Currently, the “who’s who” of the energy transition scene is gathering at the Berlin Energy Transition Dialogue. The central question of the event revolves around what is necessary to accelerate the transition to renewable energy. Avinash Persaud is also grappling with this question. In today’s interview, the architect of the Bridgetown Initiative for fair climate financing explains the challenges faced by heavily indebted countries in the energy transition, the investment risks that wealthy countries should mitigate and how to mobilize trillions for climate financing.
Even with a successful energy transition, there are still challenges to address – such as the recycling of rotor blades from wind turbines. Sarah Kröger analyzes various solutions and explains why microplastics generated by wind turbines, contrary to current reports, may not pose a significant problem.
Mr. Persaud, 2024 is said to be the year of climate finance. The Bridgetown Initiative, which you co-designed as Barbados’ climate special envoy alongside Prime Minister Mia Mottley, could play a crucial role. What has been achieved so far?
The Bridgetown Initiative has played a pivotal role in advancing the climate agenda. It has made it clear: The climate crisis is a financing problem. Financing mitigation and resilience efforts in developing countries is much costlier than in industrialized nations. It also underscores that emissions reduction, adaptation and “loss and damage” require distinct financing approaches.
Could you elaborate on that?
Emissions reduction generates revenue. Solar parks, wind turbines, geothermal energy – all these generate income. Thus, the private sector could be engaged in climate mitigation efforts. This works in industrialized countries but not in developing ones. Adaptation to climate change can also save money – for example, building a dam with a loan to prevent future damage. However, it’s different with losses and damages: You can’t borrow money to rebuild poor people’s destroyed homes. Hence, a fund was established, with an initial capital injection of 800 million dollars. However, it needs to be a hundred times larger. 2023 was a significant year, but it’s just the beginning. We need to accelerate progress and implementation in 2024.
What role do multilateral development banks, the International Monetary Fund (IMF) and the World Bank under its new President Ajay Banga play in this?
The central role of multilateral development banks is to provide loans for large-scale public infrastructure projects like adaptation measures, dams, flood protection and improved drainage systems, costing billions. They need to increase lending for climate finance purposes, offering long-term, low-cost loans. They’ve stepped up efforts in the past year. The World Bank has revamped its strategy, placing climate alongside poverty reduction and growth at its core. By reducing its equity requirement, it has increased its lending capacity by about 50 billion dollars. Discussions are underway regarding expanding portfolio guarantees and utilizing Special Drawing Rights at the IMF. Collectively, these measures could increase climate lending by 200 billion dollars. We’ve established some damage funds, with one trillion in new capital.
Will that be enough?
It has become clear that climate change is an uninsurable event. This poses a real problem, especially for our European friends: They have the world’s largest reinsurers who sought to address climate change through more insurance. However, insurance only works if the risk doesn’t increase in correlation, extent and frequency.
What do you propose instead?
The alternative is the conditional suspension of interest and principal payments and our natural disaster clause, allowing a country to defer payment obligations for two years in the event of a natural disaster. The World Bank has announced its intention to incorporate these clauses into its bonds and loans. This is crucial for countries to buy time. However, the most critical area needing reform, but where none is seen, is the financial markets.
What needs to change?
We need to reform the system that defines things as safe or risky. South Africa emits many greenhouse gases because much of its electricity comes from coal. Switching to non-fossil electricity generation costs about 100 billion dollars. When a German investor invests in South African solar parks, they wonder: How much do I need to pay to eliminate exchange rate risk if the South African rand depreciates against me? The market price for such protection is around eleven to twelve percent per year. So, the project needs to generate eleven to twelve percent more annually than the same project in Germany. In reality, the rand depreciates by an average of only six percent per year. So, you’re paying five or six percent too much. The private sector doesn’t want to take on this risk.
How can this risk be eliminated?
The public sector needs to step in and reduce the costs of hedging exchange rate risk. Thus, it needs to charge for the actual risk, in this case, six percent, not twelve percent. This risk premium endangers the world. This is not about making money but saving the planet. The Inter-American Development Bank (IDB) and the Brazilian Central Bank have initiated a pilot project. If successful and replicable, it would be a rather radical reform.
Currently, about 60 percent of low-income countries are highly vulnerable to or are already in payment difficulties. Some proposals of the Bridgetown Initiative would further increase lending to developing countries. How do you address the debt problem?
The Bridgetown Initiative aims to do the opposite: reduce the debt of developing countries. We need to minimize the amount of future debt, which, in turn, reduces the total debt. Countries should only borrow money for things that lead to future savings – not for coping with losses and damages caused by the climate crisis. Their economies should grow faster with cheap loans, making them more resilient to climate shocks. Currency guarantees should promote private sector investments for green transformation. This is how we intend to address the debt problem.
However, by 2030, developing countries need 2.4 trillion dollars annually for climate and development financing. This exceeds the assistance currently provided by multilateral development banks worldwide, as well as the existing financial aid from industrialized nations.
Current global aid totals 200 billion dollars. It would need to increase twelvefold. This won’t happen. It’s not a solution for industrialized countries to provide all the money. While they are morally responsible and have become rich by abusing the environment, such a solution won’t be elected. Instead, industrialized countries should provide funds for things that cannot be financed otherwise, such as losses and damages. If not directly, then through higher taxes on fossil fuels used in shipping and aviation. Additionally, they should contribute more capital to multilateral development banks: If 10 billion dollars per year is invested in development banks, these seven banks can lend an additional 1 trillion dollars. This makes the problem of 2.4 trillion dollars realistic, achievable and politically acceptable.
There are rumors that Mia Mottley could become the next Secretary-General of the United Nations. You’ve known Mia Mottley since college and worked closely with her. Does she have the qualities needed to be a UN Secretary-General?
I have no doubt that she would be a good Secretary-General. My experience is that she can bridge differences, understand people and instill a desire in everyone to come together and elevate common ambitions. However, I must also say that, besides world peace, there is nothing more important to her than the Caribbean, Caribbean development and Caribbean integration. I believe she would need a lot of convincing to leave the region she deeply cares about.
In 2023, nearly 30,000 wind turbines were operational in Germany, generating approximately one-third of the country’s electricity. As part of the energy transition, their contribution is expected to increase further. However, with the addition of more turbines and the aging of existing ones, the issue of recycling comes into sharper focus. Steffen Czichon, Head of Rotor Blade Department at the Fraunhofer Institute for Wind Energy and Energy System Technology (IWES), remarks, “Currently, the quantities requiring decommissioning are still relatively small, giving us time to further develop technical solutions.” However, the Federal Environment Agency anticipates nearly 400,000 tons of waste, primarily from rotor blades, over the next 20 years. Globally, BloombergNEF projects that around 782,000 tons of rotor blades will need to be recycled by 2044.
There is ongoing discussion about the amount of microplastics released due to erosion of rotor blades, but precise data on microplastic emissions is lacking. An estimate suggests that Germany experiences a maximum erosion rate of 1,395 tons per year. To put this into perspective, tire abrasion exceeds 100,000 tons annually and shoe sole abrasion surpasses 9,000 tons.
Despite these challenges, the wind energy industry generates relatively little waste and approximately 90 percent of turbine components can be recycled. However, rotor blades pose a significant challenge due to their composition of wood, metal, adhesives and, primarily, composite materials. These materials, whether glass fiber-reinforced (older models) or carbon fiber-reinforced (newer models), are difficult to separate. Researchers and companies are, therefore, exploring solutions.
Previously, the Bremen-based company Neowa recycled glass fiber-reinforced plastic (GFK) rotor blades through co-processing, shredding the material and converting it into granules used as alternative fuel in the cement industry. At the same time, the glass content replaces some of the sand used in cement production.
However, operations were suspended last year due to a sharp decline in the number of decommissioned rotor blades. The reason is that wind turbines are often operated beyond their planned 20-year lifespan when technically viable. Moreover, increased energy prices render them economically viable even after the expiration of government subsidies. Some sites await approval to replace old turbines with larger, more efficient ones, delaying decommissioning.
Continuum, a Danish company, is planning to build several recycling plants to address the eventual recycling of rotor blades. These facilities will shred the blades to produce composite materials for kitchen countertops or construction panels. According to the company, these panels will consist of 92 percent recycled material.
Additionally, the process aims to significantly reduce the CO2 emissions associated with the current practice of incinerating and processing rotor blade residues in cement factories. The first plant is scheduled to be completed in early 2024, with five plants planned across Europe, including one in Germany. Each facility is expected to process approximately 36,000 tons of GRP annually and operate on renewable energy sources.
Novotech, based in Aschersleben, Saxony-Anhalt, also recycles GRP waste through mechanical processing. The rotor blades are crushed into coarse powder and combined with wood chips and other additives to create terrace boards. These boards can contain up to 30 percent recycled rotor blade material.
To simplify recycling in the future, it is crucial to consider the final steps during the product design process and design rotor blades for easier material separation. For example, Siemens Gamesa has developed the “RecyclableBlade”, featuring a new resin with a chemical structure that facilitates the separation of different components. With a mild acid solution, the resin, glass fibers and wood can be separated and reused in construction, consumer goods or the automotive industry.
The German startup Voodin Blades is collaborating with a Finnish wood material producer to develop lighter rotor blades made from laminated veneer lumber. The company is currently testing a 20-meter blade, with an 80-meter blade planned next.
However, existing recycling approaches have yet to achieve a true circular economy. While materials are reused, the resulting products are generally of lower quality – a classic case of downcycling. Research is ongoing to improve existing concepts to achieve higher material values and reduce energy consumption.
Policy interventions are also necessary. As Czichon from IWES notes, a recyclable blade does not necessarily equate to a blade that will be recycled. “I always compare it to coffee cups. It’s great if they’re compostable. But if I then burn them, it’s no good. And it’s the same with recyclable rotor blades.”
Therefore, establishing a closed recycling chain, such as setting up central collection points for old rotor blades, is essential. However, clearer political frameworks are needed, as wind energy expansion currently takes precedence over recycling on the priority list. Sarah Kröger, with Lisa Kuner
Currently, the “who’s who” of the energy transition scene is gathering at the Berlin Energy Transition Dialogue. The central question of the event revolves around what is necessary to accelerate the transition to renewable energy. Avinash Persaud is also grappling with this question. In today’s interview, the architect of the Bridgetown Initiative for fair climate financing explains the challenges faced by heavily indebted countries in the energy transition, the investment risks that wealthy countries should mitigate and how to mobilize trillions for climate financing.
Even with a successful energy transition, there are still challenges to address – such as the recycling of rotor blades from wind turbines. Sarah Kröger analyzes various solutions and explains why microplastics generated by wind turbines, contrary to current reports, may not pose a significant problem.
Mr. Persaud, 2024 is said to be the year of climate finance. The Bridgetown Initiative, which you co-designed as Barbados’ climate special envoy alongside Prime Minister Mia Mottley, could play a crucial role. What has been achieved so far?
The Bridgetown Initiative has played a pivotal role in advancing the climate agenda. It has made it clear: The climate crisis is a financing problem. Financing mitigation and resilience efforts in developing countries is much costlier than in industrialized nations. It also underscores that emissions reduction, adaptation and “loss and damage” require distinct financing approaches.
Could you elaborate on that?
Emissions reduction generates revenue. Solar parks, wind turbines, geothermal energy – all these generate income. Thus, the private sector could be engaged in climate mitigation efforts. This works in industrialized countries but not in developing ones. Adaptation to climate change can also save money – for example, building a dam with a loan to prevent future damage. However, it’s different with losses and damages: You can’t borrow money to rebuild poor people’s destroyed homes. Hence, a fund was established, with an initial capital injection of 800 million dollars. However, it needs to be a hundred times larger. 2023 was a significant year, but it’s just the beginning. We need to accelerate progress and implementation in 2024.
What role do multilateral development banks, the International Monetary Fund (IMF) and the World Bank under its new President Ajay Banga play in this?
The central role of multilateral development banks is to provide loans for large-scale public infrastructure projects like adaptation measures, dams, flood protection and improved drainage systems, costing billions. They need to increase lending for climate finance purposes, offering long-term, low-cost loans. They’ve stepped up efforts in the past year. The World Bank has revamped its strategy, placing climate alongside poverty reduction and growth at its core. By reducing its equity requirement, it has increased its lending capacity by about 50 billion dollars. Discussions are underway regarding expanding portfolio guarantees and utilizing Special Drawing Rights at the IMF. Collectively, these measures could increase climate lending by 200 billion dollars. We’ve established some damage funds, with one trillion in new capital.
Will that be enough?
It has become clear that climate change is an uninsurable event. This poses a real problem, especially for our European friends: They have the world’s largest reinsurers who sought to address climate change through more insurance. However, insurance only works if the risk doesn’t increase in correlation, extent and frequency.
What do you propose instead?
The alternative is the conditional suspension of interest and principal payments and our natural disaster clause, allowing a country to defer payment obligations for two years in the event of a natural disaster. The World Bank has announced its intention to incorporate these clauses into its bonds and loans. This is crucial for countries to buy time. However, the most critical area needing reform, but where none is seen, is the financial markets.
What needs to change?
We need to reform the system that defines things as safe or risky. South Africa emits many greenhouse gases because much of its electricity comes from coal. Switching to non-fossil electricity generation costs about 100 billion dollars. When a German investor invests in South African solar parks, they wonder: How much do I need to pay to eliminate exchange rate risk if the South African rand depreciates against me? The market price for such protection is around eleven to twelve percent per year. So, the project needs to generate eleven to twelve percent more annually than the same project in Germany. In reality, the rand depreciates by an average of only six percent per year. So, you’re paying five or six percent too much. The private sector doesn’t want to take on this risk.
How can this risk be eliminated?
The public sector needs to step in and reduce the costs of hedging exchange rate risk. Thus, it needs to charge for the actual risk, in this case, six percent, not twelve percent. This risk premium endangers the world. This is not about making money but saving the planet. The Inter-American Development Bank (IDB) and the Brazilian Central Bank have initiated a pilot project. If successful and replicable, it would be a rather radical reform.
Currently, about 60 percent of low-income countries are highly vulnerable to or are already in payment difficulties. Some proposals of the Bridgetown Initiative would further increase lending to developing countries. How do you address the debt problem?
The Bridgetown Initiative aims to do the opposite: reduce the debt of developing countries. We need to minimize the amount of future debt, which, in turn, reduces the total debt. Countries should only borrow money for things that lead to future savings – not for coping with losses and damages caused by the climate crisis. Their economies should grow faster with cheap loans, making them more resilient to climate shocks. Currency guarantees should promote private sector investments for green transformation. This is how we intend to address the debt problem.
However, by 2030, developing countries need 2.4 trillion dollars annually for climate and development financing. This exceeds the assistance currently provided by multilateral development banks worldwide, as well as the existing financial aid from industrialized nations.
Current global aid totals 200 billion dollars. It would need to increase twelvefold. This won’t happen. It’s not a solution for industrialized countries to provide all the money. While they are morally responsible and have become rich by abusing the environment, such a solution won’t be elected. Instead, industrialized countries should provide funds for things that cannot be financed otherwise, such as losses and damages. If not directly, then through higher taxes on fossil fuels used in shipping and aviation. Additionally, they should contribute more capital to multilateral development banks: If 10 billion dollars per year is invested in development banks, these seven banks can lend an additional 1 trillion dollars. This makes the problem of 2.4 trillion dollars realistic, achievable and politically acceptable.
There are rumors that Mia Mottley could become the next Secretary-General of the United Nations. You’ve known Mia Mottley since college and worked closely with her. Does she have the qualities needed to be a UN Secretary-General?
I have no doubt that she would be a good Secretary-General. My experience is that she can bridge differences, understand people and instill a desire in everyone to come together and elevate common ambitions. However, I must also say that, besides world peace, there is nothing more important to her than the Caribbean, Caribbean development and Caribbean integration. I believe she would need a lot of convincing to leave the region she deeply cares about.
In 2023, nearly 30,000 wind turbines were operational in Germany, generating approximately one-third of the country’s electricity. As part of the energy transition, their contribution is expected to increase further. However, with the addition of more turbines and the aging of existing ones, the issue of recycling comes into sharper focus. Steffen Czichon, Head of Rotor Blade Department at the Fraunhofer Institute for Wind Energy and Energy System Technology (IWES), remarks, “Currently, the quantities requiring decommissioning are still relatively small, giving us time to further develop technical solutions.” However, the Federal Environment Agency anticipates nearly 400,000 tons of waste, primarily from rotor blades, over the next 20 years. Globally, BloombergNEF projects that around 782,000 tons of rotor blades will need to be recycled by 2044.
There is ongoing discussion about the amount of microplastics released due to erosion of rotor blades, but precise data on microplastic emissions is lacking. An estimate suggests that Germany experiences a maximum erosion rate of 1,395 tons per year. To put this into perspective, tire abrasion exceeds 100,000 tons annually and shoe sole abrasion surpasses 9,000 tons.
Despite these challenges, the wind energy industry generates relatively little waste and approximately 90 percent of turbine components can be recycled. However, rotor blades pose a significant challenge due to their composition of wood, metal, adhesives and, primarily, composite materials. These materials, whether glass fiber-reinforced (older models) or carbon fiber-reinforced (newer models), are difficult to separate. Researchers and companies are, therefore, exploring solutions.
Previously, the Bremen-based company Neowa recycled glass fiber-reinforced plastic (GFK) rotor blades through co-processing, shredding the material and converting it into granules used as alternative fuel in the cement industry. At the same time, the glass content replaces some of the sand used in cement production.
However, operations were suspended last year due to a sharp decline in the number of decommissioned rotor blades. The reason is that wind turbines are often operated beyond their planned 20-year lifespan when technically viable. Moreover, increased energy prices render them economically viable even after the expiration of government subsidies. Some sites await approval to replace old turbines with larger, more efficient ones, delaying decommissioning.
Continuum, a Danish company, is planning to build several recycling plants to address the eventual recycling of rotor blades. These facilities will shred the blades to produce composite materials for kitchen countertops or construction panels. According to the company, these panels will consist of 92 percent recycled material.
Additionally, the process aims to significantly reduce the CO2 emissions associated with the current practice of incinerating and processing rotor blade residues in cement factories. The first plant is scheduled to be completed in early 2024, with five plants planned across Europe, including one in Germany. Each facility is expected to process approximately 36,000 tons of GRP annually and operate on renewable energy sources.
Novotech, based in Aschersleben, Saxony-Anhalt, also recycles GRP waste through mechanical processing. The rotor blades are crushed into coarse powder and combined with wood chips and other additives to create terrace boards. These boards can contain up to 30 percent recycled rotor blade material.
To simplify recycling in the future, it is crucial to consider the final steps during the product design process and design rotor blades for easier material separation. For example, Siemens Gamesa has developed the “RecyclableBlade”, featuring a new resin with a chemical structure that facilitates the separation of different components. With a mild acid solution, the resin, glass fibers and wood can be separated and reused in construction, consumer goods or the automotive industry.
The German startup Voodin Blades is collaborating with a Finnish wood material producer to develop lighter rotor blades made from laminated veneer lumber. The company is currently testing a 20-meter blade, with an 80-meter blade planned next.
However, existing recycling approaches have yet to achieve a true circular economy. While materials are reused, the resulting products are generally of lower quality – a classic case of downcycling. Research is ongoing to improve existing concepts to achieve higher material values and reduce energy consumption.
Policy interventions are also necessary. As Czichon from IWES notes, a recyclable blade does not necessarily equate to a blade that will be recycled. “I always compare it to coffee cups. It’s great if they’re compostable. But if I then burn them, it’s no good. And it’s the same with recyclable rotor blades.”
Therefore, establishing a closed recycling chain, such as setting up central collection points for old rotor blades, is essential. However, clearer political frameworks are needed, as wind energy expansion currently takes precedence over recycling on the priority list. Sarah Kröger, with Lisa Kuner
