New York — Public funds must be pooled to de-risk decarbonization projects in regions penalized by high interest rates, Canada's Minister of Natural Resources Seamus O'Regan told the IEA's Net Zero Summit March 31.
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The summit brought together a broad range of international politicians to discuss how to get economies on track to deliver on the Paris Agreement limiting global warming to below two degrees Celsius.
"Governments can de-risk investments in clean energy and energy efficiency in developing countries. We need to use public funds to accelerate the deployment of technologies, and as governments we can use green transition bonds and loans by developing taxonomies that guide investment decisions in clean energy," O'Regan said.
O'Regan was echoing comments made by Luxembourg's Energy Minister Claude Turmes, who said even small amounts of public funding served to overcome barriers to investment in Africa, for instance.
"If you want to invest in solar in Africa you are penalized by the financial markets. We must work together to provide a de-risking fund for solar in Africa, and for energy efficiency in industry in third countries," he said.
Heading for four degrees
Earlier, the US' Special Presidential Envoy for Climate John Kerry told the summit the US was preparing to publish its Nationally Determined Contribution on climate change goals in the next few weeks, while "trillions of dollars of investment" in renewables and grid infrastructure were being lined up by the new Biden administration.
"We're heading for over four degrees, we're not on course and the time for discussion is over," Kerry said.
The US accepted differentiation in national climate plans, "but we can't ignore the next 10 years, and it is easy to do a lot more – this is the greatest economic opportunity we've ever had," he said.
India's Minister of Power Raj Kumar Singh reinforced an underlying theme of the summit for more ambitious short-term targets.
"We need stronger collaboration in order to keep the Paris goals within reach this decade while giving space to developing countries to grow," he said, noting India's 450 GW plan for solar and wind additions by 2030.
Leapfrog the old model
European Commission Vice-President Frans Timmermans responded to Singh's comment that storage and hydrogen were expensive, saying developing countries could "leapfrog" the fossil fuel-driven model of industrialized countries and go straight to renewable energy.
"This is an area where you can only be convincing by showing what you can do at home," Timmermans said.
"It's a huge opportunity, and yes it's true that hydrogen is expensive, but we can bring down the costs by scaling up development," he said.
China's Minister of Energy, Zhang Jianhua, said China was "ready to work on technical cooperation" between countries, and was planning a huge R&D drive as it focused on the "uphill battle" to ensure its carbon emissions peaked in 2030, ahead of neutrality in 2060.
The last generation
The gathering represented the last generation of politicians who could deliver on the Paris Agreement, Austria's Minister of Climate Action Leonore Gewessler said.
"We have to avoid lock-in effects and stranded investments," she said. "The taxonomy we are working on in Europe will play a crucial role in deciding whether we are successful in this or not."
The EU's taxonomy, guiding sustainable green investment, "must not be open to discussion as to whether gas or nuclear can be included, no matter whether they replace coal or not, we must invest in renewables and efficiency as the most important alternatives," she said.
Roadmap due in May
The IEA planned to release a roadmap May 18 detailing how countries could chart a course to net-zero emissions with concrete policies and actions, IEA Executive Director Fatih Birol said at the summit.
This was welcomed by Gunther Thallinger, Chair of the Net Zero Asset Owner Alliance, a group of 35 global investors with $6 trillion in funds.
"We work on the basis of a maximum 1.5 degrees [global warming], so we hear what Senator Kerry and Minister Singh say when it comes to an acceleration to see what we can achieve in the next five years. Lower cost curves for renewables and batteries must find their way into the IEA's guidance. With that, we can really develop our support," he said.