It will all kick off again on 24 September, the date for which "Fridays for Future" has called a global climate strike. This will see hundreds of thousands of mainly young people taking to the streets across the world. The movement initiated by the Swedish activist Greta Thunberg will likely have chosen this date deliberately, with German parliamentary elections coming two days after the planned demonstrations and the 26th UN Global Climate Conference beginning in Glasgow a good five weeks later. The community of nations will be meeting in the Scottish city from 1 to 12 November with the aim of getting to grips with the fight against global warming. The focus of the summit will be on the concrete implementation of the Paris Climate Agreement. At the end of 2015, the conference held in France's capital city agreed to limit global warming to 1.5 degrees. If this central target is to be achieved, there is no getting round decarbonisation of the world. To put it plainly, net greenhouse gas emissions are to fall to zero as quickly as possible.
At the Glasgow summit, the USA will be back at the negotiating table. One of the first official acts of president Joe Biden at the start of the year was to take the superpower back into the Paris Agreement. A little later he set the United States an ambitious target: by 2030 greenhouse gas emissions are to shrink by at least half compared with the 2005 level. The previous plan formulated by the Obama administration had been to cut emissions by between 26% and 28%. "America is back", said the analysts at J.P. Morgan, commenting on the new era in the White House. In their view, this course of action demonstrates that the USA under Biden is looking to play a pioneering role in global climate policy. In this notion they would be in direct competition with the European Union. If Brussels has its way, Europe will be the first carbon-neutral continent by 2050. The EU wants to have forced its net greenhouse gas emissions by at least 55% below the 1990 figure two decades before then. How this is meant to happen is set out in the "Fit for 55" climate protection package. This is the legislative framework which the EU Commission formulated for its ambitious goals in July.
Although the plans of the various states and regions still differ from one another, there is widespread unanimity among politicians that the expansion of renewable energy sources will play a decisive role in the fight against climate change. In the USA the change of thinking is having an impact even in the heartland of the oil industry. The largest photovoltaic park in the USA has just been built in Texas, for instance. From 2023, the Samson Solar Energy Center will boast a total capacity of 1.3 Gigawatt (GW). In purely mathematical terms, that means the power station could supply some 300,000 households with green electricity. As well as the sun, wind, water and geothermal power are also gaining increasingly in importance for energy generation. According to figures from the International Renewable Energy Agency (IRENA), the global capacity of all renewable power stations reached a record 2800 GW in 2020. While the coronavirus pandemic has not exactly made the installation of solar modules and wind turbines any easier, the efficiency of the segment has improved by a double-digit percentage over the last year (see graph).
The renewable sources are not just profiting from climate policy ambition: they are also becoming ever more competitive when compared with fossil fuels. "Solar photovoltaics and wind are increasingly the cheapest source of electricity in many markets," wrote IRENA in a recent presentation. The organisation backs up this argument with a look at price shifts. The greatest fall has been in production costs for solar technology, which shrank by around 85% between 2010 and 2020. At USD 0.057, the cost of generating one kilowatt hour (kWh) of solar electricity last year was at the bottom end of the documented range for fossil fuel sources (see graph). This trend is the result of massive capital investment: in 2020 alone, according to IRENA, USDbn 524 was poured into the transformation of the energy supply across the world. Just under two thirds was spent on renewable sources. The stock market has long since discovered this growth market for itself. "Investors are anticipating the energy transition," IRENA concludes. On the financial markets, capital would be diverted away from fossil fuels and towards green technologies. Nevertheless, shares in this field have corrected over recent months, with the sector suffering from profit-taking as well as problems in supply chains and rises in interest rates. The correction could turn out to be a golden opportunity for investors to get involved, particularly those with a long-term outlook.
Source: IRENA, as at: August 2021
Source: IRENA, as at: June 2021
View more information on investment solutions on the topic “Green Energy: The Future is Renewable”
