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Next on the Climate Change Agenda? Investment and Innovation
Climate change is a threat that must be addressed, and to address it requires patience, persistence, and an extra dose of climate diplomacy. At the center of the climate discussion is the use of energy, and although COP21 reached an unprecedented deal this past December combating greenhouse gas emissions, the international community may not sustain its momentum into 2016. A paradigm shift in the energy sector is crucial to success, and can only occur once the international community commits, wholeheartedly, towards cleaner energy policies.
But global action on climate change and clean energy policy is difficult because many states believe that they stymie economic growth. They will shirk responsibility because they either believe another country will take action, or because it hurts domestic industries. But the truth is that clean energy programs can actually help economies grow, in both developing and developed countries. Economic growth and climate change action are two sides of the same coin. Two strategies should be considered by countries to combat climate change through clean energy policies. First, countries should increase investment in zero-carbon energy sources such as wind, solar, and nuclear power at home and across global energy markets. Second, innovation at home and abroad will drive efficiency and growth in energy markets and force a change in the world’s energy structure.
Clean energy investment has been on the rise for the past 10 years, according to Bloomberg New Energy Finance. Investment figures demonstrate several trends about clean energy markets, including an expanding list of countries committed to clean energy projects, cost-competitiveness with oil, gas, and coal, and a rising capacity share for solar and wind. If more countries enter the market, clean energy investment will continue. Though promising, global markets have a deep-seated reliance on more traditional forms of energy.
Despite a world-wide surge in clean energy investment, nations continue to run on fossil fuels. Substantial gains in renewable energy use will still seem marginal relative to carbon emissions. Therefore, countries need to attack the problem from the top down and the bottom up. Developed countries should encourage foreign direct investment for clean energy programs in developing countries like Brazil, China, and India—countries that hold the world’s largest populations. In the long run, these countries will develop on a platform of clean energy growth, which will have a multiplier effect over time. Governments and international governing bodies should also incentivize clean energy investment through bottom up programs like the EPA’s Clean Energy Incentive Program, which rewards early investments in renewable energy and delivers clean energy to low-income communities, or through top down approaches like the EU’s Emissions Trading System, a cap and trade system used to promote investment into clean, low-carbon technologies.
But there is a solution that could make clean energy even more attractive to investors, and that solution is innovation. At COP21, Bill Gates and a coalition of billionaires announced “Mission Innovation,” which “aims to reinvigorate and accelerate global clean energy innovation with the objective to make clean energy widely affordable.” It states that more reliable and efficient clean energy sources can inspire companies across sectors to utilize renewable sources over traditional sources. Innovation will help companies grow in size and impact, and can transition the world to a low-carbon economy while also improving energy security. Innovation will also encourage firms to manufacture and export new technologies, which can create jobs and stimulate economic activity. But for innovation to progress, governments must create the necessary conditions for research and development programs. Without R&D, innovation would never jump from science to commercial use. Encouraging ideas like fusion energy and “perovskite” solar cells would never leave the lab.
Luckily, there have been steps in the right direction. The House recently passed H.R. 4084, which supports research and development for advanced nuclear technology, and the U.S. and China recently renewed their commitment to the U.S.-China Clean Energy Research Center, a research center that facilitates joint research and development in clean energy technology. But there is still more that can be done. Congress can support Mission Innovation’s next steps in the FY 2017 budget: a $7.7 billion government-wide increase in for “fundamental and transformative clean energy R&D,” and $1.3 billion in funding to adopt clean energy.
The world must recognize that investment and innovation in clean energy programs will be key drivers towards economic growth, not a burden to the energy sector. Global action on climate change should be seen as an opportunity, an opportunity beneficial to individual countries and to the world.
