Carbon prices at sufficiently high levels can push firms to internalise the costs of greenhouse gas emissions while providing a long-term price signal to drive investments needed for decarbonisation. Emission trading systems and carbon taxes feature in a growing number of climate strategies, but even the most well-designed instruments must be accompanied by other policy measures if emissions reductions goals are to be reached
The share of hydroelectric power in electricity generation is set to decrease as solar and wind come to dominate. Yet, hydropower has a crucial role to play in providing flexibility and storage for grids increasingly running on variable renewable energy resources
Venture capitalists are putting record amounts of money into climate tech, drawn by the opportunity to make money while fostering the innovation needed for decarbonisation. Digitalisation remains a focus, but investors are increasingly looking to tap into asset-heavy investment opportunities that are crucial to the energy transition
The expansion of distributed energy resources has precipitated the rise of advanced software platforms to manage them. Virtual power plants and distributed energy resource management systems can help integrate renewables and low-carbon assets more smoothly while allowing value from the flexibility that resources like rooftop solar, battery storage, electric vehicles and heat pumps can also provide to be extracted
Time-stamped certificates would allow customers to know where their power is coming from at any given time and could provide another signal for investors by driving up prices for green energy certificates when supply is short. Regulators are taking steps to ensure that consumers signing up for green tariffs are really helping to progress the energy transition
Offsetting emissions is fraught with problems and critics fear these programmes could distract from the real goal of keeping fossil fuels in the ground
Small businesses face a hard time decarbonising due to financial constraints, a lack of expertise and time, and technological hurdles. The rise of new business and financing models, plus a helping hand from larger companies, are helping them on the path to carbon neutrality
As economic activity declined under the pandemic so did demand for electricity. Fossil fuel generation was squeezed off the grid by renewable energy projects with lower marginal costs. Fears that the higher proportion of fluctuating supply would destabilise power systems proved unfounded and grids remained stable. If renewables are to be tasked with keeping the grid secure, alternative mechanisms, already available, must be introduced soon
The concept of transition bonds began as an idea to sell bonds that were difficult to market as green bonds, mainly natural gas bonds, but has evolved into an opportunity to accelerate decarbonisation efforts
Consumers will become more active market players as the amount of renewable energy in the grids increases, providing, for a fee, greater flexibility for power systems and increasing decarbonisation
Placing wind and solar photovoltaic facilities on the same site may sound attractive in theory, but the reality is more complicated and many experts suggest this will only make sense in a limited number of cases