, distributed energy now allows solar panels to sit on a residential or commercial rooftop that powers storage batteries in the basements no matter how remote a community may be. The development and policy implications of these types of advancements are truly significant.
While international agreements and policy has helped innovation break out, it is now market demands that are clearly the driving force accelerating the rapid deployment and adoption of clean energy in both developed and emerging markets across the world. Even countries previously reluctant to act, like India and China, have submitted plans as part of the Paris Climate Agreement, outlining how they plan to tackle climate change internally. American leadership and engagement has been instrumental in demonstrating the transformative market potential that clean energy technologies offer to create local jobs and mitigate the impacts of climate change.
Bloomberg New Energy Finance’s recently released a new report “Climatescope” that announced a shift in the center of the clean energy universe. The report notes another first; emerging markets are now out-deploying the developed world markets when it comes to renewable energy. These shifts are occurring because it is beneficial to do so—for their own health and security.
The policy and planning that has driven the clean energy revolution has made significant progress, and we are now living in a world where clean energy is cost effective as well. As Bloomberg recently pointed out, “the world recently passed a turning point and is adding more capacity for clean energy each year than for coal and natural gas combined. Peak fossil-fuel use for electricity may be reached within the next decade.” Emerging economies are making strategic investments that are helping to lift millions out of energy poverty, and clean, distributed generation will continue to be key.
America stands to benefit from this significant market shift. The agreement in Paris helped to unleash clean energy innovation in the U.S. and around the world, that is putting individual nations back in control of their energy security. Our country is well-poised to lead in a global clean energy economy. The U.S. was the second largest investor in renewable energy in 2015, but other countries are not far behind.
It is important to also recognize the complexity of these issues, and the challenge as growing economies that are lifting millions out of poverty have vast demand for power. For instance, China has the most solar, wind and hydropower capacity in the world and it is estimated that by 2020, over 15 percent of China’s energy capacity will come from non-fossil fuel sources. But, as the nation’s demand for energy continues to steadily rise, the Chinese are rapidly bringing new coal powered plants online as well. As Fortune recently pointed out, China has “50.8 GW of new coal-fired energy capacity between the years of 2013-15. For scale, the country’s total installed energy capacity in 1980 was 66 GW.”
The key to continued growth of the clean energy sector will be investment. During Climate Week 2016 in New York City, the United Nations (UN) released a report that indicated it will take $90 trillion dollars in public and private capital to address the worst impacts of climate change. The good news is clean energy proves to be a great investment and is already outpacing capital in fossil fuels thanks to large institutional financial backing. Despite this rapid growth, there is still a dramatic funding gap, and in order to bridge that gap, we need to be able to access the collective private capital available and capitalize on the clean energy revolution.
President George W. Bush’s former Secretary of Treasury, and former Goldman Sachs CEO, Hank Paulson points to the opportunity in “green investing” in his latest op-ed in the New York Times. $90 trillion is a large price tag, but it should not be seen as a bill, rather a worthy investment. It is feasible to fund the clean energy revolution, but we need everyday investors participating in this market. As markets and nations around the world—both developed world powers and developing nations with energy deficits—are embracing clean energy, we need forward looking policies and financial mechanisms, like CleanCapital, to keep this momentum going.
About the authors: Jon Powers & Kevin Johnson are energy experts at Dūcō and the co-founders of Clean Capital, a clean energy finance company. Jon served as President Obama’s Chief Sustainability Officer in the White House, and Kevin has seven years of Merger and Acquisition and business development experience for several of the world’s largest renewable energy companies.