Only UK has a binding, ambitious and concrete long-term strategy of decarbonization
Only a few G20 countries follow a strategy of full decarbonization for the power sector. Almost all G20 countries (except the US) have agreed to limit their CO2-emissions to net-zero by 2050, but only the UK has passed a binding and ambitious long-term plan to decarbonize its power system.
The Monitor finds that all countries show room for improvement for their policy framework to provide excellent investment conditions for renewables. “The question is not whether countries implement policies but how exactly they implement them”, says co-author Jan Burck from Germanwatch. The main challenges include
• On-and-off policy support,
• Sub-optimal enforcement of a support policy and
• Regressive policy design.
More investments for renewable energy by G20 is needed to align within the Paris Agreement warming limit.
Overall the global energy system needs to undergo substantial structural transformations to be compatible with the Paris agreement goals – this change requires a wide set of private and public investment. To achieve this, the annual investments required until 2050 in the power sector amount to 886 billion USD in the 19 countries assessed.
Most G20 countries need to investment more into a low-carbon power system compared to a business-as-usual scenario. But this calculation does not account for lower operational expenses afterwards resulting from lower/zero fuel costs.
For China, France, Brazil and Argentina, the annual investment needs is lower if they follow the Paris aligned path (capex only). This relates to the existing capacity, how much capacity is installed, the electrification rate and the amount of energy efficiency
Private investors will need to account for majority of renewable energy finance
Insurance companies like Allianz can play a crucial role in renewable energy projects, possessing the necessary risk management expertise as insurers as well as being well-capitalized investors with a long-term investment perspective.