Earlier this month, the International Renewable Energy Agency said the world needed to invest $131 trillion by 2050 in order to limit the estimated global rise in average temperatures to 1.5 degrees Celsius. That’s 30 percent more than what is currently planned. It’s also equal to investments of $4.4 trillion every year from now until 2050. How realistic are these spending goals?
Well, it appears that the realism of IRENA’s estimates depends on how you look at the energy transition: as simply an increase in renewable energy generating capacity and a consequent increase in the share of electricity in national energy mixes. While not exactly wrong, this widely shared perspective fails to account for the sheer scale of the change we are in the process of undertaking.
James Bradford, chief executive of asset manager Vivid Capital management, compared the energy transition to the Industrial Age in terms of significance—an era that will present substantial challenges and numerous opportunities.
“There will be some spectacular growth industries developed along the way,” Bradford told Oilprice. “Installed solar capacity for example is expected to grow from less than 1TW today to nearly 10TW by 2050. That’s 10x growth, which is enormous growth, for any industry.”
And solar is just one example. When you add all the other renewable forms of energy such as wind or biomass, or hydro, and the ambitious plans many governments have about hydrogen, the scale of the transition—and the fitting size of the investment needed to implement it—becomes more obvious.
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irina slav, oilprice.com, renewable energy, energy transition, fossil fuels, irea, international renewable energy agency