Investments in G20 need to roughly double to remain within the Paris Agreement warming limit. India, South Africa and Indonesia are high-need hotspots.
The G20 countries need to roughly double their annual investments to align their power infrastructure with the 2°C pathway set out in the Paris Agreement. India, South Africa and Indonesia emerge as high-need hotspots owing to increasing demand for energy, sheer size of the country and vulnerability of the existing power system to a changing climate.
The absolute investing needs in the G20 stand at USD2012 709 billion per year between 2014 to 2035. For comparison: In 2015, combined investments in all power generation, including fossil fuels, stood at USD over USD 420 bn globally.
Private investors will need to account for majority of renewable energy finance
In spite of the high initial investments involved in renewable energy technologies like wind and solar PV, the low-carbon transition can be achieved at neutral cost, as analyses by the IEA in 2015 and by Allianz in 2014 have shown.
Insurers can make a considerable contribution here, as well-capitalized investors with a long-term investment horizon and suitable expertise in risk management. Viewed from the opposite direction, infrastructure investments are well suited for insurers’ long-term commitments to their life insurance clients.