The leaders’ statement emerging from the recent G20 summit in New Delhi highlights the urgent need for collective action on climate change and sustainable finance.
A central element of the Green Development Agreement is the recognition that the energy transition must be profitable in order to accelerate progress. To reach a tipping point of affordability, barriers (such as insufficient and expensive energy storage) that currently prevent the growth of renewable energy must be removed.
Undoubtedly, there is a long way to go. According to the International Energy Agency’s World Energy Outlook 2022, the energy sector needs to triple renewable energy capacity by 2030 to achieve net zero emissions by 2050.
There is also the question of funding. As part of the declaration, G20 leaders reaffirmed the commitment made by developed countries to mobilize $100 billion annually in climate finance to support mitigation and adaptation efforts in developing countries.
In a speech before the summit, European Council President Charles Michel said the target would be reached for the first time in 2023. While this is an important step forward, it adds up to $4.5 trillion in annual clean energy investments needed by 2030. Global warming must be limited to 1.5°C above pre-industrial levels.
It is clear that a massive shift in our approach to climate finance is necessary. Multilateral development banks and philanthropic institutions should play a key role in promoting private sector investment in affordable finance and risk mitigation, as well as establishing low-cost finance to facilitate the transition from fossil fuels to renewable energies.
The goal is not only to dramatically reduce the cost of clean energy technologies, but also to reduce research and development costs, facilitate access to mass market scale, and improve financial linkages.
But progress in affordability requires a concerted effort from all sectors. By collaborating on reducing the cost of renewable energy, we can increase demand, spur innovation and drive market change, paving the way for a more sustainable and resilient future for all of us.
Energy conservation is highly dependent on problem solving. Solar and wind energy, due to their affordability and widespread availability, will almost certainly account for the majority of renewable electricity generation.
But these resources are only sometimes plentiful: countries around the equator receive about 12 hours of sunlight each day, while winds are inconsistent. Battery energy storage systems (BESS) emerge as a potential solution to this inherent variability, especially as they approach a critical breakeven threshold.
The Global Leadership Council, established by the Global Energy Alliance for People and Planet (of which I chair), has made BESS one of its flagship initiatives.
At the upcoming United Nations Climate Change Conference (COP28) in Dubai, the Council will launch the BESS Consortium, a multi-stakeholder partnership of leading development finance institutions that will support countries deploying first-generation BESS programmes. , Asia, Latin America and the Caribbean.
Mobilizing five gigawatts of BESS by the end of 2024, with more than $4 billion in grants, commercial and concessional funds, and by 2030, unlocking 90 gigawatts of BESS to enable 400 gigawatts of renewable energy.
India has enormous potential, especially for BESS, given its plan to increase renewable energy capacity to 600 GW (65% of total installed capacity) by 2032.
To achieve this ambitious goal, distribution companies can acquire and accommodate large amounts of renewable energy in a sustainable way. At the distribution end, BESSs can provide grid balancing and other critical services to reduce the total cost of power acquisition.
In New Delhi, the 40 MW-hour BESS project aims to create a scalable path to one gigawatt of storage by 2026 and create 10,000 jobs. The pilot project, when expanded, will improve technology and encourage widespread use of renewable energy.
This improves the stability and reliability of the power grid and allows greater integration of clean energy sources. Over time, this project could reduce carbon dioxide emissions and ensure a cost-effective and reliable supply of renewable energy.
These technologies have immense potential to improve economic diversification, strengthen energy security and foster employment opportunities. Collaborating to develop them and establish a global landscape that underpins sustainable energy prosperity is a central theme of India’s energy transition dialogues.
The race to make renewable energy affordable offers an unparalleled opportunity to deliver sustainable and inclusive growth while reducing carbon dioxide emissions. But we can only achieve this if the private sector, governments and civil society work together to reduce the cost of clean technologies and increase their access.
Ravi Venkatesan is the President of the Global Energy Alliance for People and Planet.
© Project Syndicate 1995–2023