by Christopher N. Fox, Director, Special Projects — Ceres
As world leaders prepare to gather for the COP22 climate talks in Morocco, Ceres experts are blogging on low-carbon investor and company actions since the adoption of the Paris Climate Agreement and challenges that remain.
Today, the Paris Agreement – the first-ever global, legally binding framework to tackle climate change – becomes international law. The United States, China, India, Brazil, European Union and 89 other nations representing two-thirds of global emissions have formally joined the agreement, allowing it to go into effect today.
Many international agreements take years to become law. Not this one. The Paris Agreement was just opened for signature in April 2016. Its entry into force in just six months represents one of the fastest in history for any global agreement and is a sign that governments are finally joining forces to seriously address climate change. For businesses and investors the Paris Agreement should be viewed as a clear market signal that the transition to a low-carbon global economy is underway and accelerating.
The primary goals of the Paris Agreement are to hold the increase in the global average temperature to well below two-degrees Celsius, and achieve net zero greenhouse gas emissions in the second half of this century. To achieve these goals, governments and the private sector must act boldly and quickly on a range of fronts, including ratcheting down investment in fossil fuels and mobilizing an additional $1 trillion per year in clean energy from now through 2050. Last year, a record $348 billion was invested in clean energy according to Bloomberg data – far short of the Clean Trillion levels needed to avoid the worst impacts of climate change.
Putting the Paris Agreement into action will create opportunities for many sectors of the economy. In the electric power sector alone, meeting the Paris Agreement’s central aim of limiting warming to well below two-degrees Celsius represents roughly $9.4 trillion in renewable energy opportunities over the next 25 years, according to a report released this year by Ceres and Bloomberg New Energy Finance. While the majority of this clean energy investment opportunity is expected to be available under existing policies and market trends, it is important to note that there is a $2.6 trillion gap between the level of renewable energy investments projected under current business-as-usual scenarios and the level that is actually needed to meet the Paris Agreement’s goals. New policies and approaches will be needed to bridge this gap.
In a separate study, the International Energy Agency found that implementing the national climate plans of the Agreement would represent a $13.5 trillion investment opportunity over the next 15 years in efficiency and low-carbon technologies.
Scaling up global investment to implement the Paris Agreement will be a top priority for the United Nations Climate Change Conference, known as COP22, in Marrakech, Morocco this month. My colleagues and I will be there with the Global Investor Coalition on Climate Change, the We Mean Business Coalition and other allies to encourage government, business and investor leaders to join forces to boost financing for low-carbon opportunities, including in emerging economies where the majority of investment is needed.
While the Paris Agreement’s entry into force is a historic turning point, it is just the beginning. Accelerating and expanding global clean energy investment – at a pace and scale never before undertaken in any context – is essential to realizing its goals.