Climate Action: Making the Next Decade Count
Carolina Angarita
Carolina Angarita
Senior Investment Analyst

In October 2018 the Intergovernmental Panel on Climate Change (IPCC) – the UN body dedicated to providing an objective, scientific view of climate change – issued a sobering report highlighting the difference between 1.5°C and 2°C of global warming. Both scenarios painted a bleak picture of what would occur under increasingly warm conditions. Only under the 1.5°C scenario could human life continue relatively unaltered. An increase of 2°C would have greater consequences including the irreversible loss of marine ecosystems and ice-free summers every 10 years in the Artic. The former would lead to a series of cascading effects, endangering the viability of other species in the food web, while the latter would result in a significant sea level rise affecting millions of people in coastal areas.

The report also found that the global temperature has already increased by 1°C, and higher again in places like the Arctic. The effects of this rise in temperature are evident in the erratic weather patterns we are experiencing, for example, extreme weather events occurring in two places at once (e.g. last summer’s Hurricane Florence and Typhoon Mangkhut). As the earth’s atmosphere holds more moisture as temperatures rise, this causes heavier rain at the same time as rising sea levels, making storm surges increasingly likely.

The IPCC report, to which thousands of climate experts from around the world contributed, sent a clear message: we must reduce carbon emissions by 45% by 2030 and completely decarbonise the world economy by 2050, if we are to limit temperature rises to 1.5°C.

The Race to 2030 Goals
The report triggered public reaction around the globe, from governments searching for new ways to support the transition to a low-carbon economy, to children taking to the streets demanding more action on climate change and safeguarding their future. In the US, a proposed Green New Deal (alluding to ex-President Franklin D. Roosevelt’s New Deal that lifted America out of the Great Depression) sets out an economic stimulus programme which would commit the US economy to renewable energy and resource efficiency, while supporting social goals including job creation, reducing energy poverty and improving air quality. Job creation, as proposed in the Green New Deal, is already underway in the US – solar panel installers and wind turbine technicians are recording around 100% annual growth, making them the two fastest growing jobs in America.

While an ambitious plan like the Green New Deal may never materialise with a Republican government in place, it reflects a wider movement towards more urgent climate action worldwide. China, for example, pledged in 2017 to invest $360 bn in renewable power generation by 2020. The enthusiasm of some Governments to meet 2030 carbon reduction targets shouldn’t come as a surprise. A recent report by Cambridge Econometrics and Eurofound’s European Jobs Monitor found that the transition to a low carbon economy is positive for the EU as a whole. Over the next 11 years, the transition is expected to lead to 1.1% growth in GDP and 0.5% growth in employment, with some countries benefiting more than others. EU member states will benefit from investment in energy efficiency and renewable power generation, as well as lower fossil fuel prices and fossil fuel demand.

Ireland’s Greenhouse Gas Emissions By Sector in 2017

Sector
Agriculture 33%
Transport 19.8%
Energy Industries 19%
Residential 9.5%
Manufacturing Combustion 7.7%
Industrial Processes 3.7%
Flourinated Gases (used in freezers, air conditioning, aerosols etc) 2%
Commercial Services 1.8%
Waste 1.5%
Public Services 1.5%

Source: Environmental Protection Agency, Ireland

There is significant potential in Ireland for the renewable energy market. High wind speeds and good sea conditions off the east coast mean that Ireland has enormous potential for off-shore wind generation. It has been suggested that the generation and export of this vast source of renewable energy (estimates being prepared right now value this in the region of 15-25 GW) to other countries would more than offset the carbon footprint of the agricultural sector, the largest contributor to Ireland’s carbon emissions (33.3%). It is admittedly taking longer for Ireland to tap into this valuable resource due to a lack of coherent policy and regulatory framework that would attract investment in offshore wind.

Achieving ambitious climate goals is arguably no longer an issue of funding, with governments and other public bodies committing increasing resources to climate action. However, conditions need to be created which build confidence and unlock the private capital needed to decarbonise the economy.

Ireland is ranked 26 out of 28 EU countries in terms of progress on meeting 2020 renewable energy targets – developing policies and a regulatory environment that support investment in green projects and mitigate risk needs to be a priority in Ireland. As the Irish Government prepares to invest the proceeds of the €3 bn raised by the first green bond last year, this should provide the impetus for policy certainty and transparency that will enable us to seize the opportunities for energy transition.

To speak with a Portfolio Manager or Account Executive today, phone the Cantor Fitzgerald dealing desk on 01 633 3633.