New Climate Economy report shows unprecedented opportunity for clean, sustainable infrastructure

Author:
Ilario D'Amato
Reading time: 4 minutes
6 October 2016

LONDON: Sustainable infrastructure is the key element in delivering global economic growth and tackling climate change, a new report from the New Climate Economy shows.

Investment in the sector will have long-term effects for years to come, and will be crucial in driving vital reductions in carbon emissions, and implementing the goals set in the Paris Agreement, which will enter into force next month.

“Investing into investment” for sustainable infrastructure is the most urgent priority for the financial, political and climate sectors, said Felipe Calderónformer President of Mexico and Chair of the Global Commission on the Economy and Climate, in a Climate TV interview filmed at the Business & Climate Summit, an international meeting convened by The Climate Group last June in London.

“We need to put money, to put very capable people to train and to strengthen the institutional capacity either of governments or private sector – especially in less developed and developing countries,” he urged.

AN UNPRECEDENTED OPPORTUNITY

The way we are going to shape global public transports, buildings, water supply, sanitation – but also forest landscapes and watershed protection – will in turn determine our economy and our environment, the study suggests.

To achieve a prosperous, net zero emissions future, US$90 trillion of investment worldwide is needed in the next 15 years in the infrastructure sector – more than the entire current stock – almost doubling current expenditure.

In particular, the energy sector is where the biggest opportunities lie: accounting for 28% of the core investments needed, it would save a staggering US$1.1 trillion currently at risk of becoming stranded assets if diverted from its current dependency on coal, now that the Paris Agreement is entering into force.

    Change in infrastructure spending required for a 2°C scenario (percentage change in expenditure over 2015-2030 compared to Business-as-usual)

    The Global South will need about 2/3 of this amount, equalling about US$4 trillion annually, with about 60% coming from the public sector. It is crucial that such new infrastructure avoids the inefficiency of today’s most polluting cities, transport networks and energy production, ‘leapfrogging’ the sector into a new, cleaner era.

    The report indicates the opportunity of achieving such an ambitious target is unprecedented, thanks to record low interest rates, large available pools of finance and rapid technological changes. However, there are still barriers to raising the necessary resources.

    “We need to remove fossil fuel subsidies, right now,” emphasized Calderón in his interview. “Or, in other words, we need to establish the right economic incentives to move towards all the way sustainable projects in particular in infrastructure. That implies putting a price on carbon, everywhere.

    “Secondly, we need to invest private – but in particular public – money in research and development. It is incredible that in the 80’s we were investing more than double public money than today in research and development for clean energy.”

    Felipe Calderon

    The report also indicates the urgent necessity of strengthening policy frameworks, to give consistency to private investors and spur their much needed contribution. The financial system must also play its part, reducing the costs for green projects and accelerating the transition toward a net zero global economy. Governments and businesses must also work jointly to fast-track the research and deployment of new, cleaner technologies.

    However, private sector alone can’t solve these issues. Governments must play a key role too, by setting strict deadlines to phasing out subsides by 2025 at the latest, for example, whilst phasing out coal and putting a price on carbon – the study indicates. Subnational governments will play a crucial role in realizing such important objectives, as shown by the collaborative successes of The Climate Group’s States & Regions Alliance.

    On the business side, bold programs such as RE100 and EP100 are helping the world’s most influential companies in their journey toward 100% renewable power and doubling their energy productivity.

    • Read the full report here.
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