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Optimism at the Secretary’s Climate and Clean Energy Investment Forum

The attitude of speakers at the Secretary’s Climate and Clean Energy Investment Forum can be summarized in two words: guarded optimism. A conference hosted jointly by the United States Department of State, Google, and Georgetown University on Oct. 20-21, the forum focused on current and future efforts to funnel investments toward climate solutions.

While recognizing the enormity of climate change, speakers and participants highlighted several promising developments in the world of climate-change policy and clean-energy finance.

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Hopes for Paris Were High

With fewer than 40 days to go until the Paris climate negotiations, speakers expressed high hopes for a strong outcome in December. In his opening remarks, United States Secretary of State John Kerry highlighted the “enormous progress” that negotiators had made since the failed Copenhagen talks, particularly with respect to bridging the “great divergence between developed and developing countries.”

United States Secretary of Energy Ernest Moniz echoed this point. “I think it’s fair to say that the optimism of our accomplishing something substantial in Paris is significantly greater than it was a year ago,” he remarked, adding that last November’s joint climate change announcement by President Obama and General Secretary Xi Jinpingin in Beijing was a “game changer in both our domestic and international discussions.”

At the same time, both officials acknowledged the limitations of COP21. While Kerry called achieving a global climate change agreement “an absolutely critical step and a major priority of President Obama,” he said that much more work would be needed after the Paris conference.

Expectations for Solar Were Even Higher

While the expectations for the climate negotiations were guardedly optimistic, few at the conference could contain their excitement about developments in the solar industry.

Improvements in solar efficiency technology and capital costs have surpassed expectations, said Inderpreet Wadhwa, founder and CEO of Azure Power. As evidence, he pointed to the 70-percent decline in solar energy prices since 2009 as well as the exponential growth in worldwide demand for solar PV.

At the same time, non-solar technological improvements have accelerated both rural electrification efforts and the adoption of off-grid solar systems. Xavier Helgesen, co-founder and CEO of Off-Grid Electric, a distributed-solar provider in Africa, observed that recent cost reductions in LEDs and lithium batteries have had a “multiplier effect” on off-grid energy production.

“If you think of an LED as five or 10 times more efficient than a compact fluorescent light bulb and then you think of the cost of solar coming down 70 percent, then the multiplier is 15 in terms of the light that people get from the amount of money that they spend,” Helgesen said.

Importantly, many panelists predicted that these positive developments in solar would continue into the future. Helgesen, for example, said the first fully-solar country would come online in the next 10 years. Wadhwa went further and forecasted that solar technology would become as integrated into consumers’ lifestyles as cell phones and Wi-Fi currently are.

“You’re going to have your cell phone screens with solar panels, you’re going to have school backpacks with solar panels,” he said, adding that there would be more solar panels than people by 2030.

Public Policies Are Key to Unlocking Clean-Energy Investments

Realizing this future, however, will require substantial investments. Panelists identified several important roles that governments can play in unleashing private-sector funds.

Amos Hochstein, special envoy and coordinator for international energy affairs at the Department of State, said that governments must work to increase investors’ comfort levels in investing in emerging markets. He noted, for example, that United States companies are eager to enter into India’s renewable-energy market but hesitate because of concerns about the creditworthiness of certain Indian states.

John Roome, director for sustainable development in the World Bank’s East Asia region, echoed this sentiment, saying that establishing the viability and trustworthiness of off-takers was critical for attracting private capital.

While issues of risk management dominated discussions of clean-energy finance in the developing world, participants highlighted the need for improving regulations in the United States. NRG Energy CEO David Crane said some state and municipal regulations on residential solar systems were impediments to the expansion of clean-energy generation. “There’s almost nothing you could buy that would take longer and be a worse experience than getting solar on your roof.”

Regulatory costs were also on the mind of Secretary Moniz. With core technology costs dropping rapidly, he said that “soft costs” – such as delays in the permitting of distributed generation – were fast becoming the dominant costs for solar power.

More Technological Innovations Are Needed

Finally, panelists stressed the need for big breakthroughs in clean-energy technology R&D. At the top of speakers’ lists were improvements in battery storage, innovations in the automobile industry, and advancements in clean-energy software technologies.

Moniz, in particular, underscored the importance of funding “use-inspired basic research” that will drive forward the next generation of clean energy technologies. To that end, the Department of Energy has created a series of Innovation Hubs, which are multidisciplinary research centers that are charged with tackling critical high-risk/high-reward energy issues – such as the conversion of sunlight into liquid fuels.

Ultimately, the Secretary’s Climate and Clean Energy Investment Forum communicated the message that a low-carbon economy is within reach. However, Kerry said, realizing this future will require “investments at all stages – from venture capitalists to pension funds, from project developers to green bonds.”

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