The U.S. and the broader global community must recognize emerging markets as critical sites of energy transition if the world is to achieve global zero carbon emissions. As the International Energy Agency states in a recent report, falling costs of clean energy technology has created an opportunity for global investment in, and thoughtful creation of, a low-emissions development model for economies in the developing world. The COVID-19 pandemic has highlighted the resiliency of renewable energy and the public support for efforts to combat climate change and an energy transition.
Despite holding only 10% of the world’s wealth, 40% of the IEA’s climate-driven frameworks for global energy investments and emissions reductions lie in emerging and developing economies. Emerging and developing countries consumption of electricity is growing three times faster than consumption in advanced countries. Although growth rates for renewable energies are increasing, and are projected to continue accelerating, fossil fuels are projected to remain dominant until and perhaps beyond 2050. Cleaner fuel and mixed energy sources will be necessary intermediate steps amid rapid urbanization and industrialization where renewable energy is not yet scalable to meet demands. The U.S. and other advanced economies should prioritize clean energy investments in emerging markets in order to move the world towards a more sustainable global economy.
In order to meet net-zero emissions goals by 2050, emerging and developing economies must increase annual spending on clean energy by seven times to reach 1 trillion dollars by 2030. Blockchain, AI, EV charging, and virtual power lines are just a few innovative solutions that will ensure an efficient transition. The increased investment will yield high returns since reducing emissions in emerging markets is cost-effective – estimates place the expense of cutting emissions in these economies to be half as expensive as in advanced economies. The costs of renewable energy have been falling decisively over the last decade, with solar photovoltaics marking an 82% cost decline, followed by 47% decline in the cost of concentrating solar power, and a 39% and 29% decline in onshore and offshore wind, respectively. While the costs of wind and solar power continue to drop, energy efficiency is increasing through advancements in greener buildings, appliances, and vehicles.
In addition, structural shifts, increased development finance is necessary to support a sustainable transition to clean energy. Between 2013 and 2018, 86% of clean energy investments came from the private sector. In the same period, public investments in clean energy were due in part to national development finance institutions, namely from China, Colombia, Mexico, and Turkey. The Biden-Harris attention to increasing finance from public sources is laying a foundation to to attract even greater private investment in what may otherwise be seen as risky endeavors. Yet, this growing space will require new tools an approaches to ensure that investments in renewable energy projects have appropriate risk and return attributes. Public participation in and supportive policy measures for low-carbon energy sources can boost investments in meaningful advances in technology and infrastructure, as well as support the transition to a more sustainable global economy.
Strategic minerals might offer another path to a more sustainable energy future. Copper, lithium, nickel, cobalt, among other elements, are required to accelerate clean energy transformation through EVs, power grids, wind turbines, and other critical green technologies. Lack of a coordinated strategy to secure these minerals represents a vulnerability in the energy sector, one that may prove fatal as the pressure for acceleration increases. The World Bank finds that mineral production for elements like graphite, lithium and cobalt, may increase by 500% over the next three decades to meet green energy demand for 3 billion tons of materials. In the face of global challenges, such as increasingly destructive climate crises and worldwide pandemics, the need to secure critical minerals will likely become more pressing. Responsible and sustainable mineral development have the potential to play a large role in securing a clean energy future.
This panel will explore the new tools and approaches to ensure that investments in renewable energy projects in the transition to a more sustainable global economy. The panel will also examine how public participation in and supportive policy measures for low-carbon energy sources can potentially boost investments in meaningful advances in technology and infrastructure, as well as potential opportunities for strategic minerals.
Panelists:
Frank Fannon
Senior Adviser, CSIS
Olu Verheijen
Managing Director, Latimer Energy
Bruce Niemeyer
Vice President, Strategy and Sustainability, Chevron
Mark Carrato
Power Africa Coordinator, USAID
Moderator:
Dan Runde
Senior Vice President and Director, Project on Prosperity and Development and Americas program, CSIS