Call for renewable energy gains momentum, even amid pandemicMay 12, 2021By Chris MaddenPortfolio Manager, Calvert Research and ManagementWashington - Companies directly involved in energy solutions had a strong 2020, even as the world faced a pandemic that dealt severe blows to supply chains and manufacturing, not to mention its devastating impact on public health. During the crisis, climate change took on new emphasis with investors, businesses and governments — as well as the public — in light of shifts in pollution and weather patterns.In 2020, countries installed more than 260GW of renewable energy capacity — a new record and an increase of nearly 50% from 2019 installations, according to a report from the International Renewable Energy Agency (IRENA).1 The U.S. installed 29GW of renewables, nearly 80% more than in 2019, including 15GW of solar and around 14GW of wind, according to the report. Further, more than 80% of all new electricity capacity added globally last year was renewable.2Source: International Renewable Energy Agency, March 31, 2021, "Renewable Capacity Highlights."In 2021, supply chains are recovering and economies reopening. China, the world's largest producer of solar panels, has largely dealt effectively with the crisis. Solar companies continue to be some of the best-performing companies in the global economy. Wind energy has started to perform at prepandemic levels, as the more complex and regionally diversified supply chain impacts subside. Renewable energy momentumRenewable energy, as a creator of jobs, appears to be a prime candidate for ongoing government support and stimulus spending. The U.S. reentered the Paris Agreement, and a focus on infrastructure and energy efficiency are key goals of President Biden's "Build Back Better" initiative. In terms of the overall U.S. energy mix, coal has become a smaller source and renewables are starting to compete more heavily with natural gas.In Asia, South Korea, Japan and China have all made commitments to achieve net-zero carbon emissions, with China targeting to reach carbon neutrality by 2060. To achieve that goal, the country will need to cut its reliance on coal from approximately 60% of power generation to 2%-3%. As a result, solar power production is projected to double in China over the next five years.3Europe, led by Germany, continues to be at the forefront of the transition to a zero-carbon global economy. Renewables produced 38% of the European Union's electricity in 2020, up from 34% in 2019. That was just enough to surpass fossil-powered generation for the first time, which dropped to 37%.4The RE100: Business backing renewablesClimate action by companies is another driver of the transition to a zero-carbon economy. The Renewable Energy 100 (RE100) is a global corporate initiative whereby businesses commit to 100% renewable electricity use, and now has over 300 members.In fact, we are beginning to see market imbalances, with a shortage of renewable energy supply available to meet corporate demand. We believe this trend will increase in the short term, with demand outstripping supply for some time. The transportation system is another key marker for the energy market. Prior to COVID-19, electric vehicle (EV) production was on the rise, including models and brands at every price point. EVs held up surprisingly well during the pandemic and we expect they will capture substantial market share over the next few years, supported by government action. The EU, for example, has a number of incentives and penalties in place that encourage reduction in automotive emissions and the U.S. has allowed California to once again create its own standards. Strategies for climate mitigationOur strategies aimed at global energy solutions seek to invest in innovative companies working to mitigate climate change and advance the transition to a broader spectrum of direct-energy suppliers, including utilities, solar and wind. We also think that companies developing energy-efficient technologies or who are leaders in reducing their carbon footprints have pivotal roles to play in this transition.Bottom line: On a clear growth trajectory, the transition to a cleaner global energy system has strong support across governments, businesses and the public sector. Our global energy-solution strategies are positioned to both advance and benefit from this long-term trend.1. International Renewable Energy Agency, April 5, 2021, press release: "World Adds Record New Renewable Energy Capacity in 2020."2. Ibid.3. BCG, December 14, 2020, "How China Can Achieve Carbon Neutrality by 2060," by Baiping Chen and Lars Faeste, et. al.4. Bloomberg Green, January 24, 2021, "Renewables Beat Fossil Fuels in EU for First Time Last Year," by Will Mathis.