Solutions to the global energy crisis

by in Business.

Vensys wind turbines are seen at the Wincono wind farm in Larnaca, Cyprus. Getty Images

Vensys wind turbines are seen at the Wincono wind farm in Larnaca, Cyprus. Getty Images

Climate change is a risk to businesses and financial markets everywhere and is very closely related to the growth of the energy supply, one of the pillars of the global economy. The evolution of the renewable energy sector, which is already producing huge economic gains, is critical to tackling those risks (from the limitations of fuel supplies to antiquated grids) and rebalancing the energy playing field around the world, even if the level of financing required for accelerating the transformation towards low-carbon is still in an early stage. The transition to a low-carbon economy is the only way to secure sustainable economic growth and prosperity for all. During the 2014 Blouin Creative Leadership Summit, a panel on energy and the environment delved into some of the challenges the global energy picture faces.

“The real game changing technology is energy storage. If we are able to improve its efficiency and reduce costs, we would also challenge the centralized power production philosophy,” said Kandeh K. Yumkella, United Nations Under-Secretary-General and Special Representative of the Secretary-General for Sustainable Energy for All. The energy storage industry is growing, yet if it were to establish itself as a resource the amounts of capital flying in should grow exponentially.

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Wang Tao, Resident Scholar at the Energy and Climate Program at the Carnegie-Tsinghua Center for Global Policy, said that energy consumption will continue to increase, largely due to the growing middle class in developing economies and population trends. In the long term, we should rely on renewables and work in that direction despite the technical difficulties in the short term. Looking ahead, he believes “we need greater support from governments and people need to understand them better.”

Energy demand will continue to increase, driven by non-OECD economic growth, said the World Energy Council in its latest Issues Monitor. In that vein, the panelists commented on the different approaches between developing and developed countries. When adapting to a new energetic system, it’s the former that could benefit the most since the potential to build infrastructure is much bigger. An initiative introduced in India,which aims to use solar power to enable every home to run at least one light bulb by 2019, was presented as a model to follow – and a huge investment opportunity. Almost 6.5 million people now work in the renewable energy sector around the globe; this number will only increase in years to come.

A major challenge remains how to finance renewable energy implementation. The panel agreed that there is a need to facilitate investment in renewable technology and strengthen the institutional framework. Further consensus emerged around the need for green bonds – a kind of tax-exempt bond created to encourage sustainability and the development of brownfield sites – as a way to finance new energy projects. That said, the panelists agreed such bonds carry huge political risk.

Finally, the panel — which included Ross von Burg, Director Capital Introductions & Project Finance, Skystream Markets, and was moderated by Heriberto Cabezas, Senior Science Advisor to the Sustainable Technology Division in the U.S. EPA’s Office of Research and Development — touched on the upcoming United Nations Climate Summit. In anticipation, the World Bank has announced the convening of a carbon pricing leadership coalition to work with 74 governments and more than 1,000 companies to put a price on carbon emissions. The list of initiatives includes business ranging across industry, energy and transportation, and institutional investors with more than $24 trillion in assets.

Clearly, the potential exists — now it’s a matter of execution.