Are governments doing enough to drive clean energy investments from the private sector? During today's OnPoint, Phyllis Cuttino, director of the climate and energy campaign at the Pew Charitable Trusts, discusses a new report, "Global Clean Power: A $2.3 Trillion Opportunity," which examines three different policy scenarios and the impacts each could have on clean energy investments worldwide. Cuttino says stronger policies must be implemented globally in order to facilitate investments from the private sector.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Phyllis Cuttino, director of the Climate and Energy Campaign at the Pew Charitable Trust. Phyllis, thanks for coming on the show.
Phyllis Cuttino: Thanks for having me.
Monica Trauzzi: Phyllis, Pew just released a new report, Global Clean Power, a $2.3 trillion opportunity which examines three different policy scenarios and the impacts that each could have on potential clean energy investments worldwide. Overall, why are current policies insufficient?
Phyllis Cuttino: Well, I think that all countries if you want to maximize investment in your clean energy sector and you want to meet emissions reductions goal, clearly business as usual or even Copenhagen pledges simply aren't enough. And so what our report demonstrates is that you really need what we're calling enhanced clean energy policies.
Monica Trauzzi: OK, enhanced clean energy policies, what exactly does that mean? Because there are clean energy policies in place right now worldwide, so how far do things actually need to go?
Phyllis Cuttino: Well, in almost all cases it means having what we might call a renewable electricity standard or some kind of a standard for renewable energy incentives, long-term incentives to the sector and, frankly, a carbon policy. So all those three things really need to be in place and our study of G-20 countries shows that there are countries who are in different stages of achieving those policies, but everyone in the G-20, frankly, has farther to go if they want to meet what's required for emissions standards if we're going to keep global warming in check and also maximize investments.
Monica Trauzzi: So, what are the three different scenarios that you looked at?
Phyllis Cuttino: We looked at business as usual, which is over the next decade countries implement no new policies. Copenhagen pledges, which are the policies that countries would need to implement to meet the pledges that they made at the 2009 December conference. And then this enhanced policy scenario.
Monica Trauzzi: So, if things stay the same where does that leave us?
Phyllis Cuttino: Well, it certainly doesn't get us to $2.3 trillion globally. That's a big number. That's basically the equivalent of the entire GDP of the United Kingdom that we could add to the global economy just in clean power. For the United States it would mean $342 billion in private investment. This isn't government investment, this is private investment over 10 years.
Monica Trauzzi: And this can all be spurred, this can all happen through policy implementation?
Phyllis Cuttino: Absolutely. Every report we've done and, frankly, this is our third and we have two more coming out soon, but the last three that we've done have all demonstrated that if policies are implemented, investment will follow. Investors are looking for what we call TLC, transparency, longevity, and consistency. And here in the United States I think we've all seen that there's a lot of capital that's sitting on the sidelines. We see now over the next 10 years that the center of gravity in the clean energy economy is shifting to Asia, so away from the European Union and away from United States and into Asia. Forty percent of all private sector investments in the clean power sector are going to Asia over the next decade.
Monica Trauzzi: Which G-20 members then would gain the most by implementing stronger policies?
Phyllis Cuttino: Well, there are actually three countries that if they would implement enhanced policy scenarios would have the most to gain, one of which is the United States. The other two are the United Kingdom and India. So we've seen China, for instance, moving so rapidly in this direction. In fact, they have installed essentially what is half of the United States installed renewable capacity in the last two years alone. They have a target for 20 gigawatts of solar by 2020 and 150 gigawatts of wind by 2020. It's a staggering figure.
Monica Trauzzi: We're talking about a lot of money here. How much money actually needs to be put in to make this stuff happen? How much does the government need to provide? And can governments afford to put money in at this point with the economy where it is?
Phyllis Cuttino: Sure, well, our report, frankly, looked only at private sector investments. But private sector investments, again, follow policy. And some policies do cost governments money, feed-in tariffs and others. But I think we can achieve those - implementation of those policies even with subsidies, frankly, through other policy mechanisms. One thing that we could do is we could reduce subsidies for fossil fuels that have enjoyed decades and decades, you know, 60+ years of subsidies, to help foster, frankly, an emerging sector that has grown substantially over the last five years, even in the midst of an economic downturn. So it's a real opportunity for the future.
Monica Trauzzi: What kind of competition do you think this could all spur worldwide if policies were improved?
Phyllis Cuttino: Oh, I think the competition is already fierce. I think that we've seen that China certainly believes that clean energy is important, both internally, but also as a huge export opportunity. The United States used to manufacture 40 percent of all solar panels. We now manufacture five. We only have one of the world's top 10 solar industries and two of the top 15 wind companies. China now supplies 40 percent of all solar panels and 25 percent of all wind turbines. So installing a mandate at home only helps you build your manufacturing base, create jobs, and then offer you the opportunity to export. We know that 90 percent of future energy demand is going to come from the developing world, 53 percent of it from India and China as they put, you know, millions of new people on the grid year after year after year, connect them to electricity. So the United States should really try to frankly service that need by providing clean energy, goods, and services abroad.
Monica Trauzzi: A lot to watch in the next Congress.
Phyllis Cuttino: That's right.
Monica Trauzzi: All right, thanks for coming on the show.
Phyllis Cuttino: Thanks Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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