Why Climate Finance Is Measuring the Wrong Thing |
An aerial view of a dollar sign on top of a forest. International climate finance often measures clean energy projects by installed capacity rather than the electricity they ultimately generate or the emissions they displace. (Shutterstock/Ruslan Lytvyn)
Why Climate Finance Is Measuring the Wrong Thing
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The Bonn climate change conference offers an opportunity to shift international climate finance toward measuring outcomes instead of installed capacity.
Every few months, a new record is announced. More gigawatts of renewable capacity installed than the year before, more countries with net-zero targets, and more finance mobilized for the clean energy transition. These are genuine achievements, and they are worth marking. They are also taken on their own, an incomplete account of what the transition is actually delivering. Gigawatts measure what has been built. They do not measure what has been generated, what carbon has been displaced, or whether the electricity is available when people need it. That gap between what is announced and what is delivered has been sitting inside the international climate framework for years, largely unaddressed.
Installed Capacity Is a Poor Measure of Climate Progress
Installed capacity measures what has been built. It does not measure what has been delivered. A wind farm rated at 1,000 megawatts, running at a global average capacity factor of around 28 percent, generates roughly 2,450 gigawatt-hours of electricity in a year. A nuclear plant of the same nameplate rating, at a typical 85 percent capacity factor, generates over 7,400 gigawatt-hours: three times as much electricity, from the same headline figure. The International Energy Agency(IEA) has noted for years that renewable capacity growth has consistently outpaced actual generation growth and emissions displacement, for exactly this reason. Curtailment adds another layer:........