The Greek philosopher, Heraclitus once said: "change is the only constant in life." Proof of this can be seen all throughout history. As the times change man has had to adapt time and time again to changes in infrastructure and technology; men have had to align themselves with those who share similar beliefs and wage war against those who'd impose theirs. Mankind has faced countless trials in our efforts to survive on this world and today we are facing yet another change. No longer is it a struggle to survive. Today man must preserve what has already been accomplished and build upon
From the naïve eyes of a recent college graduate stepping into this world this may seem like a daunting task for his generation to face, but in fact the solutions are all around us. Sustainable farming methods, irrigation systems, and now renewable energy sources are well-known throughout the world.
Swiss Re recently held an event where selected speakers were invited to speak to clients and employees alike on sustainable energy solutions in order to engage minds and begin a dialogue.
Peter Davidson of Aligned Intermediary began the conversation speaking on the current challenges and trends of investing in renewable energy. With the exception of a small anomaly between the years 2011 and 2013, investment in clean energy has been increasing rapidly. Accounting for all asset classes Davidson reported that in 2015 USD 329 billion was invested into clean energy, compared to USD 88 billion that was invested just a decade ago. Around the world countries have acknowledged that climate change is a pressing priority. 195 countries signed the Paris Agreement in December 2015 and have pledged to increase ambitions pursuing cleaner energy solutions and reducing their carbon footprint. USD 12.1 trillion of investments in renewable electric power generation is needed to limit climate change to two degrees Celsius. One striking point Davidson shared with the audience was that this goal is already in a critical state. The delta of two degrees Celsius has already been surpassed and efforts must now be ramped up just to maintain the climates current posture. While costs for building and maintaining renewable energy sources like wind plants have dramatically decreased over the years the uncertainty of projected revenues still remains a problem for interested investors. The issue of weather resource is being recognized as one of the most volatile factors present when we speak of this risk.
This is why Swiss Re is working to produce parametric solutions that will fall into the favors of these investors. Not only will this be a new venture for the company, but it will increase the confidence that investors carry into assuming this risk. The research mapping the availability of weather resource will allow us to tailor a model that will attempt to predict changes in weather parameters that may adversely affect renewable energy power generation that depend on variables such as wind and rainfall. Pushing this product will not only differentiate Swiss Re from its competitors but will also come with added value to clients. Publicly available data used to measure weather resource (and lack thereof) will allow Swiss Re to pay out claims rapidly, keeping investors confident and owners in business. It would seem that the stage is set for a major change in the way the world allocates its limited resources, yet even with all of these incentives investment from the private sector comes nowhere close to its full potential.
Thomas Heller and Uday Varadarajan of the Climate Policy Initiative outlined this as a considerable challenge facing innovation in better energy sources. Institutional investors are well poised to infuse their funds into the renewable energy markets, but obstacles such as solvency, capital limitations, and multifarious obligations limit the ability for explicit investments. Heller briefly makes a point that between investment managers, pension funds, insurance companies and other institutional investors there is roughly USD 85.7 trillion of investment capital. But because of these obstacles- these constraints, that number dwindles down to roughly USD 257 billion. The goal of liquidity and projects of large-scale has the potential to see fruition only if confidence can be assured.
Through emerging products such as parametric solutions Swiss Re hopes to encourage new ventures into the renewable energy space by assuring our clients that should the outcomes be adverse, Swiss Re will be there to indemnify them. Every day the masses demand more and more, but what we actually need is not more, but better. Better ways of exploiting renewable energy sources in the name of sustainability. It is with innovations such as this that Swiss Re truly hopes to be on the forefront of building a resilient community and a sustainable future.
The presentations given by our speakers are now available on our event website. Select the "Speakers & Presentations" tab, and click on related documents under the speaker's name.
Category: Climate/natural disasters: Climate change, Sustainable energy: Solar, Wind
Location: New York, NY, United States