Climate change and the reduction of greenhouse-gas emissions continue to become important topics in the global economic agenda and public policymaking, with the transition from energy produced mainly from fossil fuels to a new energy mix with renewable energy sources.
This article is an excerpt from the Norway Report’s Renewable Energy & Electricity report. For more information, click here
The need for such transition was re-acknowledged during the Paris Agreement in December 12th, 2015, where each signing country agreed to implement greenhouse emissions mitigation, adaptation, and finance aimed to a long-term goal of keeping the increase in the global average temperature to well below 2o C above preindustrial levels; and to limit the increase to 1.5o C.
In 2015, renewable energy sources represented 15% of the global energy mix; a 65% goal by 2050 was established in the Paris Agreements. In order to achieve it, the International Renewable Energy Agency (IRENA) estimates that investments in these type of projects must double from current level of investments until 2020 (USD $500 billion per year), and then triple (USD $900 billion per year) up to 2030, where the cost-effectiveness of renewable energy project could double using existing technology.
Two-thirds of the investment would go to power production and the rest to renewable heating and transportation. Doubling the share of renewable energies could generate an increase of 1.1% of the global GDP and a 3.7% growth in welfare, and generate new jobs for 24 million people.
Norway’s internal demand for financing or investment in renewable energy projects is secured by a strong power market, with enabling policies that lower the risk incurred by financial institutions, facilitating the possibilities of any project that complies with the requirements, to obtain lower capital costs.
Norway, as a strong energy producer with the capability of exporting its excedent in energy production to neighboring countries, many private investors focus their attention on emerging markets. Institutions like Oslo Pensjonsforsikring have made important investments on international fonds like the Copenhagen Infrastructure Partners Fund II, where approximately EUR 6.8 billion have been invested in solar PV, biomass, and in off-shore and on-shore wind energy production in Europe, North America and East Asia; also the Oslo Pensjonsforsikring has invested NOK 1.9 billion on green bonds.
Another example is the Kommunal Landspensjonskasse KLP with its Fund KLP AksjeGlobal, which is integrated by an investment portfolio of 750 companies that comply with high scores on social, environmental and corporate responsibility.