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Divesting from fossil fuels and investing in renewables: is it the trend?, por Larissa Basso

O crescimento dos investimentos em energia renovável é uma tendência irreversível?

Headlines reporting divestments from fossil fuels have become common. Having started in 2011 in the United States, the movement to get institutions and individuals to divest from fossil fuels is now global. Universities, pressed by groups of students, have been in the forefront; last July, over 100 foundations and trusts with assets worth at least USD5 billion have joined (RTCC, 2015); last August, the Norges Bank Investment Management – the group that manages the Norwegian sovereign fund, formed by the resources obtained from selling Norwegian oil – excluded several fossil fuel producers from their investment portfolio, arguing risks of severe environmental damages from their activities (NBIM, 2015). It seems that the trend is here to stay, and that divesting from fossil fuels would push investments in renewables. But is it so?

True, investments in renewables have been rising. Between 2004 and 2014, the annual amount invested in renewables globally went from USD45 billion to USD270 billion; the total amount invested in 2014 was 17% higher than the amount invested in 2013 (FS-UNEP, 2015, p. 79). The global installed capacity of wind and solar photovoltaic power increased around 95GW in 2014 (FS-UNEP, 2015, p. 11). Investments in renewable energy or enhanced improvements regarding it are uneven around the globe, but they are spreading. The gap between investments in renewables in developed and developing countries is closing: USD138.9 billion in the first group in 2014, up 3% compared to 2013, and USD131.3 billion in the latter group in 2014, up 36% compared to 2013 (FS-UNEP, 2015, p. 11). Renewables are expanding in new markets: in 2014, at least USD1 billion were invested in renewable energy in Indonesia, Chile, Mexico, Kenya and South Africa (each), and between USD500 million and USD1 billion in Jordan, Uruguay, Panama, Philippines and Myanmar (FS-UNEP, 2015, p. 11; 79).

Policy mechanisms in support of renewables have also been spreading. In the beginning of 2015, 164 countries had adopted targets for renewable energy deployment, a 14% increase compared to 2014, when this was the case for 144 countries (FS-UNEP, 2015, p. 87). Targets were enacted for the first time in 2014 by Nicaragua, Bolivia and Singapore (FS-UNEP, 2015, p. 87). Policy mechanisms, national or subnational, in support of those targets are also disseminating: in early 2015 they could be found in 145 countries, up from 138 countries in 2014 and only 15 in 2005 (FS-UNEP, p. 87). Policy mechanisms can be as different as direct regulation; regulated change in supply and demand of energy; economic and fiscal incentives to promote energy efficiency or renewables; carbon pricing; policies and actions to unlock high-emissions assets – e.g. through retirement of inefficiency fossil fuel plants, change dispatch of the existing power generation fleet, retrofit in fossil fuel plants to increase efficiency or promote carbon capture and storage, biomass co-firing or conversion (IEA, 2014a, p. 09). Feed-in tariffs are the most popular renewable energy regulatory support policy worldwide: as of early 2015, they were in place in 73 countries at the national level (FS-UNEP, 2015, p. 88). Emissions trading systems have improved in places where they already existed; have flourished in new ones (China – different provinces, Northeast United States, Quebec, Kazakhstan, Switzerland, New Zealand, Tokyo) and are being considered in others (Japan – national level, South Korea, China – national level, Turkey, Thailand, Chile) (IEA, 2014a, p. 10-11).

Nevertheless, when these advances are put side by side with developments regarding fossil fuels, it becomes clear that, although they are an important step towards a global low carbon economy, the world is still very dependent on fossil fuels, and this dependence is deepening.

Investments in fossil fuels remain dominant and have been increasing sharply. The annual amount invested in oil, gas and coal has more than doubled in real terms between 2000 and 2013 (IEA, 2014b, p. 51); over USD950 billion were spent in extracting fossil fuels, transporting them, refining/transforming or constructing fossil fuel power plants in 2013 (IEA, 2014b, p. 11; 20; 51) – more than three times the amount invested in renewables. World oil production increased 4,59% between 2006 and 2013 (3936 million tons in 2006 and 4117 million tons in 2013); natural gas production increased 16,86% (2977 billion cubic meters in 2006 and 3479 billion cubic meters in 2013); coal – the least expensive among the three to exploit, and the most intensive in carbon emissions and other environmental and social impacts – production increased 45,68% in the period (5370 million tons in 2006 and 7823 million tons in 2013) (IEA, 2007; IEA, 2014). Fossil fuels still provide, by far, the largest share of world Total Primary Energy Supply (TPES): coal, oil and gas answered for 81.72% of global TPES in 2012 (IEA, 2014c), from 81% in 2005 (IEA, 2007).

Fossil fuel subsidies – government action that artificially lowers the cost of producing or the price of consuming fossil fuels – totaled USD550 billion in 2013, four times more than those to renewable energy (IEA, 2014d, p. 04). Fossil fuel subsidies are holding back investment in renewables (IEA, 2014d, p. 04). In fact, the impact of fossil fuels subsidies in renewable energy development is multifold; first, by artificially reducing the price of fossil fuels, they impair the relative cost competitiveness of renewable energy; second, their artificially lower price create a barrier for renewable energy entrants, which could exploit different technology alternatives; third, subsidies create a stable market for fossil fuels, enhancing the attractiveness of fossil fuel industries and technologies and undermining investments in (comparatively) risky renewable alternatives (IISD, 2014).[1] There is a global movement that pledges phasing-out fossil fuel subsidies; since 2010, the G20 has included the topic in its Summits and Declarations. But, as the data shows, concrete results have been almost insignificant to date.

In summary, even if divesting from fossil fuels might have become a trend and start to occupy headlines, the trend still lacks real force compared to fossil fuels. Investments in fossil fuels remain strong as ever, and global dependence on them has never been greater. There is an emerging global low carbon economy, based in developments regarding renewable energy and energy efficiency, and it might get stronger along the 21st Century – especially if current environmental and social externalities from the use of fossil fuels start to be internationally priced. Given the messy picture regarding future commitments on energy decarbonization in the climate regime and other international arenas, however, it is too early to affirm that this prediction is certain.


FS-UNEP (2015): Renewables Global Status Report 2015. Available at <;, access 20 Jul 2015.

IEA (2014a): Energy, climate change and environment, 2014 insights. Available at <;, access 20 Jul 2015.

IEA (2014b): World energy investment outlook special report. Available at <;, access 30 Aug 2015.

IEA (2014c): Key World Energy Statistics 2014. Available at <;, access 01 May 2015.

IEA (2014d): World energy outlook report. Available at <;, access 20 Jul 2015.

NBIM (2015): Norges Bank Investment Management – Exclusion of Companies, list. Available at <;, access 09 Sep 2015.

RTCC (2015): Divestment campaign swells as 100 trusts worth $5bn sign up. Available at: <ttp://>, access 09 Sep 2015.

Larissa Basso is a PhD Candidate at the Institute of International Relations of University of Brasília and member of the International System at the Anthropocene and Climate Change Research Network. Contact: <>

[1] The argument in the source is made to electricity, but there is no reason why it cannot be applied to fuels as well.

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