This section covers publications written or commissioned by Allianz.
Allianz Climate and Energy Monitor
The Allianz Climate and Energy Monitor measures the need for investment for an energy transition among the world’s most important 19 countries (the G20 includes these 19 countries plus the EU), and ranks them on their attractiveness as potential destinations for investments in low-carbon electricity infrastructure.
G20 policies are insufficient for decarbonizing the power sector
- None of the G20 countries is currently taking sufficient action to combat the investment gap in the power sector, which would be necessary to be aligned to a 2ºC limit in global average temperature increase.
- The countries vary widely in terms of their investment needs and attractiveness. For instance, while China will need to attract annual investments of USD 208bn to address its investment gap, Argentina’s shortfall is estimated at USD 5bn. And while countries such as Brazil or India are just beginning to introduce policies to promote transition torenewables, the UK and Germany already have a significant policy and installation track record.
Emerging countries face a huge investment gap while the OECD countries are leaders in policy framework
- Together, the G20 countries will require roughly USD 710 billion annually in absolute investment until 2035.
- Brazil, India, Indonesia, China and South Africa will need to bridge 50% of this investment gap – having the highest investment needs – owing to their market size and development needs. This percentage increases when the overall vulnerability of their power infrastructures to the impact of climate change is taken into account.
- Most attractive in terms of investments are Germany, the United Kingdom and France due to good performance across all indicators. In the US, favorable general investment conditions and a large and ready market partially mask the generally low federal policy support.
- Notably, China has unsurprisingly high overall investment needs, but also the fourth-best investment attractiveness.
- Some of the countries with the highest investment needs – such as Brazil, India, Indonesia and South Africa – nevertheless have an insufficient investment framework and are therefore possibly unable to attract substantial private sector investment.
- In India, ambitious green policies are encumbered by generally unfavorable investment conditions. It will need a rapid translation of policy euphoria into hands-on, focused deployment in order to realize its full potential in this market.
- Being amongst the least attractive countries for investments, even countries with relatively low investment needs such as Mexico, Turkey and Argentina, still require substantial policy enhancement. These countries in particular need to level the playing field for investing in renewable energy as opposed to their massive fossil fuel sectors.
The G20 countries need to establish coherent strategies and policies to attract investments
- A coherent climate strategy is a vital element in giving investors confidence in the political commitment, but it also needs to translate into concrete and transparent policy measures that make investment in renewables attractive in comparison with fossil fuels. It also demands a favorable general macroeconomic investment climate.
- The G20 countries should further strengthen their leadership and market development role to attract investments, also by developing instruments to address specific investment risks. For example, they could allow development banks to mitigate political risks in order to increase the transparency and longevity of investments frameworks.
Trend Compendium on Climate Change - Our World and Us
Published April 2015
As part of its 125th anniversary, Allianz published the book Our World and Us to focus on issues that will have the most profound impact on our way of life in coming decades, like climate change and demographic change. In this book, we find suggestions for how to forge a global climate deal, make business greener, remove carbon from the atmosphere and completely overhaul the way we travel, live in cities and generate electrify.
Allianz Climate Solutions contributed several chapters on the publication.
Arrhenius study sees need for investment incentives for security of power supply
Published February 2015
- Lack of investments in low-carbon power plants
- The German government is planning a re-design of the electricity market
- Allianz Climate Solutions and Germanwatch see need for functional investment incentives
The phase-out of nuclear energy, the increase of renewables energies, and the market exit of unprofitable power plants may lead to bottlenecks in power supply from the year 2020 on. There is a need for new power plants, which are able to flexible react on the natural volatility of wind and solar power. The long lead time for the construction of new power plants and missing stimulus for investments today endanger the security of supply, warns a study from the arrhenius institute for climate and energy policy on commission of Allianz Climate Solutions and the environmental and development organization Germanwatch.
The study, titled "Price peaks or capacity mechanisms - what drives invemstents in new plants?", shows that additional revenue streams are needed for the necessary backup capacities in the future. Furthermore the study analyses that also renewables are not able to refinance on the electricity market but need additional remuneration as well.
"The construction of power plants has a lead time of at least five years. If we want to keep the security of supply in German on today's level, the government has to act now", says Karsten Löffler, Managing Direector of Allianz Climate Solutions.
ACS and PIK publish discussion paper on the market integration of renewable energies.
Publication February 2015
The ongoing shift to renewable energies (RE) in Germany demands a market integration with gradual bearing of market risks of RE projects. This has been and will continue to be a focal point of the debate on regulatory reforms.
Henriette Schweizerhof (Allianz Climate Solutions) and Michael Pahle (Potsdam-Institute for Climate Impact Research) analyze the risk allocation of the current situation as well as the possible risk transfer of coming reforms. Moreover, they examine how this process would be able to avoid constraining the bankability of RE projects and, in general, ensure the continued shift to RE according to the governmental targets.
The paper outlines and discusses two elements that could be at the center of it:
- First, a support framework that creates incentives for RE projects to increasingly take risks, for which we propose a cascading risk auction mechanism that prioritizes “more risky” projects.
- Second, design options for (a) “more risky” support contracts and (b) risk transfer in power purchase contracts, which if standardized could help to develop and establish suitable risk mitigation and management approaches on the side of financers.
Arrhenius study shows: energy transition lowers costs of future power generation
Publication April 2014
The German power generation will be cheaper in 2050 if the energy transition is implemented consistently, instead of focusing on conventional fuels, according to a recent study of the German Arrhenius Institute for Energy and Climate Policy. The study has been commissioned by the NGO Germanwatch and Allianz Climate Solutions.
The increasing concerns of industry and retail electricity customers that the energy transition drives costs has led to this study. Arrhenius compared two alternative scenarios for the year 2050:
- 80% of power is generated from renewable energy
- a conventional scenario, where 58% of electricity is generated by conventional power plants and 42% by renewable energy plants.
In both cases it has been assumed that the European targets for carbon emissions reductions are complied with (-80% until 2050).
The study shows: A consistent energy transition towards renewable energies is not particularly more expensive and can, under certain circumstances, even be cheaper than sticking than a scenario with over 50% power generation from fossil fuels; this result is valid under the assumption that the existing long-term climate protection targets apply for the conventional scenario, too, and that the costs of investing in wind power and photovoltaic systems actually decrease to the extent that science and industry experts today consider possible.
Allianz publishes paper on Climate Bonds
Published July 2013
Climate Bonds, also called green bonds, are considered as a promising investment vehicle to facilitate financing for low-carbon infrastructure.
In July 2013, Simone Ruiz-Vergote, Karsten Löffler, and Thomas Liesch of Allianz Climate Solutions published a paper on climate bonds. It summarizes the different types and structures of climate bonds. Furthermore, it analyses the barriers and possible approaches for an even faster growth of the market.
A series of expert interviews were conducted for this paper.
The paper has been used as chapter for the book Nachhaltige Geldanlagen (sustainable investments) of Frankfurt School Publishing in March 2014.
Allianz interviews the author of "The world in 2052?"
Jørgen Randers, one of the authors of the report "Limits to Growth", a classic environmental literature, discusses his projections for the next 40 years of life on this planet in an interview with Karsten Löffler, CFO of Allianz Climate Solutions and Greg Langley, editor-in-chief of Project M.
At age 67, Randers, professor of climate strategy at BI Norwegian Business School, remains curious. His current work, 2052, is a description of what he thinks will happen over the next 40 years. "It resembles the pollution crisis scenario from "Limits to Growth", a situation where humanity grows, GDP grows and resources are sufficient to handle growth, but emissions of greenhouse gases are so large that we reach plus two degrees centigrade in warming by 2050. By 2080, we move to three degrees centigrade, which means self-reinforcing climate change and climate crisis are a possibility in the second half of this century."
The interview will be published in the upcoming edition of the Project M Journal: "Point of no returns". The Project M Journal is a corporate, monthly appearing publication of Allianz SE and accessible online via the website www.projectm-online.com.
Hedging Climate Change Risk Report
The report shows how insurers can manage the risk of increasing natural catastrophes.