More money than ever before invested in low carbon and climate-resilient growth, hitting $391 billion
- 16 November 2015
LONDON: A record US$391 billion flowed into low carbon and climate-resilient growth in 2014, according to a report released today by Climate Policy Initiative. The fresh figures come just two weeks before the COP21 climate talks begin in Paris, where finance is expected to play a pivotal role in scoring a robust global deal capable of securing a safe climate.
The annual Global Landscape of Climate Finance study reports that countries around the world are amping up investment in climate action such as renewable energy and adaptation, in order to protect and drive their economies. Investment rose 18% in 2014, recovering from a dip in 2013 to US$331 billion from US$359 billion in 2012.
At US$119 billion, the biggest spend came from East Asia and the Pacific, with China investing the lion’s share at 22% of the global total. Western Europe followed investing US$93 billion, with the Middle East, South Asia and Africa not far behind.
Of the investments, US$292 billion went into renewable energy, largely driven by the attraction of falling clean technology costs to businesses. Indeed, some of the world's most influential companies are committing to going 100% renewable as part of our RE100 campaign in partnership with CDP, which just last week saw top Chinese company BROAD Group join the ranks.
In total, over half of climate finance flows came from the private sector, which surged 26% to US$243 billion in a year. The rest came from the public sector, which has seen steadier growth in recent years. A huge US$131 billion came from development finance institutions alone.
But while investment has reached record levels, it is not yet enough to keep global temperature rise to safe levels, according to lead author of the report, Barbara Buchner, Senior Director, Climate Policy Initiative. “Two weeks out from the international climate negotiations in Paris, our analysis demonstrates that countries around the world are investing to drive their own economic growth and development. Overwhelmingly, it is national self-interest that is driving climate action.
"The numbers also show that while global investment in a cleaner more resilient economy is growing, so too is the investment gap between what is required for reducing emissions to within agreed limits and what is being delivered. Even greater effort and geographic spread is needed to deliver investments consistent with the 2°C global temperature goal.”
The investment trend reflects the reality that in an increasingly carbon-constrained economy, profits and growth will be most reliant on low carbon energy. But while renewables accounted for around half of all new power plants last year – according to a separate report published last week by the International Energy Agency (IEA) – forecast cumulative investments of US$7.4 trillion still only represent around 15% of the world’s total energy supply investment.
The IEA’s World Energy Outlook 2015 also points out how the low carbon transition is in part being hampered by fossil fuel subsides. Ángel Gurría, Secretary-General, OECD, recently told The Climate Group that governments must put an end to such subsidies, calling the practice “the greatest misallocation of resources” and a “brutal example of policy contradictions” in our exclusive Climate TV interview.
With the global climate talks taking place in just under two weeks, the public and private sectors both have the prime opportunity to divert individual countries’ investments away from a fossil-powered economy to low carbon, climate resilient growth.
Mark Kenber, CEO, The Climate Group, affirms that the Paris negotiations can be “the great business opportunity of this century”, and urges the national climate pledges that were submitted ahead of COP21 to be seen as “significant investment prospects for forward-looking businesses.” In a blog earlier this year, he concluded: “What must be taken away from Paris is that the momentum to a low carbon future is now unstoppable – and that change makes environmental, business and moral sense.”
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By Clare Saxon Ghauri