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Synopsis: With the world trying to achieve the Paris climate target, there is a need to bring more financial commitments and change in policies to achieve this target.
Solar power is now the cheapest form of electricity in history. Over 90% of power-generation capacity added around the world last year was in renewables
But to stand a chance of limiting global warming to 1.5° Celsius above pre-industrial levels, the world’s energy systems must transform even faster. And that needs governments and public financial institutions to stop supporting fossil fuels and instead support the clean-energy transition.
Is RE sector being adequately financed?
To meet the 2015 Paris climate agreement’s 1.5°C target, the global energy transition needs to progress 4-6 times faster than currently. Fossil fuels still supply 84% of the world’s energy and account for over 75% of global emissions.
The International Energy Agency’s ‘Net Zero by 2050’ roadmap shows that global energy systems must be fossil-fuel-free by 2040.
Yet, since Paris, G20 governments have provided more than three times more public finance for fossil fuels ($77 billion) than for renewables every year.
What favorable factors now exist in the RE sector?
Investments in RE sector have always been riddled with high upfront costs and lack of large scale adoption issues, but the situation is now changing.
Dramatic cost reduction: Wind and solar are now cheaper than new coal and gas power plants in two-thirds of the world. The dramatic cost reduction over the decade has transformed options, particularly in poor countries, where renewables-based mini grids offer opportunities to alleviate energy poverty and provide energy access.
Why investment in RE sector is necessary?
New jobs: Investment in R.E helps in creating new jobs which further drives the economic growth. According to the International Renewable Energy Agency deploying Renewable at scales could help create 42 mn jobs worldwide by 2050.
Air pollution reduction: It also helps to reduce Air Pollution.
What is the global contribution?
Various governments and organizations have made commitments to end the use of fossil fuels and to boost the use of RE sources.
G7: Members states made a commitment to cease all of their international funding for coal projects by end of 2021.
South Korea, Japan and China: These countries also agreed to stop funding coal projects overseas in spite of being the world’s largest providers of international coal financing.
Paris Agreements: More than 85 countries have submitted updated national climate pledges. This shows the trend towards higher renewable energy use and lower reliance on fossil fuels by 2030.
European Investment Bank (EIB): EIB also became the 1st multilateral bank to announce an end to all financing for fossil fuel projects by 2021. EIB also provides support to a wind farm in Africa, which provides clean and affordable energy.
UK: It provides end to new public support for overseas international fossil fuel energy projects, fully shifting investments into renewables.
What should we do?
In the upcoming COP 26 summit, the focus should be on making more commitments to align International public support fully with the Paris goals.
Government and Financial Institution should provide resources to provide cheaper, cleaner energy and to end international support for fossil fuel-based power.
To ensure that every community benefits from the transition in RE, it is important to carefully design the policies. There is a need for global solidarity where, everyone has access to necessary technologies, expertise, investment support and financial strategies.
Source: This post is based on the article “Public Finance ought to throw its weight by clean energy” published in Livemint on 11th October 2021.