The irreversible rise of the clean economy in 2017
In this new monthly column, We Mean Business, a global coalition of non-profit organizations working with thousands of the world's most influential businesses, shows how industries are accelerating the transition to a zero-carbon economy.
The path to a low-carbon economy faces strong headwinds in the year ahead, due in part to the uncertain political backdrop in countries such as the United States. But despite these challenges, 2017 looks set to be the year when a global momentum to reducing emissions reaches a critical turning point.
One of the key reasons for optimism is the growing leadership of China in driving the low-carbon economy. The presence of Chinese President Xi Jinping at the World Economic Forum in Davos for the first time this year underlined the country’s growing commitment to climate protection and its willingness to invest in the future.
China steps up
China plans to invest $360 billion in renewable energy through to 2020, an investment expected to create some 13 million jobs by the end of the decade. From 2012 to 2015, China spent $340 billion on clean energy — more than any other country in this period. China also has committed to grow renewables to 20 percent of their energy mix within 15 years — an amount equivalent to the entire U.S. energy sector.
Meanwhile, China’s commitment to electric vehicles looks set to create global vehicle manufacturing leaders in companies such as BYD Auto Company and BAIC Automotive Group — whereas a potential rollback of fuel efficiency standards in the U.S. could dampen the impressive growth in Tesla and GM EV sales.
The Paris Agreement reached the level of support needed for ratification in just 10 months, making it the fastest international agreement in history. One of the additional successes of Paris was the creation of distributed leadership — the bold commitments of cities, states, regions, investors and businesses on climate change mean that the energy transition continues to accelerate.
Distributed leadership from business represents massive market signals to encourage investment in new product development. For example, well over 200 companies have committed to science-based targets for tackling climate change.
Late last year, the mayors of the world’s megacities committed to turn the Paris deal into concrete action by acting to reduce peak emissions by 2020 and then nearly halve carbon emissions for every citizen in a decade, keeping the world within a warming limit of 1.5 degrees Celsius. If all cities of 100,000 people or more act on the recommendations set out in C40’s Deadline 2020 report, we will achieve 40 percent of the emissions reductions necessary to avoid catastrophic climate change.
By the close of COP22 in Marrakesh in November, the 48 country members of the Climate Vulnerable Forum committed to 100 percent renewable energy, reflecting corporate ambition to do the same — as demonstrated by companies such as General Motors and Walmart joining the RE100 initiative.
Ratcheting up ambition
Major countries are already ratcheting up their ambition — for example, India’s Paris plan committed to generate 40 percent of its electricity from non-fossil fuel sources by 2030, but in December it upped that ambition to 57 percent by 2027.
According to a We Mean Business (WMB) report, produced in partnership with BSR, implementing the Paris Agreement will unlock at least $13.5 trillion (PDF) of economic activity globally. And leading companies are reaping the benefits of innovation driven by clear, bold climate targets: The revenues of businesses who are decoupling their growth and emissions grew an average of 29 percent, over a five-year period, while their emissions fell by 26 percent overall, according to a CDP report, in collaboration with WMB.
The transition to the zero carbon economy has accelerated and is, if anything, more inevitable, given the momentum in renewable energy and electric vehicles. Then-President Barack Obama wrote last month that "the trend toward clean energy is irreversible," stating that twice as many Americans work in the clean energy sector than in electric power generation from fossil fuels. On top of this, between 2008 and 2015 the cost of electricity fell 41 percent for wind, 54 percent for rooftop solar photovoltaic (PV) installations and 64 percent for utility-scale PV.
These are economic drivers that cannot be ignored and populist protectionism is unlikely to provide solutions to long-term issues. 2017 will be a crucial year to drive forward the move towards a more resilient low carbon economy.