Can the world afford to go green?

On 25 April, the World Economic Forum co-organized a series of public-private roundtables in London at the third Clean Energy Ministerial, an intergovernmental platform that includes countries responsible for 80% of the world’s energy demand. The Ministerial began with sobering assessments from the International Energy Agency and Bloomberg New Energy Finance about the status of the global clean energy “revolution” that is needed if we are to achieve shared climate change and sustainability goals. The IEA reported that other than solar photovoltaics (PV) and wind, most clean-energy technologies are not on track to make their required contribution to reducing carbon dioxide (CO₂) emissions. Bloomberg New Energy Finance added to this gloomy message, saying that after clocking up a record in 2011, new financial investment in clean energy in the first quarter of this year was the weakest since the depths of the financial crisis in early 2009.

Ministers assessed this report soberly, and committed to further efforts to advance clean energy in their countries.  The shale gas boom in the USA was mentioned in passing, but, interestingly, was not a big topic of discussion. Notably, India, China and South Africa offered a sunnier picture, highlighting the boom in renewable energy in each of these growing economies in the past few years.  The UN Secretary-General Ban Ki-moon joined the discussion via satellite link, and partnered with Bank of America CEO Chad Holliday in asking ministers to support the UN’s “Sustainable Energy for All” initiative through capacity building and targeting government funds to draw in private investment.

After the opening session, the World Economic Forum added a multistakeholder dimension by convening eight public-private roundtables featuring corporate, NGO and international organization leaders interacting with energy ministers on topics such as electric vehicles, renewable energy finance, markets for solar photovoltaics and energy efficiency. Participants discussed the opportunities presented by dramatically reduced costs for clean energy (solar photovoltaics and onshore wind are competitive with fossil-fuel power in a growing number of regions and electric vehicle battery costs have also dropped sharply).They also examined the challenges presented by the global economic crisis, which has led governments to reduce, and even retroactively to withdraw, public incentives for clean energy. The private sector offered ideas about the sorts of policies that work, and ministers asked for new innovation in financing mechanisms and new business models, particularly for energy efficiency and smaller-scale renewable energy. While the discussion did not solve key dilemmas such as the persistence of inefficient fossil fuel subsidies and the impact on health and climate, the dialogue gave all involved a better understanding of the policy challenges and business opportunities for clean energy.

The Ministerial closed on 26 April with a closed-door session among governments to discuss how to incorporate these views and ideas into their planning and implementation of policy support for clean energy, with many pledging new action to prepare for the fourth Ministerial, to be hosted by India next year.  The Forum looks forward to working with the Clean Energy Ministerial process, and with individual governments, to build on and expand this sort of meaningful public-private collaboration. It is only through a shared responsibility that we will truly achieve the clean energy revolution that is needed.

Author: Thomas Kerr is Director of Climate Change Initiatives, World Economic Forum.

Pictured: A wind turbine is seen near the village of Piansano, 90 km (60 miles) north of Rome, April 16, 2012. Several European Union nations have been scaling back subsidies for renewable energy, including solar, as they try to pare back public spending amid the EU sovereign debt crisis. The Italian government said last week it will cut financial incentives for solar and other renewable energy, unleashing an outcry from investors who say the changes will slow the industry’s growth in Italy. To match Interview SOLAR-FUND/ REUTERS/Max Ross