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Climate investors look beyond renewables as Bonn gets down to business

There’s a buzz on as world leaders gather in Bonn to push forward the global climate-action agenda: the world is awash in private capital — we just have to go get it.

Last week’s $653 million financing package for a 752-megawatt solar park near Aswan in Egypt showed how deals can be put together. Bids for the 300-megawatt Sakaka plant in Saudi Arabia showed why — at less than three cents a megawatt-hour, solar is just about the cheapest power there is.

The Bonn climate meeting, officially known as COP23 (the Paris climate agreement was reached at COP21), kicks off the real sprint to the finish to avoid the worst climate dangers.

With the U.S. moving toward pullout, delegates are eager to accentuate the positive, such as record levels of private investment in renewables 2015–2016, even accounting for a dip in 2016.

Unlocking a $23 trillion investment opportunity in climate action

Beyond renewables

And renewables, at about $300 billion a year, is only part of the $1 trillion annual market in “climate business solutions,” according to the International Finance Corp., an arm of the World Bank. Green buildings ($388 billion annually), climate-smart urban transport ($288 billion), water recycling ($23 billion), and municipal waste management ($160 billion) and the huge upside in energy storage ($2.5 billion), are all set to grow.

That trillion could be scaled up six-fold with simple, if wonky, policies, according to the IFC. Renewable energy auctions, land title reform and policies around energy storage could boost renewable energy investments to a cumulative $11 trillion by 2040, according to the IFC’s “Creating Markets for Climate Business” report.

Off-grid solar and storage alone can reach $25 billion a year by 2025 with the right tariff structures, technical standards and financing structures such as pay-as-you-go financing and securitization. Policy changes can make trillions of dollars of agriculture and transportation investments “climate-smart,” the report says. Feed-in tariffs, pay-for-performance contracting and a variety of credit enhancements would unlock trillions in investments in water and waste management.

Why is Cleantech Still a Dirty Word for Investors? (podcast)

U.S. states, cities and corporations are gamely pressing ahead in Bonn, even without Trump administration support. Other countries are certainly not waiting around. China now has more than one-third of the world’s wind power capacity, a quarter of its solar power, and a big jump in battery technologies.

More than 60,000 renewable energy development jobs have been created in Africa, which could become a renewable-energy powerhouse, with more than 1,100 gigawatts of solar power and 100 gigawatts of wind power capacity.

Renewables are no longer ‘alternative.’ Fossil fuels are ‘legacy.’

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