Low rates provide a historic opportunity to tackle climate change. Tackling the climate crisis will require the world’s largest ever peacetime investment. Historically low interest rates mean there has never been a better time to make it. Interest rates affect the entire economy, but are particularly important for renewables because the cost of borrowing has an outsized influence on their competitiveness. Fuel costs are essentially zero for green power — sun, wind and water are free. That means capital expenditure is the biggest component of the average cost of producing renewable electricity. In other words, renewables’ costs tend to be front-loaded, requiring upfront borrowing, and they deliver savings over time. The same is true of many technologies we need to reduce global emissions. It costs more to build well-insulated houses, but less to run them. It is just the same for efficient appliances and electric vehicles.
FT 26th Dec 2019 read more »