communities of faith to commit to a zero or lowcarbon future. Pressure is also being placed on the more reluctant energy sector players. Even shareholders in fossil fuel companies are increasingly pushing for their companies to become‘ greener’. The private sector is taking advantage of the falling costs of renewable energy technologies, and new initiatives have emerged that include both public and private sector actors, acknowledging that all have a role to play in energy transition.
In parallel, increasing energy access for 1.2 billion people without access to electricity is an international priority. In order to meet the target of limiting global temperature increase to below two degrees Celsius, while at the same time increasing energy access, remaining fossil fuel reserves will have to be kept in the ground, and both renewable energy and energy efficiency will have to be scaled up dramatically.
LEVELLING THE PLAYING FIELD
Fossil fuel subsidies have to be phased out, as they distort the true costs of energy and encourage wasteful spending and increased emissions. Fossil fuel subsidies also present a barrier to scaling up clean energy by:
●● decreasing the costs of fossil fuel-powered electricity generation, thereby blunting the cost-competitiveness of renewables;
●● creating an incumbent advantage that strengthens the position of fossil fuels in the electricity system; and
●● creating conditions that favour investments in fossil fuel-based technologies over renewables.
Fossil fuel subsidies were estimated to be over US $ 490 billion in 2014, compared with subsidies of only US $ 135 billion for renewables.
Policy design should discourage investments in fossil fuel and nuclear energy, while removing risks from investments in renewable energy. This is crucial for scaling up renewables, which can help close the energy access gap. Although there has been some divestment from fossil fuels and advances in renewable energy investment, fossil fuel and nuclear investments continue to be favoured over clean energy in many instances, particularly when short-term gains are the primary consideration and long-term thinking is discounted. This can occur when politicians think only in terms of the next election cycle, or when companies attempt to provide shareholders with quick returns. Furthermore, fossil fuels are more institutionalised and have long-standing, wellfinanced lobbies.
Conversely, renewables are still less known and often suffer from negative images and messages that are widely communicated, such as the idea that that investing in large renewable projects is unrealistic. Simultaneously, renewable energy policy changes and uncertainties undermine investor confidence, inhibiting investment and deployment in some markets. Investors consider all of these factors in their decision making, as do insurers( demonstrated by the increasing presence of insurance addressing climate change risks). Likewise, policy makers should think on a long-term basis in order to increase investment in clean energy and advance the energy transition in their countries.
THINKING BEYOND THE POWER SECTOR
More emphasis needs to be placed on strengthening the role of renewable energy in the heating, cooling and transport sectors, as well as on sector coupling. Policy support for the use of renewables in these sectors has advanced at a much slower pace over the past 10 years than it has in the power sector. Currently renewable heat obligations exist in only 21 countries and biofuel mandates exist in only 66 countries, compared with 114 countries with renewable energy regulatory policies in the power sector. Not only should policy support for renewables increase in general, but interaction among the three sectors also needs to increase, and national policies should strengthen local capacity, particularly in the heating and cooling sector due to its distributed nature and to its large reliance on local resources.
Policy makers need to remove barriers that are preventing the increased share of renewables in heating, cooling and transport. Current policy initiatives in both sectors are not sufficient to drive the transition from fossil fuels. Policies in the
35