The goal of slashing fossil fuel consumption, tempering climate change and saving the planet from ultimate destruction cannot be realized with simple good will. We need to throw money at the problem—a lot of it—and right now, we’re just not spending enough, says the Climate Policy Initiative in a report released this week.
How much of a windfall is needed? For clean energy alone, this amounts to an additional $5 trillion in investments to limit the rise in global temperature change to two degrees Celsius by 2020, the minimum threshold for avoiding the meltdown of ice caps and swelling sea levels, according to the International Energy Agency’s estimates (if we stay on our current path, the rise in global temperature change will be double that amount).
Here’s a challenge: Private investment, which dwarves other types of climate investment, tends to stay local. According to CPI, 76 percent ($275 billion) of money spent globally on climate issues in 2012 was invested in the countries in which the funding originated. Wealthy countries tend to invest within their own borders or in other wealthy countries. “This implies that effective national policy is critical to increasing climate finance globally,” CPI Senior Director Barbara Buchner said in a prepared statement. “There may also be an opportunity to increase international flows, by addressing the perception of additional risk in overseas investments.”
This is how global climate investment numbers broke down in 2012:
- Private investment accounted for 62 percent ($224 billion)
- Public financing through loans, risk coverage mechanisms and direct project investment accounted for 38 percent ($135 billion)
- Government support for fossil fuel energy consumption and production accounted for $523 building in developing and emerging economies alone
- Developed countries received 49 percent ($177 billion)
- Developing countries received 50 percent ($182 billion)
It seems as though the folks at Bloomberg New Energy Finance got the memo, having recently released a new program for identifying the best clean energy and green growth proposals for investors. It’s newly launched Finance for Resilience (FiRe) process will be applied to a variety of work streams including developing world distributed energy, developing world projects, energy policy, financial regulation and disclosure, leveraging public finance, new investors and financial products, and cities and municipalities.
To read the CPI’s full “Global Landscape of Climate Finance 2013” report including the group’s six key policy recommendations, click here