Derisking Decarbonization: Making Green Energy Investments Blue Chip


Publish Date:
October 27, 2017
  • Dan Reicher, Jeff Brown, David Fedor, Jeremy Carl, Alicia Seiger, Jeffrey Ball & Gireesh Shrimali, Derisking Decarbonization: Making Green Energy Investments Blue Chip, Stanford Steyer-Taylor Center for Energy Policy and Finance & Stanford Precourt Institute for Energy & Hoover Institution, October 27, 2017.
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From the Introduction:

This framing paper for the launch of the Stanford Clean Energy Finance Initiative considers the challenge and opportunity of dramatically scaling up global investment in clean energy deployment. Simply put, the International Energy Agency (IEA) reports that we are currently investing globally roughly one-third of the private and public funds necessary to have a shot at staying within the 2 degrees Centigrade warming threshold that could help avoid the most severe impacts of climate change. This paper takes a look through an “investor lens” at the risks that stand in the way of adding tens of trillions of dollars globally over the next 25 years to the current clean energy investment trajectory.

The audience for the paper is broad given the important areas of technology, policy, and finance that undergird clean energy deployment. The finance community looms large in how we analyze investment risk and consider solutions. Policymakers are also important given the impact that policy at all levels has on investment flows and deal-making.

The framing paper focuses globally but pays particular attention to clean energy investment risks in the top three carbon-emitting nations — the U.S., China and India — with the largest focus on the U.S. It takes a broad look technologically across the entire clean energy spectrum including energy efficiency, the full range of renewables, nuclear power, carbon capture and storage (CCS), natural gas, cogeneration, as well as key enabling technologies including transmission, storage, and demand response.

The paper was written by a team assembled from two Stanford energy groups: the Steyer-Taylor Center for Energy Policy and Finance (STC) and the Hoover Institution (“Hoover”). STC is a joint center of the Stanford law and business schools that “explores and develops economically sensible policy and finance solutions that advance cleaner, more secure energy.” Hoover is a “public policy think tank promoting the principles of individual, economic, and political freedom.” The groups have collaborated before and given their sometimes differing substantive and political takes on energy issues we believe joint efforts yield a more pragmatic and balanced outcome. Dan Reicher (STC), Jeff Brown (STC) and David Fedor (Hoover) are the paper’s principal authors, with contributions from Jeremy Carl (Hoover), Alicia Seiger (STC), Jeff Ball (STC), and Gireesh Shrimali (STC).

The framing paper complements eight “solutions papers” that address specific aspects of investment risks. Together these analyses support the November 1, 2017, Stanford Clean Energy Finance Forum. This paper was funded by a gift from Bank of America Merrill Lynch to the Stanford Precourt Institute for Energy. The gift provides Stanford with full independence to conduct the research, draw conclusions and write this report.