Governments should consider the scaling up of renewable
energy as part of economic development strategy, rather than as
an environmental strategy with the
secondary benefits of job creation. This is one of many
recommendations from a report exploring financing strategies
for large scale deployment of renewable energy projects. The report was authored by
the Clean Energy Group, commissioned by the International
Energy AgencyRenewable Energy Technology Deployment
(IEARETD ). IEARETD is a cooperation of nine
countries under the umbrella of the IEA.
Making the switch to large-scale renewable energy systems
will require investment with magnitudes in the trillions of
dollars. The necessary transformation is on the scale of the
information technology revolution of the past
Renewable energy investments are on a growth trajectory,
reflected by $243 billion of global CAPEX in 2009. However,
these recent figures do not reflect international consensus
among many policymakers on the future levels of
investment required to finance the large-scale deployment of
renewable energy technologies to address climate change risks.
Such commitments have been made all the more difficult in the
current financial crisis.
However, the level of capital is available with new,
conventional investors, but only on terms that are within their
investment parameters. Governments have an important role in
providing the right conditions. Simply scaling up public
subsidies is not a viable solution.
The report advises that policies should specifically reduce
the technical and institutional policy risks associated with
renewable energy technologies and, at the same time, increase
the profit potential of these investments. An economic and
infrastructure systems approach is required. Some major
recommendations for present day up to 2015 include:
Build local markets for a countrys renewable
Fill identified gaps in industry value chains such
as manufacturing support or workforce development.
Institutionalize the functions to manage the
economic development, finance mechanisms and technology innovation.
Create investment incentives that will attract
investments from new pools, like corporations.
Consider creation of green bonds.
Increase private and public research and
development in renewable energy technologies.
Combine feed-in tariffs (FITs), national tax credit
schemes and mandatory renewable procurement for utilities into
Public procurement of renewable energy and
mandatory use of renewable technologies in new buildings are
possible quick wins in policies.
Establish the emerging technology renewable
auction mechanism (ET-RAM) that requires local utilities
to procure renewable energy project outputs from specific technology classes. This would be a
driver for innovative renewable energy technologies to enter
In the phase from 20162020, policies have to build on
these experiences, stimulating reinvestment and attracting even
more cautious investors. In the period from 20202050, a
fully formed infrastructure investment portfolio will continue
along the new renewable energy economy path, producing jobs,
wealth and environmental benefits, the report