- Category: Business
23 Jan 2013
- Published on Wednesday, 23 January 2013 09:55
- Hits (4482)
Insurers have a key role to play in accelerating investments in low carbon technologies, suggested a new report by Swiss Re.
Using six climate change scenarios, the report found that the global energy sector is confronted with a sharp increase in future losses due to higher investments in newer and less mature technologies, including renewables.
This is where insurers come in, offloading some of the risks of clean technology investments through protection against losses and risk management expertise. It builds a strong case for sustainable energy projects, noted the report.
“As renewable energy and energy efficiency projects increase in complexity and scale, so do their eco-nomic stakes and their risks. Helping the energy industry minimize risks to unlock the potential of best-practice technologies is therefore a critical step on the long road towards a less carbon-intensive future,” it further stated.
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By 2030, expected losses annually will be at least 25 percent higher than today’s $25.6 billion. In the “greenest scenario,” this could reach more than double to $41.7 billion.
Agostino Galvagni, chief executive officer of Swiss Re Corporate Solutions said insurers should support the further development of low-carbon power generation, and need to be innovative and provide solutions along the whole value chain.
For example, they can enable project financing through construction insurance and reduce cash flow volatility of intermittent energy production using weather risk transfer solutions.
In addition, collaboration between the insurance and energy industries can help improve risk management expertise and develop new insurance products which will facilitate the kind of risk-taking necessary to growth and innovation in the renewable energy sector.
According to scenarios presented in the report, the Asia-Pacific region will contribute most growth in the energy sector and is anticipated to account for half of the overall global energy financing by 2030.
Hence, insurers will also see business opportunities in the energy sector in this region.
The report, Building a Sustainable Energy Future, highlighted the link between decisions on the global energy mix and their consequences to how we mitigate and adapt to global climate change. It examined how clean energy technologies, shifts in public perception, market forces and policies set by global and national decision-makers will influence the way we energize society in the future.
“This study clearly shows that renewable energy will play an important role in the global power mix of the future," said Andreas Spiegel, Head of Sustainability & Political Risk at Swiss Re and author of the report.
“At the same time it shows that adaptation to climate change will increase in importance because the window of opportunity for mitigating climate change is getting much narrower.” – C. Dominguez