With Writing on Wall for Fossil Fuels, Renewables 'Poised for Take-Off'

"The arguments against divestment are all quickly falling away," said Jamie Henn, communications director for 350.org, after United Nations Secretary General Ban Ki-moon urged financial leaders to double their clean energy investments by 2020 at a global investor summit on Wednesday.

"Today, I call on the investor community to build on the strong momentum from Paris and seize the opportunities for clean energy growth," the Secretary General said at the 2016 Investor Summit on Climate Risk, the first such gathering since the Paris Agreement was hammered out in December. "Sustainable clean energy is growing but not nearly fast enough to meet energy demand of what science says. The investor community is of critical importance if we are going to move from aspiration to action."

"We cannot continue to invest in coal...we cannot afford to look for new oil and gas sources."
--Christiana Figueres, UN Framework Convention on Climate Change

In saying so, the United Nations "has made it clear that there is no way to meet the goals agreed to at the Paris Climate Summit if we keep investing in fossil fuels," Henn argued. "Divesting from coal, oil and gas and reinvesting in just, sustainable energy solutions is one of the most important things an institution can do to help combat the climate crisis."

Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change, echoed that call, telling the crowd of more than 500 investors in New York: "We cannot continue to invest in coal...we cannot afford to look for new oil and gas sources. By 2030, the window of investing in high carbon needs to close. As for capital, forget 2050, forget 2030. Where capital goes in the next five years will decide what kind of world we have."

Attendees of the summit ranged from international pension funds to big-name financial institutions.

According to the non-profit coalition Ceres, which organized the day-long meeting alongside the United Nations Foundation and the United Nations Office for Partnerships, significant gaps remain in growing clean energy at the levels necessary to meet the Paris climate accord's goal of limiting global temperature rise to below 2degCelsius.

But that capital is starting to flow, with Bloomberg New Energy Finance (BNEF) reporting earlier this year that clean energy investment hit a record high in 2015--despite "influences that might have been expected to restrain it," such as the plunge in fossil fuel commodity prices.

And a report released Wednesday by Ceres and BNEF, timed to coincide with the investor summit, suggests that renewable energy sources such as wind and solar are "poised for a take-off due to declining costs that often make them fully competitive with fossil fuels, even without subsidies."

As BNEF founder and chairman Michael Liebreich put it: "The clean energy industry could make a very significant contribution to achieving the lofty ambitions expressed by the Paris Agreement. To do so, however, investment volume is going to need to more than double, and do so in the next three to five years."

"That sort of increase," he added, "will not be delivered by business as usual; closing the gap is both a challenge and an opportunity for investors."

"Divestment used to be dismissed as a niche campaign. Now, it's one of the most important questions at the center of any portfolio."
--Jamie Henn, 350.org

Part of that challenge will involve shifting money away from high-carbon sectors and toward a low-carbon future. And doing so is more than environmentally responsible--it's financially prudent, given how dirty energy "may perform poorly in the years ahead," according to Mindy Lubber, president of Ceres and director of its Investor Network on Climate Risk.

Indeed, a study released earlier this week revealed that in one year alone, New York City's largest pension fund lost around $135 million from their holdings in the top 100 oil and gas companies.

"The prudence of divesting from coal is so legible it is quickly becoming the norm," Brett Fleishman, senior analyst with 350.org, said at the time. "Oil and gas are on a more asperous decline, making it harder for investors to see the mounting risk associated with the industry. New York City's pension funds need to divest now, as cautious, long-term investors."

At the Investor Summit, Secretary General Ban also called on pension funds to take action, saying such entities "must use their influence as investors and shareholders to accelerate the rapid decarbonization of the economy."

For Henn, it all means the writing's on the wall for fossil fuels. "Divestment used to be dismissed as a niche campaign," he noted. "Now, it's one of the most important questions at the center of any portfolio."