Shifting to a low-carbon economy could save between 11-18% of global GDP by 2030, according to a new report.
Released to coincide with Finance Day at COP29, the report from The Independent High Level Expert Group on Climate Finance notes that savings would be driven by reduced investments, consumption and imports of fossil fuels, and fewer environmentally harmful subsidies.
“The challenge, therefore, is to foster the enabling conditions for the ramp up of investments and mobilise finance of the right scale, of the right kind at an affordable cost.”
The expert group estimates that global projected investment for climate action will be $6.3-6.7trn per year by 2030.
The largest increase in investment is required in emerging markets and developing countries (other than China), which are projected to account for over 50% of global emissions by 2030.
Achim Steiner, UNDP Administrator, said, “We don’t need to find new money – we just need to take some of the money we’re spending on making artificially fossil fuel consumption cheaper, or extraction profitable, and direct it towards the climate finance economy we’re negotiating in Baku.”
Finance is a key focus of COP29, with a global climate finance deal heading the COP wish-list. The co-chairs of the NCQG contact group published a first iteration of a draft decision text yesterday.
UN Secretary General Antonio Guterres called on companies to commit to “deep decarbonisation across the value chain” and not rely on “dubious offsets”.
“Net Zero plans that exclude Scope 3 emissions are incomplete,” he said.
Unlocking low-carbon industrialisation
Clean energy technologies face tariffs that are twice as high as fossil fuels, on average.
Rebeca Grynspan, UNCTAD Secretary-General, said, “We don’t have a level playing field for new technologies to thrive. We need trade and investment, and the green transition to make it happen. Trade, investment and finance have to come together – we have to have a coherent policy framework.”
By providing incentives and setting mandates to use green materials, chemicals and fuels, governments can create consistency for buyers, create market certainty, and improve the business case for the production of green commodities.
Faustine Delasalle, Executive Director of the Industrial Transition Accelerator (ITA) Secretariat and CEO of the Mission Possible Partnership, said we have the technologies to decarbonise economies.
“But we’ve reached a stalemate between producers and buyers that cannot be broken while buyers are not incentivised to purchase green products that still compete against cheaper, higher carbon products. As we’ve witnessed in several sectors and countries, governments have the power to change this, and drive progressive uptake of green materials, fuels and chemicals,” she said.
The ITA has issued an open letter urging governments to stimulate low-carbon products which could unlock up to $1trn of investment and bring more than 500 green industrial plants awaiting finance to construction by 2030. However, since April, only eight facilities globally have reached final investment decision, and more than half (300) have been waiting in the in-tray for at least two years.
