A report drawn up by WWF argues that in an ever-growing variety of sectors, the green economy is developing and starting to take over the fossil based economy.
The report “10 Signals: Evidence the Green Economy is Underway” shows that the green economy is creating more jobs, offering more investment opportunities, providing an alternative to stranded assets, and leading the way to a long-lasting development in which first movers will reap the benefits of this new prosperity.
Many market signals, the report says, show that the fossil fuel industry is experiencing the aftermath of COP21. While energy demand worldwide is still on the rise, the only major energy sources that show signs of decline are conventional oil and coal.
The beginning of the end of fossils
Discoveries of new conventional oil reserves hit a record low in 2017. The coal sector is facing eroding profitability too. About half of all US coal is owned by companies that have declared bankruptcy. China has cancelled plans for 151 coal plants in 2017, and 40% of its coal power stations are already losing money. While the fossil fuel sector provided jobs for 30 million people globally in 2017, it is set to lose 8.6 million jobs by 2050.
Green economy sectors are overtaking fossil fuel driven sectors
In stocks, the green economy sectors are now comparable to the Oil & Gas ones, both amounting to US$4 trillion in market capitalization. In flows, there is a stark contrast, with green economy’s share as a proportion of the total market in steady rise and the fossil fuel sector on the decline. Investments reveal the same trend: approximately US$280 billion was invested in new renewable energy generation in 2017, continuing a six-year trend of exceeding global fossil fuel generation investments.
Green sectors are creating more jobs.
In the United States, 1$ invested in clean energy creates three times more jobs than 1$ invested in the fossil sector. In the European Union, the growth rate of green jobs proved to be seven times higher than that of the rest of the economy from 2000 and 2015.
The level of public subsidies to fossil fuel has been reduced.
In 2016, the subsidies gap was considerably reduced, demonstrating a priority shift in public policies’ orientation. By that time, fossil fuel subsidies had been divided by more than two, at US$270 billion, while support for renewables was steadily rising to US$160 billion.
Finance is going greener as more and investors take climate change into account and see it as an opportunity.
A growing number of financial actors are realising that the foundations of their business models rely on a stable climate.Investors are aware that the road to a low-carbon economy also spurs the emergence of new markets. HSBC’s State of the Market report identified in 2017 US$895 billion of ‘climate-aligned bonds’ financing low carbon and climate resilient assets or projects. This is an increase of US$201 billion in climate-aligned bonds since 2016. The IFC estimates that the nationally determined contributions of 21 emerging market economies alone represent US$23 trillion by 2030 in investment opportunities
Renewable energy is soaring at an unprecedented rate.
The rapid growth in renewables has systematically outpaced the predictions of the IEA. The development of photovoltaics appears to be systematically underrated, as the price of solar electricity decreased 8-fold in 9 years. In Germany for instance, renewables are already cheaper than fossils.
By 2040, intermittent renewables (solar and wind) could reach 45% of the global power mix capacity, with other zerocarbon power sources representing about 35%, and unabated fossil fuels the remaining 20%. This is partly due to increasing investments (wind & solar attract 73% of total electricity investments) and to the dramatic fall in the price of batteries, as the cost of storage per kilowatt dropped by 70% between 2010 and 2016. As a result, the industry created more than 500 000 new jobs globally in 2017, with the total number of people employed in renewables surpassing 10 million for the first time according to the IEA.
Realising the development potential of the circular economy
Studies show that a 30% improvement of resource productivity by 2030 could create over 2 million jobs, while every percentage point reduction in resource use leads to 100 000-200 000 new jobs. Some sectors are already taking advantage of the business opportunities of protecting the planet. In the cement industry, for instance, the share of fossil wastes and biomass has gone from almost nothing in 1990 to 28% and 14.8%, respectively, in 2015.
Other key signals the report highlights are that:
Science based targets are set to become the new normal for companies.
Electric vehicle sales are booming
Sustainable agriculture is outperforming conventional agriculture in critical aspects.