2016 was a landmark year for the renewables industry due to COP21 and the resulting Paris Agreement. 174 countries and the European Union signed this deal – an unprecedented commitment to tackle the negative effects of climate change.
12 months on from Paris and on paper the outlook appears less optimistic. COP22 in Marrakesh was overshadowed by several recent political events in the UK and USA and the whole industry is holding its breath for moves to be made for a progressive, healthy energy mix worldwide.
However, it’s not all doom and gloom by any means. Many of the talks at COP22 focused on how developed countries can support poorer nations in terms of their renewable energy adoption and have generally put the topic of climate finance in the spotlight, which is crucial.
Global governments now need to help create a positive investment climate for institutional investors looking to invest in climate change solutions such as solar PV and onshore wind, and commercial energy storage as the vital connection between renewables and the grid. Investors can reap the benefits of strong proven returns but also exercise real power in driving positive change in divesting from fossil fuels and reinvesting into renewables. Additionally, such investments are proven and credible, and often wrongly placed as part of the private equity industry as they are stable infrastructure projects.
We hope that COP22 inspires and educates investors to be more ‘climate aware’ as they diversify their investment portfolios. These ‘climate-savvy’ investors will want to ensure that markets are no longer solely run by fossil fuels such as oil and coal, but will realise the true potential of renewable energy sources to shape our future for the better. Furthermore, strong leadership and collaboration between investors is needed to keep the promise of Paris’s COP21 alive.
Following the political shifts over the last year, the legacy of COP22 must be to weather the uncertainty that is to come. ‘Climate-savvy’ institutional investors can lead the charge in doing so, by driving investment into renewables, but can also enjoy the returns that come with them: it’s a win-win situation. The road ahead must be one of collaboration, with investors and policy makers working together to create a positive investment climate, which will in turn help to tackle the global issue of climate change.