When we look back on 2018, will this summer prove to be a turning point in the fight against climate change?
This summer, the world experienced firsthand the effects that climate change scientists have warned us about for decades. Record-breaking wildfires in California, scorching heat in Europe and drought parching Australia are a few of the vivid examples of the reality of climate change.
For those of us who have dedicated our careers to working on these issues, this summer is the first time a discussion on climate change has regularly appeared in major media outlets drawing links between these natural disasters and their root cause. But there is another story that needs to be told: There remains hope in this battle.
Even with these clear indicators of the effects of climate change, the current administration in Washington, D.C. is not just refusing to act; it is actually undermining the ability to address climate change by actively pursuing policies that throw kindling on an already-burning fire. But as international climate leaders from government and industry meet this month to spotlight their actions at the Global Climate Action Summit in San Francisco and for Climate Week in New York City, the fundamental message remains clear: Global momentum to address climate change will not stop.
The global community shows no signs of slowing progress in the face of Washington’s self-inflicted headwinds. Here at home, local and state governments, as well as the private sector, are moving ahead to help solve these problems, and capital investment into solutions is at a record high. This is key because technology-centric innovation will be a critical catalyst to both adaptation and mitigation against the effects of climate change.
A great example of this are the thousands of governments and corporations that stood up after President Trump announced his effort to withdraw from the groundbreaking international climate accord in Paris to announce that “We Are Still In” to meet their commitments. In July 2018, Bloomberg NEF reported that corporations had already shattered the previous annual record for the purchasing of clean energy for their operations — a result of leadership and strategic planning.
As you can see from the graph below, the trends are pretty hard to miss. These trends will only continue as 60 percent of Fortune 100 companies have established significant goals to increase the use of renewable energy in their operations, creating a critical positive feedback loop.
According to Bloomberg NEF annual figures, global markets saw a 3 percent growth in clean energy investment to over $333.5 billion in 2017, but more significant was the growth in actual clean energy generation that reached an all-time high in response to falling costs, outpacing fossil energy generation. In 2018 those trends continue as investors are increasingly adopting longer-term investment time horizons rather than focusing on short-term returns.
Some of the world’s largest pools of capital, including key institutional investors managing over $17 trillion in assets, are elevating climate change as an investment priority. This includes actions like investing in green infrastructure, private equity funds focused on innovative technology and climate impact, and direct project-level investment.
These trends are only possible because the right policies are coming into alignment with the development of technology, creating momentum for increased capital investments into climate solutions.
Beginning with President George W. Bush's Energy Independence and Security Act of 2007 and continuing throughout the next decade, federal initiatives have empowered the market with clear demand signals and increased private investment flowing to meet the demand. With these policies, coupled with more than 15 years of technology development and venture capital investments, we are now seeing commercially ready solutions in solar, wind, energy efficiency and storage driving the development of new software platforms that leverage technology innovations like big data and the internet of things. Now asset owners can look across their portfolios to optimize energy use and drive efficiency in key sectors such as buildings and transportation — contributing to solving the climate challenge.
In the U.S., buildings account for nearly 40 percent of our carbon footprint, and the building sector has the potential to generate energy savings of 50 percent or more by 2050 according to a UNEP report. Also, the demand for green buildings continues to rise both here in the U.S. and globally. Out of the 193 countries that submitted climate commitments as part of the Paris Agreement, 132 countries mention the buildings sector and 87 of those highlight specific technologies to improve energy efficiency and carbon intensity.
In transportation, Tesla and other electric vehicle makers have developed new batteries to allow vehicles to drive longer on a single charge, increasing the demand for EVs and reducing the reliance on the oil needed to drive our transportation industry. The digital disruption of this sector is also generating innovation in how and where we will charge these EVs and how to manage these new fleets with innovation in fleet telematics.
These two sectors represent only a portion of what is contributing to our climate challenge but demonstrate what is happening thanks to the ongoing alignment of investment and technology innovation spurred by existing and emerging policy developments.
Throughout this month, from California to New York, we are witnessing examples of how the investment climate is changing, mandates are shifting to lower-carbon pathways, and these investments are being met by an increasingly supportive ecosystem to generate profits and returns. There has never been a better time to invest in climate solutions.
A recent report from the Global Commission on the Economy and Climate found that bold climate action could deliver at least $26 trillion in economic benefits through 2030, compared with the business-as-usual case.
As we wait to see if this summer’s record-breaking heat and extreme weather was enough to reach a tipping point, one thing is certain: Key stakeholders in the global community are taking action to put us on the right track toward a cleaner, more sustainable economy. And despite the backwards approach coming out of Washington, we need to — and are — continuing to push ahead.
Melanie Nakagawa is the Head of Climate Initiative at Princeville Global and served as Deputy Assistant Secretary for Energy Transformation at the U.S. State Department (@investinclimate).
Jon Powers is the co-founder of CleanCapital and served as President Obama’s Federal Chief Sustainability Officer (@powersjon).