RECAI 57 also looks at the role institutional investors can play in financing the energy transition to get us on a pathway to fulfilling the Paris Agreement. Last year, global renewable energy capacity investments grew 2%, to US$303.5b. This marked the second-highest annual figure ever — an impressive achievement considering 2020 was such a difficult year.
A funding gap still exists, however, and EY professionals estimate future global renewable energy development to be a US$5.2t investment challenge, based on the International Energy Agency’s Current Policies Scenario. Around US$7.7t is committed to renewables, while US$12.9t is required under the Sustainable Development Scenario.
ESG has risen up the agenda as a result of the COVID-19 pandemic, and institutional investors’ interest in renewables continues to grow. However, clearer commitments from governments on infrastructure spending — and details of pipelines of relevant investments that are likely to be supported — would help increase funding opportunities for institutional investors and insurers.
In this edition of RECAI, we also feature two green hydrogen case studies from different regions. The situation regarding green hydrogen embodies the larger issue facing the low-carbon transition: emerging technologies — not only hydrogen, but also electric vehicles and battery storage — offer enormous potential for achieving net zero, but require significant funding to bring them to scale and make them cost-competitive.
Finally, we take an in-depth look at power markets across East Asia, which has a strong outlook for renewable energy. Not only was China’s net-zero commitment a big step forward, but there were also commitments from Japan and South Korea in the past year. As a result, the region is likely to benefit from an acceleration of renewables growth, building out the supply chain, driving down technology costs and attracting international investment interest.
In Southeast Asia, demand for energy is snowballing. With 45m people still to be connected to electricity, and the population expected to grow by 25%, renewable energy can play a key role in satisfying this growth demand. Addressing climate change and managing climate risks will be a priority in this region, as several of these markets are among the most vulnerable to climate change.
COP26 provides the world with a platform to accelerate the energy transition, but success during its build-up, at the conference itself and after it concludes will require a collaborative effort. Read on to discover how a variety of stakeholders can step up and put the world on a pathway to realizing the Paris Agreement, as we outline some of the key stories on renewable energy from around the globe.