Global leaders recognise clean energy’s huge economic potential. Now they need to act.

Energy and climate leaders from more than 40 countries who took part in the IEA-COP26 Net Zero Summit last week called on countries to work more closely together to reduce greenhouse gas emissions and stave off a potentially catastrophic rise in global temperatures. But they also emphasised that major international efforts to boost clean energy policies and investment can bring more immediate benefits: massive job creation and economic opportunities that can put the world on a sustainable recovery path from the Covid crisis.

“This is the greatest economic opportunity we’ve ever had’’ said John Kerry, the US Presidential Special Envoy for Climate, during the opening session of the Summit. “We are looking at the biggest job market ever known. Every task we have – building out the grid, solar power, wind power, building out hydrogen, batteries, switching to electric vehicles – will all create jobs.”

And it’s not just an exciting prospect for advanced economies. In Africa, where 600 million people currently don’t have access to electricity, “clean energy provides the best opportunity to expand energy access, reduce poverty and create jobs,” said Amani Abou-Zeid, Commissioner for Infrastructure and Energy at the African Union.

I had the privilege of co-hosting the Net Zero Summit with COP26 President Alok Sharma where the huge potential benefits – both economic and environmental – of accelerating the shift to clean energy were a recurring theme. A key milestone on the road to November’s COP26 Climate Change Conference in Glasgow, the Net Zero Summit brought together ministerial representatives of countries covering more than 80% of global GDP, population and emissions. It also included participants from a broad cross-section of government institutions, civil society groups and private companies.

The critical need for investment, especially in developing economies

Many participants noted that while solar and wind power are cheaper than burning fossil fuels and can also create new jobs, they do require upfront investments that some countries are struggling to attract on a significant scale. We know there is enough capital out there; it’s how we bring this capital to clean energy – especially where it’s most needed – that’s the key question. This is why the IEA is working on a major report with the World Bank and the World Economic Forum – due to be released in June – to provide practical guidance on how stakeholders can accelerate clean energy investments in emerging and developing economies.

The exchanges at the Summit about the critical need for greater clean energy investment brought reminders that the 2015 Paris Agreement included pledges to mobilize $100 billion a year in investments for developing countries. “Donor countries must honour their commitments to raise their $100 billion a year in international finance – and we must get private investment flowing,” Mr Sharma said. “Without finance, the task ahead is nigh impossible.”

He emphasised that these investment flows shouldn’t be seen as onerous. “It’s not a matter of shouldering burdens but sharing opportunities,” he said. “Moving to a clean economy benefits us all, by creating jobs and cleaning up our air.”

Seamus O’Regan, Canada’s Minister of Natural Resources, noted that private investment is already flowing into clean energy. “The market is changing and investors are looking to put their money into energies, industries and jurisdictions taking meaningful climate actions, and divesting away from those that in their view are not,” he said. But he added that governments have the important role of providing incentives for new technologies and of “de-risking” investments in developing economies.

The IEA’s Roadmap to Net Zero

Several participants highlighted the importance of IEA work in helping support these efforts, notably the major report we will release on 18 May – Net Zero in 2050: A roadmap for the global energy sector. Designed to help decision-makers to prioritise urgent action ahead of the COP26 in November, our Net Zero Roadmap will set out a global pathway for what is needed from governments, companies, investors and citizens to put emissions on a path in line with a temperature rise of 1.5 degrees Celsius.

Stephanie Pfeifer, the CEO of the Institutional Investors’ Group on Climate Change said countries will also need to update domestic regulations, including building codes, carbon pricing and subsidies, and government investment where required. Partnerships between public and private stakeholders will be essential to take this forward and encourage smart and scalable projects. “We will need to work together to make real progress,” she said.

Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, highlighted how international trade has helped turbocharge the global development of wind and solar power, which have in turn created huge numbers of jobs. What is important now is scaling-up green investments and accelerating the dissemination of climate technologies, she said, noting that “trade can certainly play an important role in facilitating all this.”

Strengthening international collaboration

The vital importance of stronger international collaboration in areas like technology, investment and policies – to ensure all countries can benefit from the opportunities of clean energy transitions – was the leitmotif of the Summit. And strong emphasis was placed on the need to take into account the different phases of development of different economies.

 “We call upon countries to increase mutual understanding and mutual trust and work as one,” said Zhang Jianhua, China’s Minister of Energy. “China stands ready to work with countries to strengthen policy coordination and technical cooperation.”

Raj Kumar Singh, India’s Minister of Power, New and Renewable Energy, said developing economies such as those in Africa needed not just financing but also greater allowances for emissions, given the amount of steel and cement needed for their development. “You have to give carbon space to these countries whose consumption is one-sixth the world average,” he said.

Frans Timmermans, the Executive Vice President of the European Union, responded to this by saying that industrialising countries have a “huge potential” to leapfrog straight to clean energy. “There’s no need to emit huge quantities of carbon to get to the development you want,” he said. “There are ways to do it better.” He said economies of scale had brought down the cost of wind and solar, and would do the same for hydrogen.

Putting people at the heart of transitions

Alongside the enthusiasm about the potential opportunities, many leaders at the Summit spoke about the need to provide training and find jobs for people displaced by the shift to clean energy. “There’s no doubt that jobs are a key priority in putting people at the centre of the clean energy transitions,” said Dan Jorgensen, Denmark’s Minister of Climate, Energy and Utilities. “It is essential that people affected by the transition are given a voice and are included in the dialogue. Transitions are affecting the livelihoods of workers and their families, they have concerns and maybe even fears, which should be addressed in an open dialogue.”

South Africa has ambitious plans to deploy wind and solar, said Gwede Mantashe, the country’s Minister of Mineral Resources and Energy, but he is also conscious of the social challenges. “We cannot with a strike of a pen switch off our existing plants and convert to renewables,” he said. “If we close those power stations and those coal mines, there will be more challenges in those communities.” The clean energy transition implies a journey, he said, which must take into account how to navigate these challenges.

Ministers Jorgensen and Mantashe are both members of the Global Commission on People-Centred Clean Energy Transitions, a high-level group that I convened to examine these critical issues. The Commission will provide its key recommendations as an input to COP26 in Glasgow in November.

As Mr Jorgensen stressed, “It’s about jobs, jobs and jobs, it’s as simple as that – but green jobs.”