Building a green economy could cost $2 trillion a year, a sum that would require private as well as public money
DOHA (AlertNet) - For the world to shift to a resilient green economy and effectively tackle climate change, an investment of additional two or three percent of world GDP or $2 trillion per year will be required, economists and climate experts say.
“It is a huge amount of money, but not that huge when reckoning the world resources at stake from unfolding climate change risks. It’s, in fact, a process that will yield great returns by reversing economic downturn and halting climate change,” said Sir Nicholas Stern, author of the landmark 2010 Stern review of the economics of climate change, during a panel on financing climate friendly investment at the UN-led global climate talks in Doha last week.
He said that with billions planned in spending by governments on energy, buildings and transport, it is important that these public investments don’t lock the world into an unsustainable high-carbon economy for decades to come.
Rather than saying economic slowdowns around the world make clean investment impossible, countries should make action to tackle climate change an integral part of fiscal packages to stimulate national economies, he said.
A partnership between the World Economic Forum and the U.N. climate change secretariat – Innovative Financing for Climate Friendly Investment (IFCFI) – aims to support such decision making, in part by shedding light on innovative and proven financing examples that support adaptation and mitigation in developing countries.
Many of those may involve partnerships between public and private sector funders, experts on the panel said.
“Greater public-private collaboration is required to find solutions and stimulate new markets to deliver on the mitigation and adaptation agenda,” said Mohammed Saleh Abdulla Al Sada, Qatar’s minister for energy and industry.
But public funds will be needed in order to attract significant private capital through partnerships, he said.
RECORD CLEAN ENERGY INVESTMENT
He noted that progress already is being made on investment in renewable energy, with global spending up 17 percent in 2011 to a new record of $257 billion.
Christiana Figueres, executive secretary of the U.N. Framework Convention on Climate Change, said that developing enough clean energy to cope with demand while curbing climate change would require an extra $36 trillion in investment by 2050.
“We are looking to highlight public-private partnerships that are afoot and that are successfully extending innovative financing solutions to cope with climate change. Surely, there is much creative thinking in several sectors that people can learn from,” she said.
Thomas Kerr, who heads climate change initiative at the World Economic Forum, told AlertNet that public funding will not be sufficient to pay for all that is needed, and efforts must be made to attract private finance.
‘LIGHTHOUSE’ PROJECTS
He pointed to a series of “lighthouse” clean energy projects that he said could be replicated around the world.
An initiative in East Africa, for instance, aims to employee as many as 12,000 village entrepreneurs selling energy-efficient LED lighting to rural communities to replace polluting kerosene lamps, said Abyd Karmali, global head of carbon markets at the Bank of America Merrill Lynch.
His bank is helping to arrange micro loans for entrepreneurs and working with governments to ease import tariffs and exclude the LED systems from value-added taxes.
Naoko Ishii, head of the Global Environment Facility, said transformation, not slow change, is what is needed.
“Innovation and public-private partnership are vital if we are to have any chance of having a transformational impact on the deeply worrying trends in the global environment,” she said during a press conference on the sidelines of the latest round of U.N. climate negotiations.
“Business as usual will not be good enough. Instead, strong collective actions will be needed, with a well-defined vision that how we can foster innovation and strengthen the partnerships for scaling up funding,” she said. The success or failure of such efforts “will be critical for how effectively we together can tackle global climate change in the coming decades and prevent efforts for sustainable development falling prey to climate change effects.”
Saleem Shaikh and Sughra Tunio are climate change and development reporters based in Karachi, Pakistan.
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