Fireside Chat, Panel, Conference Presentation
The Climate Change Agreement: What's Next?
Milken InstituteAimée Christensen, Richard Friend, Hua Jingdong, Fred Krupp, Franklin Orr, Amy Christensen
- The current era is described as a "great acceleration" in global energy system reconfiguration, driven by an upward spiral of ambition and accumulating climate impact evidence, with the U.S. and China committed to doubling energy R&D investment over a five-year period from a current base of just under $5 billion annually.
- To achieve Paris Agreement goals, the global community requires trillions of dollars in investment, with Bloomberg NEF projecting $770 billion specifically for renewables and efficiency, while the World Bank Group targets 28% of its emerging market investment in climate change by 2020 and aims to crowd in $13 billion annually from the private sector.
- Off-grid solar is predicted to become the cheapest and most effective technology, with deployed costs below half of incumbent technologies and no subsidies required, expected to expand significantly in Tanzania, Kenya, and Rwanda where companies like M-Copa and Off Grid Electric are deploying 10,000 systems monthly per company.
- Technology efficiency trends indicate perovskite solar cells have reached 20% efficiency, with expectations for 30% efficiency within 15 years and continued cost decreases beyond the $0.50 per peak watt level, potentially driven by Moore's Law and additive manufacturing.
- Carbon pricing mechanisms are central to future financing, with China establishing a national trading system in 2017 expected to create an incredible market force, the U.S. potentially seeing a congressional opening on carbon pricing within the next couple of years, and a growing "club" of nations including South Korea, Canada, and Germany joining the initiative.
- Specific emission reduction strategies include cutting natural gas methane emissions by 45% in the U.S. and Canada, which is projected to lower global temperatures by an equivalent to closing a third of the world's electric-fired power plants over the next 20 years.
- Financial instruments such as the green bond market, projected to double year-to-date volume, and catastrophe bonds for standby financing in disaster-prone regions like the Philippines and the Caribbean, are critical for mobilizing capital and providing security against climate risks.
- Without the implementation of social safety nets and climate resilience development, approximately 100 million people are expected to be forced into extreme poverty by 2030, prompting World Bank support for vulnerable populations and local currency borrowing to mitigate exchange rate risks.
- Economic transitions are anticipated to create significant employment opportunities, with the U.S. positioned to lead globally in solar cell innovation, while early-stage and project finance investments are readily available to deploy emerging technologies.
- Risks to the transition include the "incumbent world" pushing ahead with grid expansion without dramatic market efforts, the potential for a four-degree world presenting an investment downside with no hedging, and the necessity of action within two decades to avoid more expensive remediation steps.