The Global Climate-Finance Challenge
The world will not avoid dangerous levels of climate change without a significant increase in investment in developing countries, and much of that will need to come from the private sector and external sources. Fortunately, all countries stand to benefit from a rapid acceleration of the transition to carbon neutrality.
LONDON – The dust has now settled after the United Nations Climate Change Conference (COP27) in Egypt, but there are still many unanswered questions about how to finance emissions reductions and adaptation. The world will not avoid dangerous levels of climate change without a significant increase in investment in developing countries. If these countries lock in dependency on fossil fuels and dirty technologies, they will be largest source of emissions growth in the coming decades.
Fortunately, such investment can not only reduce emissions and build resilience; it also can drive a new form of growth and development that is much more attractive than the dirty and destructive paths of the past. Helping these countries accelerate the transition to sustainable, inclusive, and resilient economies is therefore in developed countries’ own interest.
We were commissioned by the Egyptian COP27 presidency and the British COP26 presidency to conduct an independent analysis of the financing that developing countries (other than China) will need by 2030 in order to realize the goals outlined in the Paris climate agreement. Our report, published during the first week of COP27, concluded that these countries’ annual investment in climate action needs to increase immediately, from about $500 billion in 2019 to $1 trillion by 2025, and to $2.4 trillion by 2030. That investment will not only deliver on the Paris agreement; it will also drive this new form of growth and advance progress toward achieving the UN Sustainable Development Goals.
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