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$700 billion a year in investments needed to combat climate change

Approximately $700 billion in investments is needed annually in order to mitigate climate change and secure green growth, estimates a new report co-authored by Green Growth Action Alliance and the World Economic Forum.

This large investment is needed to develop clean energy infrastructure, sustainable and low-carbon transport, energy efficiency in buildings and industry, and forestry in such a way as to vital to pay the limit the global average temperature increase to two degrees Celsius above pre-industrial levels.

“Greening investment is the one luxury that we must afford,” said W.E.F. in its blog.

“As a result of the clear evidence of negative climate change impacts today, and the potentially devastating impacts in the future, greening investment is a pre-condition for a stable, vibrant and inclusive global economy,” stated the Green Investment report.

A combination of political and business leadership will be the key to unlock green growth,noted the report. While effective policies and efficient deployment of public finance are already in place, they have to be further scaled up.

The report suggested that government must re-evaluate investment priorities, shift incentives, build capacity and formulate policies, all leaning toward support for low-carbon projects.

Meanwhile, some investors remain reluctant to take on green investments, discouraged by high capital costs and reduced risk-adjusted returns of such investment.

“[They] should seize the green investment opportunity by calibrating risk-return analysis to the current climate in pursuit of long-term returns,” stressed the report.

More and more investors are seeking to diversify their portfolios and exploring unconventional assets for returns. With today’s rapid pace of adoption of clean energy technologies, infrastructure investment presents a potential source of stable returns and an ideal opportunity to enter a growing market.

“The incremental costs of greening growth are insignificant compared with the costs of inaction,” stressed the report. – C. Dominguez



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