To reach the climate change goals agreed in Paris, "we still fall short of being close to where we need to be"
By Sophie Hares
TEPIC, Mexico, Oct 31 (Thomson Reuters Foundation) - Countries need to pull in more private investment to tackle a massive shortfall in spending on clean energy and adaptation to climate change, a U.S. climate policy group said on Tuesday.
"On the whole there has been a positive trend over the last years of increasing investment. We have seen more of the mainstream private investors coming into climate investments," Barbara Buchner, executive director of Climate Policy Initiative's climate finance program told the Thomson Reuters Foundation.
But "we still fall short of being close to where we need to be if we want to reach our low-carbon, climate resilient future," she said.
The United States' decision to pull out of the Paris accord to address climate change and volatility in key emerging markets such as Brazil are likely to dent the amount of capital available for climate investments, according to a new report by the organization.
The CPI said while climate spending had seen an overall rise over the last five years, the tumbling costs of solar power technology and a reduction in state spending by China, after massive investments in the previous year, meant spending on renewable energy and climate adaptation globally slipped 12 percent in 2016, to $383 billion.
In 2015, investment hit $437 billion, driven in part by a surge in investment in renewable energy in China and in rooftop solar panels in the United States and Japan, the report noted.
While renewable energy investment is growing, particularly as the costs become competitive with fossil fuels for some technologies, spending on other key climate-friendly actions - from curbing deforestation to greater energy efficiency - remains far too low, Buchner said.
Altogether, an estimated $1 trillion a year needs to be spent between now and 2050 on alternative sources of energy. Even more is needed to adapt to the now inevitable changes global warming is bringing, bolster forests, improve low-carbon transport, make agriculture greener and protect water supplies, the report said.
Such spending is necessary to meet the Paris target of limiting global warming to well below 2 degrees Celsius above pre-industrial levels, according to the CPI report, which used forecasts from the International Energy Agency.
"If you think what is needed in agriculture, forestry and water, waste to really enable a full, low-carbon transition, then there's a lot that needs to happen if you want to get to this 2-degree Celsius scenario in the future," Buchner said.
Government spending remained the "backbone" of climate finance, she said, although companies and households were increasingly spending more, Buchner said.
However, spending on renewables and other climate investments was overshadowed by the $825 billion invested in fossil fuels such as coal and gas in 2016, with much of the spending coming from emerging market countries, the report noted.
As costs for some renewable technologies tumble and become competitive with fossil fuels, though, the potential to steer some investment away from traditional power generation and into hybrid or green energy sources is soaring, Buchner said.
The report highlighted wide regional gulfs in terms of climate investment with East Asia and the Pacific pulling in around $132 billion in 2015-2016 while Latin America and the Caribbean saw around $26 billion.
The decision by the United States to pull out of the Paris deal, as well withdrawing its remaining $2 billion pledge to Green Climate Fund - which pays for climate action in poorer nations - could reduce the amount of capital available for climate projects around the world, Buchner said.
Another $2 billion in average annual climate spending by the U.S. government also was in doubt, she said.
(Reporting by Sophie Hares, Editing by Laurie Goering. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters that covers humanitarian news, climate change and resilience, women's rights, trafficking and property rights. Visit http://news.trust.org)
The Thomson Reuters Foundation is reporting on resilience as part of its work on zilient.org, an online platform building a global network of people interested in resilience, in partnership with the Rockefeller Foundation.
Our Standards: The Thomson Reuters Trust Principles.