Not every problem can be solved by throwing more money at it, but climate change is one of them.
Simply investing enough money in clean energy – fast enough – will in fact stave off the worst of climate change, because reducing carbon dioxide emissions is really as simple as building enough wind farms and solar farms and other non-polluting sources for our energy.
If we had rallied earlier and invested more in making the switch to the low carbon economy, we could have headed it off for less. But, even at this late stage, we can still make the difference between an uninhabitable planet for our descendants, and one that is merely much more tragic, with more financial and personal losses from more frequent and extreme weather disasters.
How fast would we need to change, and how much would it actually cost? Of course, “cost” is a silly way of putting this investment. First, because the alternative is much more costly, as the British government economist Nicolas Stern calculated: climate change is the mother of all expenses. And second, because one man’s expense is another man’s income. If preventing climate change was something Republicans espoused, it would be called the biggest “wealth creator” – because every last nut and bolt of renewable energy that gets built, is money in the pocket of somebody who makes, sells, finances or designs it.
Back in 2009, the International Energy Agency (IEA) famously calculated that in order to head off climate change’s worst effects, a global investment of $10.5 trillion would be needed in clean energy by 2030, in order to turn the carbon ship around – which if evenly split each year, amounts to about half a trillion ($500 billion) a year for about 20 years.
Here is how that global $500 billion each year compares with our recent annual investments since that pre-Copenhagen calculation. In 2010, the world invested $187 billion in building renewable power sources, less than half the amount needed. But it was more than the dirty energy investment that year at only $157 billion in new fossil energy sources, according to Bloomberg New Energy Finance, marking the first year where we had a higher level of investment in renewable energy than in dirty energy. So the ratio switched, with a focus on the right kind of energy to do the job.
Then in 2011, the increase in investment continued to grow, bolting to $260 billion as Pete Danko noted here in a story about the recent Bloomberg news that – at least in 2011 – the U.S. actually outspent China in renewable investment, with $55.9 billion to China’s $47.4 billion, in the last of the Recovery Act spending; a one time push for clean energy that rivaled the Manhattan Project.
And the EU, with even more stable climate policy, was responsible for almost half the new global clean energy push with $100.2 billion. That is good news because the EU share will likely continue to grow, as its climate legislation creates a persistent long term mandate to increase renewables under the Kyoto Accord.
And the IEA, and Bloomberg’s figures, do not include hydro power. If we add in the $45 billion spent on large hydro in 2010, and the $10 billion on small hydro, even the first year is almost halfway to the $500 billion goal, and the second year totals $315 billion, more than halfway. Here is why a hydro count is important. Currently, Africa produces the least hydropower, only 3 percent of the world total, but is considered the region with the greatest potential for increased production.
And in the Durban climate negotiations, the EU changed its rules regarding which countries qualify for future Clean Development Mechanism (CDM) funds. Starting in 2012, only the poorest countries, mostly in Africa, will qualify for future CDM funds. The EU CDM funding propelled renewable power development in the less developed countries to higher levels than in the OECD nations. (See: Big Clean Energy Projects Seek Big EU Funding).
So with global annual investment going up every year since we got the target needed from the IEA, it looks as if we are not that far off track to do the job. To get more than halfway to the $500 billion investment target within just the first two years of really trying, even with a global economic downtown that echoed the Great Depression, is evidence that we could get there. The scale-up needed is not something that is completely out of reach.