Focusing development and traditional finance towards low carbon energy efficient infrastructure will fight climate change, help the world meet sustainability targets and boost global economic productivity, the world’s finance ministers have been told.
The transition to a more sustainable economy can only be achieved by mobilising more of the world’s capital towards climate action, according to a report published by the United Nations Environment Programme on Thursday (8 October)
But too much money was still backing high carbon and resource intensive projects. Rules and incentives in financial markets worldwide can discourage sustainable investment, UNEP warned yesterday.
The World Bank Group and International Monetary Fund (IMF) are holding its joint annual meeting in Lima. It is attended by the world’s finance ministers and central bankers.
UNEP wants changes to the design of the global financial system, including the actions of regulators, governments, and stock exchanges, to boost investment in infrastructure and slow environmental destruction.
Such investment would benefit developed, developing and emerging economies, campaigners said.
On Wednesday (7 October) the OECD said that public and private finance from industrialised countries for climate action in developing nations was building momentum. Developed countries have been promised US$100 billion per year by 2020.
Climate finance reached $62 billion in 2014, up from $52 billion in 2013 and made an average of $57 billion annually over the 2013-14 period, the OECD said.
G20 finance ministers held a meeting in Lima yesterday. Beforehand, campaigners, business groups, and leading economists said low carbon infrastructure was an essential part of the struggle to keep global warming increases below two degrees above pre-industrial levels.
World leaders will meet in Paris on 30 November for the United Nations Climate Change Conference, which aims to secure international agreement over the two degree target.
The group of 38 major business groups and NGOs from 18 countries called on the G20 to recognise the huge potential for energy efficiency public investment, for example in renovating buildings, to boost global economic productivity.
During the next 15 years, around $90 trillion is likely to be invested globally in infrastructure. Focusing that investment on low carbon, energy efficient infrastructure is essential to keep the global temperature increase below 2°C.
The G20 finance ministers will be using the Lima meeting to finalise their recommendations ahead of the G20 Heads of State meeting in Antalya, Turkey on 15 and 16 November.
The recommendations will likely have an influence on negotiations at the upcoming United Nations Climate Change Conference.
The alliance statement calls on the G20:
- To treat energy efficiency as an public infrastructure priority
- To commit to undertake an assessment of the structural reforms needed to address financing barriers and grow markets to improve energy productivity
- To commit to delivering sufficient public funding to ensure equal access to finance among householders, and to leverage the large scale private finance need to repair and enhance out building infrastructure
Ingrid Holmes, director at think tank E3G, said, “Given the multiple benefits of energy efficiency to boost economic productivity, improve health outcomes, reduce carbon emissions and cut energy bills, Governments must include energy efficiency as an infrastructure priority.”
Ada Amon, senior associate at E3G, added, “80% of global energy is consumed by G20 countries. If the G20 make energy efficiency an infrastructure priority it could make a huge dent in global energy consumption whilst boosting economic growth. No other infrastructure investment can do so much for so many.”
The call for greater investment was echoed by Lord Nicholas Stern, a globally recognised climate change and economics expert.
He stressed the need for development banks to encourage increased investment in sustainable infrastructure, especially in emerging and developing economies.
Development banks will need to increase infrastructure lending five-fold over the next decade from around $30-40 billion per year to over $200 billion, he said.
Lord Stern said, “Changing existing patterns of high-carbon infrastructure investment is a major challenge and the later it is left the more difficult it becomes. We must focus attention on the scale, quality and urgency of investments required to accelerate the low-carbon transition.”
He said the Paris conference was a chance to “enter a new period of extraordinary creativity, innovation, investment and growth.” He said there was a need to increase significantly countries’ ambitions to cut greenhouse gas emissions if we are to limit global warming to no more than 2°C.
“The Paris summit must not be regarded as a one-off opportunity to fix targets. Instead, it must be the first step of many, based on regular reviews of how close we are to meeting the goal of avoiding dangerous global warming,” he added.
In Paris, the European Union will negotiate as a bloc. EU leaders in October agreed a goal of cutting greenhouse gas emissions by at least 40% compared to 1990 levels by 2030. They also agreed to increase energy efficiency by 27%.