Governments must work with the private sector to scale up much needed investments through conducive regulatory frameworks and policy solutions to speed up the decarbonization of the energy sector and avert the worst effects of climate change, says WRI and Ørsted in their new joint working paper.
To achieve a net-zero society by 2050 and a world that runs entirely on renewable energy, policymakers, businesses and investors must level up their collaborative efforts and continue to work together with urgency and focus to rapidly scale up global renewable energy capacity. While the green technologies are readily available, and the investments required are manageable – the energy transition is not happening fast enough to limit the worst effects of climate change. Ahead of COP26, this joint paper by WRI and Ørsted lays out policy solutions to help policymakers take concrete actions now to speed up the energy transition.
The majority of the investment into the energy transition is expected to come from the private sector, and with the costs of solar and wind now cheaper than ever, there are billions of dollars poised to speed up the energy transition, but the right policies and financial incentives are not yet in place, the paper states.
“The policies put in place today will determine whether or not we can transition to clean energy fast enough to protect the earth’s climate,” says Jennifer Layke, Global Director, Energy Program at World Resources Institute. “It’s up to governments to set our course to a modern, clean, renewable electricity system and the right market signals to spur private sector action.”
Renewable energy is crucial in the fight against climate change
Over 70% of global emissions come from the production and use of energy. To stay in line with a 1.5-degree pathway, countries must decarbonize their energy systems by 2050 and increase the share of renewable energy capacity by at least six times the current rate by 2030.
Fortunately, much of what is needed to achieve the renewable energy transition is readily available today – the technologies exist, the momentum of net-zero targets is growing, and the scale of the investments needed is manageable. But we need to pick up the pace.
“This is a critical decade of climate action; governments can speed up the renewable energy transition by unlocking private sector capital,” says Mads Nipper, CEO of Ørsted. “By designing policies and incentives to attract more investments into renewable energy, governments can remove the challenges preventing the scaling up of renewables.”
This joint working paper will be launched at the Clean Energy Ministerial, at an official side event which features representatives from the Chilean and Danish government as well as from WRI, Ørsted, the International Solar Alliance and the Global Wind Energy Council.
Read the full paper here: orsted.com/renewable-energy-future.
Key takeaways from the working paper
- The global transition to renewable energy is likely to be financed largely by the private sector.
- One critical element of the energy transition will be the decarbonization of the world’s electricity supply. While needed technology is available and scale of investments are manageable – current rates of deployment remain well below what is required.
- Challenges that inhibit the decarbonization of the power sector fall largely into three categories: market structure that lacks appropriate incentives for private investments, lack of public support for siting renewable energy development, and inadequate grid infrastructure.
- Governments can and must play a critical role in scaling renewable energy capacity by providing regulatory frameworks and policy solutions to the challenges slowing down private sector investment.
- Priorities for governments will be to establish clean energy policies and market instruments to incentivize renewable energy investments; improve planning and permitting, and address community concerns; and invest in modern electricity infrastructure.
World Resources Institute is a global research organization that turns big ideas into action at the nexus of environment, economic opportunity, and human well-being.
Our Challenge: Natural resources are at the foundation of economic opportunity and human well-being. But today, we are depleting Earth’s resources at rates that are not sustainable, endangering economies and people’s lives. People depend on clean water, fertile land, healthy forests, and a stable climate. Livable cities and clean energy are essential for a sustainable planet. We must address these urgent global challenges this decade.
Our Vision: We envision an equitable and prosperous planet driven by the wise management of natural resources. We aspire to create a world where the actions of government, business, and communities combine to eliminate poverty and sustain the natural environment for all people.
The Ørsted vision is a world that runs entirely on green energy. Ørsted develops, constructs, and operates offshore and onshore wind farms, solar farms, energy storage facilities, and bioenergy plants, and provides energy products to its customers. Ørsted ranks as the world’s most sustainable energy company in Corporate Knights’ 2021 index of the Global 100 most sustainable corporations in the world and is recognised on the CDP Climate Change A List as a global leader on climate action. Headquartered in Denmark, Ørsted employs 6,311 people. Ørsted’s shares are listed on Nasdaq Copenhagen (Orsted). In 2020, the group’s revenue was DKK 52.6 billion (EUR 7.1 billion).