Clean Trillion: From Vision to Reality

When Ceres called for an additional $1 trillion investment per year in clean energy at the United Nations in January, we hoped people would take notice. We did not anticipate how quickly momentum would build. Investors, governments and others are now using ‘Clean Trillion’ to describe the global investment needed to limit global warming to 2 degrees Celsius. The Clean Trillion movement has begun.

The launch of Clean Trillion was the first step. Now we are rolling up our sleeves and focusing investors, businesses and policymakers on the actions they can take to deploy capital into clean energy at the speed and scale required.

In this new monthly blog, I will share my thoughts on recent progress, challenges and Ceres developments as we continue together on the journey to translate the Clean Trillion vision into reality. I’ll start with challenges.

Global investment in clean energy fell to $254 billion in 2013, down from $286 billion in 2012 and a record $318 billion in 2011. The world is nowhere near the goal of $1 trillion a year in additional global investment in clean energy.

While global clean energy investment has been falling, heat-trapping carbon dioxide pollution from burning fossil fuels has been rising. The Global Carbon Project, which compiles data from research institutes worldwide, estimates emissions rose to a record 36 billion metric tons in 2013, a 2.1 percent increase over 2012. According to the researchers, “Emissions are increasing because strong growth in coal consumption has outweighed any reductions from the rapid growth in renewable energy in recent years.”

A major reason for strong growth in global coal consumption is China. While China is investing in renewable energy, the country’s fossil fuel energy output has exceeded new wind and solar energy by six and 27 times, respectively.

Now for the more hopeful news.

Doubling the global share of renewable energy by 2030 is doable, according to the International Renewable Energy Agency: “The global renewable energy share can reach and exceed 30 per cent by 2030 at no extra cost.”

The costs of solar and wind power have caught up to conventional power, and in some cases are even beginning to undercut these conventional sources without subsidies. Read more from Michael Liebreich.

Insurance companies, who manage enormous amounts of capital, are investing more money in clean energy projects, especially through fixed-income vehicles such as green bonds. “The question to ask is not why invest in green bonds, but why not invest in green bonds,” Zurich’s chief investment officer Cecilia Reyes told Ceres  in January. The green bond market was a record $10 billion in 2013 and it is expected to reach $30 billion to $40 billion this year. Read more from Mindy Lubber.

The UN Secretary-General will convene a Climate Summit in September 2014 “to catalyze ambitious action on the ground to reduce emissions and strengthen climate resilience; and to mobilize political will for a meaningful global legal climate agreement by 2015.”  The Secretary-General specifically called on investors to act on climate change in four areas, and has invited participation from government, business, finance and civil society at the Summit.

Over the past month Ceres has mobilized investors and businesses in support of the Clean Trillion by highlighting the risk of investing in fossil fuels, and the economic opportunity of tackling climate change.

On the heels of the Investor Summit on Climate Risk at the United Nations, a half-dozen investors announced the filing of shareholder resolutions with 10 fossil fuel companies, including Exxon Mobil, Chevron, Southern Company, Hess, Anadarko, Devon, Kinder Morgan, Peabody Energy, FirstEnergy and CONSOL Energy, seeking an explanation of their strategies for competing as the world moves toward a low-carbon global economy. The resolutions are especially focused on potential carbon asset risk, or the possibility that these companies’ present and future fossil fuel-related assets will lose value as various market factors – such as energy efficiency, renewable energy, fuel economy, fuel switching, carbon pollution standards, efforts to curb air pollution and climate policy – increasingly threaten demand for fossil fuels and related infrastructure.

Ceres released a new report last month on escalating water-related risks associated with the hydraulic fracturing shale energy boom in the U.S. Nearly half of the 39,000 oil and gas fracking wells developed in the U.S. since 2011 were in regions with high or extreme high water stress. Water sourcing impacts are especially severe in Texas, which is expected to see $50 billion of new fracking development this year, most of it for oil production.

Apple and other California-based companies announced last week that they have signed on to Ceres’ Climate Declaration, a call to action that “tackling climate change is one of the greatest economic opportunities of the 21^st century – and it’s simply the right thing to do.” The Climate Declaration now has more than 750 signatories nationwide, including major US firms such as eBay, General Motors, Intel, Nike and Starbucks.

After the first full month of this new multi-year effort, my Ceres colleagues and I are hopeful about the growing Clean Trillion movement. However, we are far from reaching the goal of an additional $1 trillion a year in clean energy investment. To achieve the Clean Trillion, the world needs to quadruple annual new global investment in clean energy.