Swiss Re highlights impact of insurance industry on clean energy investments
- 22 January 2013
LONDON: Swiss Re’s report published this week, entitled Building a sustainable energy future: risks and opportunities, highlights the key role insurers can play in facilitating the uptake of low carbon energy technologies.
Six scenarios for the development of our global energy mix are analyzed in the report, based on drivers such as technology development, public perception, market forces and policy frameworks.
“The study clearly shows that renewable energy will play an important role in the global power mix of the future”, says Andreas Spiegel, Head of Sustainability & Political Risk at Swiss Re and author of the report.
Role of insurers
Major investments will be required to meet expected new demand. Depending on scenario, the report predicts capital expenditures for biofuels, wind power and CCS alone to increase 3- to 10-fold by 2030.
Insurers can play a major role in mitigating the risks associated with investments in newer and less mature technologies.
"Insurers should support the further development of low carbon-intensive power production," says Agostino Galvagni, CEO Swiss Re Corporate Solutions. "They need to be innovative and provide solutions along the whole value chain. For example, insurers can enable project financing through construction insurance and reduce cash flow volatility of intermittent energy production through weather risk transfer solutions."
The report argues for stronger collaboration between energy providers and the insurance sectors -- such as the European Wind Turbine Committee, which is initiated by Swiss Re -- to work with turbine manufacturers, project developers, plants owners and operators, lenders and engineers, to support the development of innovative insurance products tailored to their needs.
Also highlighted in the report is the importance of ambitious policy frameworks to adequately address the immense societal risks associated with lagging climate action.
“To drive low carbon solutions to their full potential, innovative approaches are needed not only in the technologies themselves, but also in the enabling structures such as financing and insurance products as well as policy frameworks”, says Mark Kenber, CEO of The Climate Group.
“The report outlines the challenges involved – with even the most positive scenario not enough yet to keep us within the 2°C threshold for global temperature rise – but it also points to the solutions that can help us more rapidly scale the solutions we already have.”
Read the Swiss Re report