09/27/2021 at 09:00 CEST
Climate change is the “existential threat of our time”, underlines the UN. And while there are countless solutions to mitigate it, they all cost a lot of money. Adding mitigation, decarbonization and resilience efforts around the world, the annual cost of saving the climate could exceed a trillion dollars. But the UN defends that the direct benefits would be much greater: triple. What is still not entirely clear is neither who should pay, nor how.
The latest report of the Intergovernmental Group of Experts on Climate Change (IPCC) revealed a few days ago that greenhouse gas emissions from human activities are responsible for having caused a global warming by 1.1 ° Celsius since the period 1850-1900 to the present.
Even more alarming is what study predicts: global temperature will reach or exceed 1.5 ° C or more warming in the next 20 years. The consequences are already beginning to be felt: greater floods, more frequent extreme heat waves, longer droughts, loss of ice sheets, superfires & mldr;
Although investments in renewable energy and sustainable infrastructure are growing, global spending on fossil fuels continues to exceed that made on green energy. And many countries do not have the financial resources to undertake the transition to clean energy sources and sustainable livelihoods to reverse climate change.
The UN believes that it is necessary to help these countries, that not investing will be more expensive in the long term, and that there are important opportunities for investors.
What is climate-related finance? Broadly speaking, climate finance is related to the money that must be spent for activities that will help curb climate change and that will help the world reach the goal of limiting global warming to 1.5 ° C above the average. pre-industrial levels.
To achieve this goal, the world needs to reduce its greenhouse gas emissions to near zero by 2050.
Among the initiatives that must be funded to achieve these zero value emissions are those that reduce harmful gas emissions, and those that enhance or preserve natural solutions to capture these gases, such as forests and oceans.
Financing to save the climate also seeks to increase the resilience of populations most affected by climate change and help them adapt to changing climatic conditions, measures that in turn will help reduce warming.
Funding is necessary to transition to what the UN calls a ‘green economy’ and to drive sustainable economic growth.
Because if global temperatures rise, changes in weather patterns, rising sea levels, increasing droughts and floods persist, the most vulnerable populations will face increasing risks.
In fact, the UN estimates that climate change could push another 100 million people into poverty by 2030. Addressing these trends requires significant financial resources, adequate investments and a systematic global approach.
How much money do you need?
Major investments are required and international cooperation is essential. More than a decade ago, developed countries pledged to jointly contribute $ 100 billion a year by 2020 in support of climate action in developing countries.
But, according to an expert report commissioned by the UN, that goal is not being met, despite the fact that climate-related finance follows an “upward trajectory.”
Countries announced 100,000 million for 2020 but have not delivered.
The real question is whether the world can afford not to invest in climate action. Communities around the globe are already suffering the financial effects of climate change, either from crop failure due to drought, or from extensive damage to infrastructure caused by floods or other extreme weather events.
The UN defends that Climate investment represents an opportunity and not a risk, as the benefits derived far outweigh any initial costs. For example, in most countries, solar energy is currently cheaper than building new coal-fired power plants.
In addition, investments in clean energy also drive economic growth, and could create 18 million jobs by 2030, counting on job losses in the fossil fuel sector.
Where does the money come from?
Funding comes from a long list of public and private funding sources, that support innovative climate action initiatives at the local, national or transnational level.
There are a wide variety of financial instruments to provide climate finance, from green bonds to direct loans for projects or investments in energy or technology providers.
But adaptation is only one part of the complicated climate action puzzle. Once mitigation and decarbonization efforts and global resilience efforts are accounted for in both the developing and developed world, the annual cost will well exceed $ 500 billion and perhaps even $ 1 trillion, according to the UN.
However, the benefits will be much greater. The switch to a green economy could mean a direct economic gain of 26 trillion dollars until 2030 compared to the current situation; that is, about 3 billion a year, calculates the UN.
Currently, there are several global funds dedicated specifically to fighting the climate crisis and its direct effects. Only among those who have the support of the UN are around 23,000 million dollars.
The largest of them is the Green Climate Fund, created in 2010, with a budget of about $ 8,800 and that seeks to mitigate the climatic effects in developing countries and adapt their infrastructures. Another 8,000 million contribute Climate Investment Funds, approved in 2008 by the World Bank, which seeks to “accelerate climate action, promoting transformations in clean technology, access to energy, climate resilience and sustainable forests in developing countries.” Another especially important is the Clean Technology Fund, endowed with almost 5.4 billion dollars, to promote low-carbon technologies.
Global GDP may fall 37% due to the weather
Studies that have so far evaluated the economic costs of climate change may have significantly underestimated these monetary impacts, according to research conducted by the University College of London. Specifically, the study that has just been published in the journal Environmental Research Letters, assures that the economic damages by the end of this century could be six times greater than previously estimated.
The models used so far have ignored highly relevant risks. To begin with, according to the authors, most models focus on analyzing short-term damages, assuming that climate change does not have a lasting effect on economic growth, despite growing evidence to the contrary.
The study shows that by 2100, world GDP could fall by 37% compared to the absence of impacts from warming.
If long-term damages are not taken into account (excluded from most estimates so far), GDP would be ‘only’ around 6% lower, meaning that impacts on growth can increase costs. economic factors of climate change by a factor of six. But Depending on how much growth is affected, the economic costs of this century’s warming could reach up to 51% of GDP world.
Study co-author Chris Brierley said: “We do not yet know exactly what effect climate change will have on long-term economic growth, but it is unlikely to be zero, as most economic models have assumed.”
“Climate change makes damaging events, such as the recent heat wave in North America and the floods in Europe, much more frequent. If we stop assuming that economies recover from such events in months, the damage costs of warming appear much higher than is often claimed, “he adds.
The authors calculated the effect of these changes on the ‘social cost of carbon’ (SCCO2), a crucial indicator that calculates the economic cost of greenhouse gas emissions to society. Expressed in US dollars for each tonne of CO2, estimates suggest that the economic damage could actually exceed $ 3,000 per tonne of CO2.
“Emissions from each person could very well cost humanity more than 1,300 per year, rising to more than 15,000, once the impacts of climate change are included in economic growth,” said Dr Brierley.
Instead, the US government currently only estimates a cost of $ 51 per ton and the EU, $ 61.