Utrecht University School of Economics’ Post

Don't miss out! Join us tomorrow for a discussion on the #greentransition and its impact on global #sustainabilitychallenges, #renewableenergy, and #climatepolicy

OECD Environment Working Papers No. 245 "Bridging the Clean Investment Energy Gap: Cost of Capital in the Transition to Net-Zero Emissions" highlights the need for increased clean energy investments to meet global climate goals and the need of transition to a low-carbon economy, that requires a significant acceleration in clean energy investment across all regions in the globe, particularly in developing countries. Achieving net-zero greenhouse gas emissions in the energy sector by mid-century will require total global clean energy investment of USD 4.5 trillion by the early 2030s.This currently stands at an estimated USD 1.8 trillion globally. ✅Efforts to decarbonize the energy sector hinge on closing this major investment gap over the next six years. ✅Policymakers should recognize the high cost of capital as a critical obstacle and to implement policies that can mitigate this issue. ✅Hydrogen deployment is identified as a key component in global mitigation efforts, particularly in developing countries. ✅Business entities and governments must strive to utilize the hydrogen resources efficiently. ✅For the transition, there are several challenges faced by the developing countries, that includes institutional capacity issues and underdeveloped financial sectors. ✅These challenges are aggravated by energy subsidies that create uncertainty for investors regarding the long-term viability of clean energy projects. ✅Also, the disparity in funding capabilities between developed and developing countries could widen the energy gap. ✅Effective governance structures are crucial to reduce political and regulatory risks in clean energy sectors. ✅To tackle the high cost of capital, the policymakers should create enabling conditions for clean energy investment. ✅This will require tackling the barriers specific to developing countries and emerging technologies, ensuring that incentives are well-designed, targeted, and time-bound. 

The plenary session is regarding the Green Revolution - swift and transformative actions and policies aimed at mitigating climate change and transitioning towards a more sustainable and eco-friendly energy system. Accelerating the Climate and Energy Transition involves various reforms, regulations, and challenges: ✅ Reforms: Governments and organizations need to implement reforms that promote renewable energy sources, energy efficiency, and sustainable practices. This may include subsidies for clean energy technologies, tax incentives, and regulatory frameworks that encourage the adoption of green technologies. ✅ Regulations: Stringent environmental regulations can play a crucial role in steering industries and individuals towards sustainable practices. Regulations may focus on emissions standards, waste management, and the development of green infrastructure. ✅ Challenges: ❌ Technological Challenges: Developing and deploying new technologies for renewable energy, energy storage, and carbon capture and storage is a key challenge. This requires significant investment in research and development. This is why we invited to the discussion research institutes such as KEZO Research Centre PAS by Polish Academy of Sciences and Łukasiewicz Research Network ❌ Economic Challenges: The transition to a green economy may face resistance from established industries and require substantial upfront investments. Governments and businesses need to find ways to make clean energy economically viable. ❌ Political Challenges: Political will and international cooperation are essential for addressing global climate issues. Negotiating and implementing agreements that commit nations to reduce emissions and adopt sustainable practices can be challenging. International regulative party in this discussion is European Commission ❌ Social Challenges: Transitioning to a green economy may result in job displacement in certain industries. It's essential to implement policies that ensure a just transition, providing support and training for workers in declining sectors. Ministerstwo Klimatu i Środowiska NFOŚIGW #greentransition #greeninvestments #zielonaenergia #kongresklimatyczny #szczytklimatyczny #climateaction #climateactioneurope #climateactionpoland #cneclimate #centralnortherneurope #cne

Balancing Economic Growth and Climate Change in Asia-Pacific: The Case for a Green Economy As the Asia-Pacific region emerges as the fastest-growing sector of the global economy, it faces the dual challenge of sustaining its economic momentum while addressing climate change. Prioritizing a green economy could provide a viable solution, aligning economic growth with environmental sustainability. The Financial Challenge of Reaching Net Zero by 2050 Achieving net zero emissions by 2050 will necessitate an estimated $75 trillion in investments. However, the current landscape of high interest rates complicates this massive financial requirement. Higher interest rates increase the cost of borrowing, potentially slowing down investments in green infrastructure and technologies essential for the energy transition. The Impact of High Interest Rates on Green Investments High interest rates can significantly impact the feasibility and attractiveness of investments in renewable energy and other green projects. Here’s how: Increased Borrowing Costs: Higher interest rates raise the cost of financing large-scale green projects, such as wind farms, solar panels, and electric vehicle infrastructure, making them less economically viable. Reduced Investor Appetite: Investors may shy away from long-term green projects that require substantial upfront capital due to higher expected returns on other investments in a high-interest environment. Slower Innovation: With less capital flowing into the green sector, technological advancements and the scaling up of green solutions may slow down, delaying the overall energy transition. Policy Measures to Counteract High Interest Rates Policy-makers have several tools at their disposal to mitigate the impact of high interest rates on green investments: Subsidies and Incentives: Governments can provide direct subsidies, tax incentives, or rebates for renewable energy projects to lower the effective cost of investment. Green Bonds and Financial Instruments: Promoting green bonds and other sustainable finance instruments can attract investment by offering lower-risk, stable returns aligned with environmental goals. Public-Private Partnerships (PPPs): Leveraging PPPs can mobilize private capital while sharing the financial risks associated with large-scale green projects. Regulatory Support: Implementing policies that mandate or encourage the adoption of green technologies, such as carbon pricing or renewable energy standards, can create a stable market demand for green investments. International Cooperation: Engaging in international collaborations and securing funding from global climate funds can supplement domestic investments and share best practices. https://lnkd.in/dBVtVk7q

Tony Lent, cofounder of Capital for Climate, shares the 5 most important deals this week in Climate investment, Nature-based Solutions, and hard-to-abate industries. Read here: https://lnkd.in/eXfuAwC5 Five climate deals and milestones: 1. Germany’s EnBW Energie Baden-Württemberg AG to invest $43 billion in energy transition projects by 2030 (Renewables Now)  2. Emirati sovereign fund Mubadala plans $13.5 billion biofuel investment in Brazil (Financial Times)  3. Brazil to invest $3.6 billion in mitigating climate change effects (BNamericas) 4. Apple, Conservation International, and Goldman Sachs launch $200 million in nature-based carbon removal projects (Business World)  5. The Charles Darwin Foundation for the Galapagos Islands and Oceans Finance Company form a for-profit partnership for for Galapagos Islands project (Investment International ) Follow Climate & Capital Media for stories focused on the business of climate change — the intersection of investment and sustainability. In addition to our stories on the opportunities and risks of the fast-moving #climate economy, our subscribers receive our Editor's letter on trends and important issues, including Tony Lent’s top five climate deals and milestones. For more, check out Capital for Climate's Newsletter and sign up for their NbS investment platform. (https://lnkd.in/eTH-m4Rn)  (https://lnkd.in/d-mBnekj) 

Bringing just transitions to bear on decarbonization and adaptation strategies The concept of "just transitions" in the context of energy decarbonization and climate adaptation emphasizes the critical need to balance climate action with social equity. Various stakeholders—including labor movements, consumer advocates, and environmental justice organizations—are redefining just transitions in energy sectors, writes Abigail Martin, a research fellow at Stanford University's Sustainable Finance Initiative. The transition from fossil fuels to low-carbon technologies such as solar, wind, hydrogen, carbon capture, and critical mineral production is complex. Different groups seek to maximize local economic benefits while also mitigating potential negative impacts like environmental pollution, land use conflicts, and rising living costs. Funding is a crucial challenge in energy transitions. National and international efforts, such as Germany's "Coal Commission" and the US Inflation Reduction Act, demonstrate public funding's potential in supporting worker transitions to clean energy communities. However, private financing mechanisms remain underdeveloped, with international partnerships like the Just Energy Transition Partnerships falling short of commitments. Sustainable Finance Initiative researchers are beginning to investigate a diversity of “just transition” initiatives tied to both decarbonization and adaptation projects. They aim to contribute new analytical tools and frameworks to improve capabilities in conceptualizing, negotiating and financing just transition planning and programs. Read Abigail M.'s analysis here: https://lnkd.in/gnXybj4S #decarbonization #climate #equity

Millions in the Global South lack reliable electricity, resorting to polluting sources like kerosene lamps. Green investments in solar, wind, and hydroelectric power can expand clean energy access, curbing indoor air pollution and enhancing health and well-being. Sand K. MbaUnited Nations Environment Programme Finance Initiative (UNEP FI)Global Climate InitiativesGreen Climate FundGlobal Green Growth InstituteClimate Bonds InitiativeIFC - International Finance CorporationEuropean Investment Bank (EIB)Green Finance InstituteOECD - OCDE

We are delighted to share our latest research on the Green Transition in Europe. Our paper titled "Economic, environmental, and energy equity convergence: Evidence of a multi-speed Europe?" has just been published in Ecological Economics. In this study, conducted in collaboration with Ana Rodriguez-Alvarez from the University of Oviedo, we delve into the complexities of achieving carbon neutrality by 2050 while ensuring economic progress and energy equity across European countries. Through an enhanced hyperbolic distance function and a stochastic frontier analysis framework, we examine how countries are faring in their energy transition efforts. Our analysis of European data from 2005 to 2018 reveals interesting trends and vital insights for policymakers. These are some of our key findings: ➡ The average efficiency of the countries addressing economic, environmental, and energy equity challenges has improved over time. ➡ Sustainable economic development coupled with clean energies plays a crucial role in reducing CO2 emissions and fostering energy equity. ➡ We observe convergence among countries' performances, with slightly higher convergence rates for EU-15 countries. While these results paint a promising picture of a just, competitive, and ecologically sound transition, challenges persist. It is crucial for the European Union to address possible differences in the adoption of renewable energy sources across countries and continue promoting green technologies. Furthermore, despite the efficiency improvements and the compatibility in addressing economic, environmental, and equity goals, these outcomes may not guarantee the achievement of the 2050 climate neutrality ambition. Read the full article to dive deeper into the findings of our research. https://lnkd.in/ev_wbwmS #GreenTransition #EconomicDevelopment #EnvironmentalSustainability #EnergyEquity #EuropeanUnionConvergence

In the European Economic and Social Committee I have been contributing so far to a handful of Plenary and Section meetings (I am a member of the NAT & TEN sections, focusing mainly on #energy and #environment). But "real work" will kick in soon. I've been selected as a member of the small study groups of EESC that will draft in the next months the following opinions: -> EU #climate target for 2040 (a very sensitive opinion referred to EESC by the European Commission) -> How to recalibrate the #GreenDeal that it fits for purpose  -> The future of the #supply and #pricing of #electricity in the EU -> #climatechange and its impact on the economy -> A comprehensive strategy for #biodiversity at #COP16: bringing all sectors together for a common goal If you want to recommend me interesting readings, perspectives and standpoints on any of these topics, particularly from the academic, think tank and NGO communities, I am all ears!

https://lnkd.in/gEuGgi83 Absolutely, Climate change costs on the economy Additional jobs created through green economy comprising of renewable energy, renewable fuels, restoration of ecosystems, nature based climate solutions and ecosystem services provided by such interventions,.