Financing the global energy transition | COP29, solar's place in the world and markets to watch

In this episode of Shine On Policycast, host Bethany is joined by Benjamin Clarke, SolarPower Europe's Global Markets Manager, to discuss COP29. We dive into the global story for solar and renewables, which emerging markets to watch, and ask the question of the hour: is COP still relevant?

Follow us for more:

LinkedIn
X
Instagram
Facebook
Website

Transcript

0:00

This is Shine On Policycast, the podcast that brings you EU policy updates relevant to solar. I'm your host, Bethany. Let's get started. So welcome back to Policycast. This time we've got a long-time listener, first-time guest, Benjy Clarke, our Global Markets Manager here at SolarPower Europe. So welcome, Benjy. Thanks, Bethany. I am thrilled to be here. The sincerity. No, it's good to have you here. We talk about a lot of these topics off camera, so it's good to get you in front of the camera for once. So we've got a tradition, as you know, of bringing a prop onto the podcast, or our guests bring on a prop, and then I have to guess what it has to do with what we're about to speak about. So have you got a prop for me, Benjy? Absolutely. I've got 10 euros that you absolutely can't have. Well, we'll see about that. But okay, so it's money I can't have. We're going to talk about COP. It's obviously around financing and the idea that there's some money out there that perhaps some stakeholders can't access. Ten out of ten. We're off to a great start. So COP 29, it's just wrapped up in Baku in Azerbaijan. And what's the general feeling around this year at COP? Was there a lot of ambition to get things done? Did we get things over the line? What's your thoughts? I think how you interpret the result of COP depends on how you are, who you are, sorry, not how you are. Maybe it also depends on how you are. Yeah, also that. But if you're a small island state or a least developed country, you are probably not at all satisfied with the outcome of COP because there is political pressure on you to do an energy transition, industrial industrialised, but also do an energy transition to a clean economy as well, all at the same time. And the amount of finance that is being mobilised by already industrialised countries and so on and so forth is far below the level that you need to achieve these things. So small island state, least developed country, absolutely not at all thrilled with the outcome. If you're a broadly Western country, or Western-aligned country, let's call it, you can look at it and you can see, you can look at the outcomes and you can see a raised ambition for climate finance from 100 billion a year to 300 billion a year. And also you'll see you'll be quite positive about having successfully defended the idea of a transition away from fossil fuels that came out of COP 28. It was still in the conclusions in COP 29, despite the efforts of PetroStates to get rid of that language, which brings me on to the PetroStates. How are they feeling? Yeah. Again, probably mixed because you didn't achieve your ultimate goal of essentially dropping the language of a transition away from fossil fuels. So that's a L for the Petro States. A win for the planet. Yeah. But you've also successfully frustrated progress towards mobilising climate finance at the scale that is needed to fund an energy transition. So you can keep pumping your oil and burning your gas for a little bit longer. Which, yeah, in the grand scheme of things, maybe not great news, but it sounds like there are still some parts of COP that we can feel a bit positive about. And maybe we can bring it back to the idea that the fossil fuel fee is still there. And the voice of renewables has been growing more and more every year at COP. What were we saying as a solar sector in Baku? So the big thing for the solar sector in Baku was absolutely that globally there is now two terawatts of solar installed, and that's based on the market data that we have at SolarPower Europe, but also the Global Solar Council as well. And considering it took 60 odd years to reach the first terawatt, doing the second in two years is pretty good. Yeah. Yeah. You know, that needs to be tempered by saying we need eight terawatts by 2030 to stay on a 1.5 aligned pathway. But the signs are moving in a positive direction. And I think what this underlines is really that where politics has stopped delivering, solar still does, which I think is incredibly, incredibly positive news from the solar sector shows that we are ready to pick up the slack. However, eight terawatts will not just come if we keep business as usual. I think that was the big messages that were coming out of the Global Renewables Alliance, but also the Global Solar Council as part of the Global Renewables Hub that was at COP 29 was that we need to reach this eight terawatts. The solar sector needs a massive scale up of financing for deployment, but equally, investment in grids and energy storage. And there was this 1.5 gigawatt global storage target that was being talked about. It didn't make it into the conclusions, but there were a lot of countries that signed up to the pledge on this. So this country is pushing for more energy storage? Yeah, exactly. To help with the integration of renewables like solar into transmission systems at the moment. And then there was one other bit that came out that I think is particularly important. And it's when countries are looking at updating their NDCs, their nationally-determined contributions, they really have to make those updates in line with this tripling, with the tripling target that came out of COP 28. So when we add up all those NDCs, we should get to triple. Absolutely. Fingers crossed. So, I mean, COP 29 is, by and large a negotiation between all these countries. And then at the end of it, there's conclusions. So what are the big picture conclusions that we're seeing from Baku? So there's a bunch of stuff that came out. But as I was flashing my cash to you earlier, we're going to talk mainly about the finance stuff. So I touched on it earlier, but previously in previous cups, there's been this commitment to industrialised countries raising $100 billion per year in climate finance to fund the energy transitions of non-industrialised countries. This was raised to $300 billion a year, which has tripled the amount. However, that has to be tempered by saying that this does not account for inflation. So is it- Okay, so that's 300 billion, like today, but in five years, I mean, the purchasing part of that is- Will it still be worth 300 billion? Yeah. Probably not. Okay. So You have to take that with a little pinch of salt. Every time someone says tripling, yes, okay, tripling for 2024, but what will that mean moving forward? And there's an aim to scale up this 300 billion a year to from that is to about $1.3 trillion a year by 2035, which is supposedly the amount that is needed by non-industrialised countries in small island states to to do a full energy transition and to fund that. And that's just money for the transition. That's not to do with mitigation and adaptation? So no, that's just for the transition. Okay. And then, looking at this, we also need to look at a little bit closer at this $300 billion because you feel that the, probably the fairest, but also the best way of dispersing this money for an energy transition would be in the form of grants, so you don't have to repay or very low cost loans so that there is a sustainable debt within non-industrialised nations. However, this is not where it's coming from. And in the conclusions, there's very vague language about this coming from a wide variety of sources, public and private, bilateral and multilateral, and alternative sources. So where exactly this 300 billion is going to come from. And the public and private part. So that's not 300 billion that's going to come from government money and from foreign aid, they're also relying on private partners there. Yeah. So you'd imagine that would come in the form of public-private partnerships and so on and so forth. Because the rest of the trillion that is needed for 1.3 trillion is coming from essentially private sector investments and the occasional levy on gas and oil production, frequent flyers, shipping, whatever. But let's see if that actually happens. But yeah, so you're looking for 1 trillion of private sector investment per year by 2035, and then 300 billion not in the form of sustainable debt, basically. Okay. So it's a mixed result. Mixed result. And it seems like last few years or maybe even since Paris or the Paris COP, we get mixed results at COP. Many people aren't happy. Do you find that COP is still a sustainable format for these negotiations? Should we still be planning to have this structure in our climate action? Well, I'm going to give an unhelpful answer here, but COP is essentially relevant until the moment that it's not. What you see more and more and more in COPs these days is an increasing tension and a contradiction between scientific evidence and the need for an energy transition on one hand, and the the economic returns that fossil-fueled capitalism brings on the other hand. And At the moment, you get, I think this year, Papua New Guinea decided not to attend COP because it felt it wouldn't deliver anything, and it was a waste of time for Papua New Guinea. You had small island states, at least developed countries, at one point walking out of the negotiations saying that this was not fair and not delivering anything for them. On the other hand, you've got Saudi Arabia unilaterally trying to impose changes on the conclusions in a fairly unorthodox way. There's a lot of tensions there about which way do we go. The fascinating thing about COP is that it really brings all these to the forefront and almost acts as a barometer for where is this tension leading? Will it lead to some crisis moment whereby we have to change and COP suddenly doesn't become relevant in its current form? Maybe it will change to as Ban Ki-moon and the others were saying, smaller working groups or with more regular meetings, or maybe we'll come up with an entirely new system. But for the moment, the point of crisis has not yet quite been reached. So we continue with COP. And the value in it is bringing these people together in order to see those tensions, bring them to the light, and then we figure out where to go from there. Yeah, exactly. So bring on COP30 in Brazil, I think it's it? Exactly. Yeah. So let's bring it back a bit to the solar side of things and global solar markets and what role they're playing in this whole worldwide climate movement. I mean, you mentioned the 2 terawatts, but let's zoom into a bit. I mean, what emerging markets are taking off? How do we work with them as partners in Europe? I want to talk in particular about markets. So you touched on one of them before, but obviously, COP30 is going to be in Brazil, which I think is a particularly positive thing. We've had two COPs in succession in essentially petro-states or gas-producing states. Now we're moving to a country that has a big solar market, that has a thriving solar market, that has a high penetration of renewables, if you count hydro in that, in its grid already. So I think that's a really positive statement of intent. And I certainly expect the the ambition of the of the Brazilian presidency to be in line with that and slightly raised. So I think that that's a good signal. Also within our global markets work stream at the moment, we're focusing a lot on Morocco. Okay. Sunny. Yeah, exactly. And we're bringing out an investment report on Morocco towards the back end of this year, sometime in December. What we see there, there's a new set of legislation that is being implemented at the moment, that is under design as well, that actually contains a lot of positive stuff that creates a lot of new market opportunities for solar, both in the mid-size C&I segment as well as industrial scale segment as well. So That is great. Similarly, Morocco also relies a lot on imports. It imports a lot of gas from Alger because it doesn't have a choice. It doesn't produce much of its own energy, doesn't have much of its own reserves. And so that also creates a big opportunity for solar. There's plenty of irradiation, solar potential, everything like that. And now, Morocco is starting to think, well, hang on, maybe we should start using some of that. And The way, Morocco is also an interesting one because it's right on the, well, it's in the Southern Mediterranean, it's incredibly close to Spain and so on and so forth. But you now see memoranda of understanding of an integration of the Moroccan electricity market with the Spanish and Portuguese electricity markets, which would mean in theory that you can export green electrons to Europe, which increases increases the attractiveness of Morocco as an investment destination, but also should drive the deployment of solar there. Cool. Okay, so Morocco, want to watch. Yeah. And then, we're Solar Power Europe. We are representing the European Trade Association, the European Solar Sector. But yeah, as you say, we've got a global markets work stream. We do a lot of work around the world and we work with our partners at the Global Solar Council, too. So for us, I mean, what do we have coming up that listeners can look out for in the world of solar? Well, so as I mentioned previously, we're looking at the, we're going to release our investment report on Morocco, which people should keep an eye out for. We are also talking to export credit agencies and development finance institutions about how they can better work together to combine their financial products and more effectively support the deployment of solar, but also solar manufacturing around the globe and looking at strengthening the resilience of the solar supply chain. We're going to We're finalising a position paper on that that should be done by the end of the year as well. It's quite timely because there's a lot of conversation going on at the moment in pretty much every DG you can imagine would be involved. Then in the European Commission. Yeah, yeah, yeah. Sorry. Every bit of the European Commission that would be involved is involved in this discussion around how can the EU support clean tech manufacturing around the world, increasing supply chain resilience. So that's a big focus of ours at the moment. So there's some bits and pieces there to look forward to on the upstream and the downstream side of things. Exactly. Well, thanks so much, Benjy, for all your insights today. And if people want to find out more from you on online, on your social media, where can they find you? Well, so most active on LinkedIn, which people should connect with me, reach out and so on and so forth. Very, very passive on Twitter. So don't follow me if you expect any content. Yeah, that's where people can find me. But thanks so much for having me on as well. Thanks, Benjy. Thank you. Thanks for listening to today's episode. This podcast is brought to you by SolarPower Europe. If you don't want to miss our next episode, make sure to subscribe and turn on notifications. Shine on.