Scaling up clean energy – the greatest growth proposition of the 21st centurySteve Howard, Vice Chairman, Sustainability, Temasek and Founding Chair of We Mean Business Coalition
The cost of climate change is rising at an alarming pace, with ripple effects being felt across communities and the global economy. More frequent and extreme weather events, exacerbated by climate change, are disrupting supply chains, displacing people from their homes and causing disaster response and recovery costs to skyrocket.
Climate change already costs many billions today and threatens to reduce global GDP by as much as 14%, or $23 trillion, by 2050, according to a Swiss Re Institute report, even if some mitigating actions are taken. Our collective future is at risk.
Yet in the face of one of humanity’s greatest challenges – tackling and adapting to climate change – there is tremendous opportunity to be seized. According to the International Energy Agency, investments in clean energy have the potential to boost global GDP by 4% by the end of this decade alone. Transitioning to a clean energy system and rapidly decarbonising the planet can be the growth driver of the 21st century if we act now, together.
For an asset owner and investor like Temasek, we have a fiduciary duty to invest responsibly for sustainable returns over the long term, and also, to create a future for generations to come.
This means deploying capital meaningfully to catalyse innovations and scale solutions, to contribute as best as we can towards limiting global warming to 1.5ºC, to support the development of a green economy and a just transition to foster resilience in our communities, businesses, and economies.
Temasek has since committed billions of dollars to support technology-based and nature-based solutions through platforms such as GenZero, as well as invested into companies developing next-generation renewables, mobility and agriculture technologies and solutions to drive decarbonisation.
Many countries across Asia also lack access to sufficient financing to fully develop low or zero-carbon infrastructure. To that end, through Pentagreen Capital, our partnership with HSBC, we are contributing towards closing the funding gap for marginally bankable and innovative sustainable infrastructure projects, especially in the renewable energy and energy storage, clean transport, and the water and waste management sectors, and we encourage others from the private, non-government and philanthropic sectors to do the same.
While the global agenda is understandably dominated by today’s immediate challenges, we cannot ignore the climate crisis – there are no returns on a dead planet. Everyone – from governments to corporates and communities – must lean in and do what we can to accelerate the global transition to a clean energy system.
Governments play a critical role in creating environments that can enable and support the transition at scale. With visionary, pro-climate policies in place, investors and businesses can have clarity and confidence to take action for the short and long-term, unlocking the immense investment opportunities and sustained momentum needed to grow the industries we need to secure a sustainable future: this is a pro-growth, pro-jobs agenda.
For countries to reduce their emissions and deliver on their national climate targets under the Paris Agreement, more transformative investments in climate change and the transition to clean energy are required. Further investments and partnerships are needed in renewables, electrification and energy efficiency to meet growing business demand and scale the clean energy solutions available today – and those yet to be developed.
Almost 400 companies, including some of the world’s largest, are working toward reaching 100% renewable electricity by an average target date of 2031, and in doing so contributing to global demand for a clean energy system. Some companies, including Apple, Google and Microsoft, have already reached or exceeded their targets.
Alongside better returns and business benefits, investment in a clean energy system will support communities by cleaning the air we breathe and creating stable jobs. According to the International Energy Agency’s (IEA) World Energy Outlook in 2021, air pollution contributes to more than 5 million premature deaths each year. On a trajectory of reaching net-zero emissions globally by 2050, an estimated 14 million new clean energy jobs could emerge by the end of this decade, with an additional 16 million workers switching to new roles in clean energy.
The global clean energy market is growing at pace which makes this an optimal moment to invest at scale. Investments in renewable energy, electrification and energy efficiency are now matching investments in fossil fuels, according to analysis by BloombergNEF. However, by 2030 we need nine times more investment in clean energy than fossil fuels to reach net zero by 2050and limit the devastating impacts of climate change that are more likely as average global temperatures rise. It is simply sound economics and smart risk management.
A global clean energy system will benefit people, businesses and economies everywhere. Convenings in 2023, such as the G7 Summit, G20 Summit, UN Secretary-General’s Climate Action Summit, COP28, and also Temasek’s flagship sustainability advocacy and engagement conference Ecosperity Week, are global and regional platforms to showcase historic leadership, and the energy transition requires nothing less. Good public policy can unlock innovation and investment. It is only with bold, collaborative action that we can rewrite this story of climate risk, to one of opportunity.
Temasek is a global investment company headquartered in Singapore. Ecosperity Week will be held in Singapore from 6 to 8 June 2023. Views expressed here are solely the author’s own.