To slow global warming and meet the Paris Climate Agreement target, humankind will need to invest $ 21 trillion in new technologies over the next 10 years. Of these spending, $ 2.1 trillion should come from private investors, according to an estimate by The Boston Consulting Group (BCG), based on data from the International Energy Agency (IAE). The specialists’ report is at the disposal of Lenta.ru.
The goals of the Paris Agreement are to keep the growth of the average global temperature of the Earth below 1.5 degrees Celsius compared to the pre-industrial level – this is important for saving humanity from a climate catastrophe. To reach this target, it is necessary to achieve zero carbon dioxide emissions into the atmosphere by 2050.
Of the total investment in technology needed to achieve the goal, 10 percent must come from private investors. It is private capital that helps support startups and companies in the growth stage, which play a crucial role in the development and implementation of innovative technologies. According to the BCG report, humanity is not even close to achieving the desired level of investment right now. According to experts, by 2030, annual private investment should reach $ 470 billion.
investment in new technologies needed to slow global warming
The real numbers are much more modest. From 2016 to the end of 2021, $ 160 billion was received from private investors. During this entire period, the amounts grew, but, nevertheless, in 2021, investments were still 8 times lower than necessary. However, investor interest in new technologies is growing, this year the volume of spending at an annual level has almost doubled. Experts predict that by the end of the year it will amount to $ 57 billion.
According to BCG experts, the implementation of the goals of the Paris Agreement is impossible with the technologies that are at the disposal of mankind now. There is also a need to bring a number of less actively used technologies into operation that can significantly reduce the carbon footprint. Most of the investments – more than 90 percent – by the end of 2021 will be directed to six already relatively developed sectors. We are talking about electric vehicles, energy storage systems, biofuels and renewable energy sources (RES). 40 percent of the funds will be invested only in electric cars. 23 percent of the investment will go to energy storage and 24 percent to the development of renewable energy sources. These technologies play an important role in combating climate change, but they alone will not help meet emission reduction targets. According to the International Energy Agency, solutions that are still less developed and face a lack of investment will help reduce emissions by more than a third. Hydrogen, carbon capture, storage and sequestration (CCUS) and climate analytics account for just three percent of total private investment.
Experts are calling for attention to low-carbon technologies that will be critical in the fight against climate change. Analysts from BCG point out that investors from industries such as oil and gas, chemical, technological, as well as sectors related to aviation, shipping and automobiles are now switching to new “green” technologies. Experts expect this trend to develop further. Analysts expect more investment activity to decarbonize operations from manufacturers.
The climate agenda is becoming increasingly important both at the level of private companies and at the state level. On August 9, the UN Intergovernmental Panel on Climate Change presented a disturbing report, in which it stated that a disaster due to climate change is inevitable if emissions are not immediately reduced, and the consequences of warming will affect all sectors of human activity. To avoid such a scenario, the world needs to change its business strategy and attitude towards nature. In late October, several heads of state will gather at a climate forum in Glasgow, Scotland to discuss the fight against climate change and reach new agreements.
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