Five reasons we’re investing in clean energy

Investing in low carbon energy is already the new normal. The lower costs, resilience and environmental benefits means that it is no longer an “alternative” investment.

We have invested £1.4 billion into renewable energy infrastructure across the UK, including wind and solar farms. Clean energy generation offers stable long-term returns to secure pension payments far into the future, and by unlocking the power of pensions we can play an important role in tackling climate change.

So, we’ve invested in three offshore wind farms and into renewable energy funds that pay for new projects. And we’re backing companies developing zero carbon fusion and solar energy technology, and installing electric vehicle and low carbon heating infrastructure – our latest investment is in ground source heat pump company Kensa Group.

We're supporting clean energy businesses that already employ more than 400 skilled workers in the UK green economy, and we expect further accelerated growth in employment in the sector as the UK invests for the future post Covid-19 where tackling climate change should dominate the agenda.

John Bromley, Head of Clean Energy, says: "We are deploying our capital to accelerate the UK’s progression to a low-cost, low-carbon economy. Our clean energy investments, which include low carbon heat, transport and power generation, will play an essential part in the UK’s solution for reaching net zero carbon emissions by 2050."

1. In 2018, carbon dioxide emissions topped 55 gigatonnes

To put this into perspective, this is roughly equivalent to the weight of 302.5 million blue whales, 110 International Space Stations, 165 million Boeing 747 jets or 1.1 million Titanic ships.¹ And according to the United Nations (UN), in the last decade alone these levels have risen by 1.5% each year.

Although there is evidence to show that the release of harmful emissions into the atmosphere is slowing – in 2019 both the European Union and United States managed to cut their CO₂ output, while India’s emissions grew far more slowly than expected – emissions of planet-warming CO₂ from fossil fuels still hit a record high last year.²

2. A rise of more than 1.5°C will change our environment with severe and costly impacts on human health and prosperity

January 2020 was the warmest January since 1880,³ and as global temperatures continue to rise, we will see more extreme storms, floods and droughts, as well as the extinction of species. In the past decade 476 species have been declared extinct,⁴ and the UN says another million are at risk. This matters – because people rely on food and medicine to survive.

If we limit a global temperature rise to 1.5°C (as per the Paris Agreement) we will: see a 10cm reduction in the rise in sea levels; put the likelihood of an Arctic Ocean free of sea ice in summer at once per century rather than once per decade; and cause a decline in coral reefs of 70–90%, versus the destruction of more than 99%. This is important because billions of people live in homes that are vulnerable to flooding and increasing frequency of catastrophic weather events.

3. Global emissions must fall by 7.6% annually

“We haven’t succeeded in bending the global emission curve.” These are the words of the Technical University of Denmark’s Anne Olhoff, one of the leaders in the UN’s latest report on climate change.⁵

Fossil CO₂ emissions from energy use and industry, which dominates total greenhouse gas emissions, grew 2% in 2018 to reach a record 37.5 gigatonnes per year.⁶ To keep the global temperature rise to within 1.5°C, these emissions need to fall by 7.6% each year for the next 10 years. If we want to ‘bend the global emissions curve’ and limit temperature rise to 1.5°C, by 2030 we need to reduce the amount of CO₂ emissions by a staggering 32 gigatonnes.

4. Big societal changes are needed

The UN has said collective ambition to meet this year-on-year 7.6% target must increase more than fivefold over current levels. This means huge investment is needed in electric cars, green energy, reforestation, reduced meat consumption and a downturn in consumerism.

What’s good is that the technologies and policy knowledge to achieve this are already available.⁷ And the mindset of society is changing. In 2019, one in 40 new cars purchased were electric⁸ and between 2014 and 2019, interest in ‘veganism’ increased sevenfold.⁹

But it’s not about simply being able to and wanting to make changes. It’s about understanding the need to transform the world we live in, and starting that transformation today – not tomorrow. This is what people are now talking about and they already want to see their money being moved into action.

5. Paris Agreement won’t get us to 1.5°C target

Even if each of the original 175 nations that signed the Paris Agreement in 2016 met their individual pledges, we would still see a temperature rise of around 3.2°C this century – more than double what we’re aiming for. But most of the countries aren’t even hitting their pledges, and in 2015 the United States, which accounts for 13–14% of the world’s CO₂ emissions¹⁰ pulled out of the agreement altogether. Moreover, Iran, Iraq, Angola and Libya – large oil exporting nations – have still not ratified the agreement, while the eight countries yet to ratify account for about 4% of global greenhouse gas emissions.

As of today, 189 nations have formally endorsed the Paris Agreement.¹¹ But these nations need to go further, faster.

At Legal & General we recognise that we are in a climate change crisis. Thankfully, we can – and will continue to – use our scale and influence to invest in clean energy solutions that will power a sustainable and long-term future for our customers, wider society and generations to come.