UN Special Envoy on Climate Action and Finance
The price of meeting net zero is estimated to be between $100-150 trillion over the next 30 years. Regardless of this cost, we need to reach net zero before climate change does irreversible damage to the environment and the economy. This video helps us understand the need to reach net zero, outlines the cost of reaching net zero and finally explains where the money will come from.
The price of meeting net zero is estimated to be between $100-150 trillion over the next 30 years. Regardless of this cost, we need to reach net zero before climate change does irreversible damage to the environment and the economy. This video helps us understand the need to reach net zero, outlines the cost of reaching net zero and finally explains where the money will come from.
The price of meeting net zero is estimated to be between $100-150 trillion over the next 30 years. Regardless of this cost, we need to reach net zero before climate change does irreversible damage to the environment and the economy. However, the scale of this challenge is enormous. At the core of the investment need is a complete overhaul of our energy system, emissions from electricity must fall 60% alone by 2030 and annual investment in clean energy will need to rise 3.5x to $4tn. We will need public and private financing to meet this goal.
Key learning objectives:
Understand why we need to reach net zero
Outline the cost of reaching net zero
Discuss where the money will come from
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Global temperature needs to stabilise at 1.5 degrees above the pre-industrial average, we are currently at 1.3 degrees. With current climate change policies, we are expected to hit 2.9 degrees warming. To stabilise temperature rises at 1.5 degrees, emissions need to half over the next decade, falling 7% year on year.
An overhaul of the energy system is required, energy emissions from electricity along must fall 60% by 2030. Annual investment in clean energy will need to rise to $4tn, about 3.5 times what it currently is.
Country commitments (NDCs) are on the rise but are not yet good enough. The IEA has concluded that the current stated policies would only limit temperature increases to 2.7 degrees, rather than the 1.5 degrees required.
If the NDCs are seen as credible, investors will pour money in anticipation creating a virtuous cycle of large-scale investment, faster decarbonisation and greater jobs and growth.
To make these NDCs credible, public finance support for critical infrastructure is required, however, only private finance can match the scale of climate action needed for the transition to net zero.
To reach net zero climate-related financial reporting is critical. The push to require all financial institutions to publish climate-related financial reporting is underway, almost the entire financial sector demands TCFD disclosures for example.
The IFRS is also setting up the International Sustainability Standards Board, which will produce a climate disclosure standard by mid-2022, ensuring financial transparency when it comes to sustainability.
The NGFS has grown to include 90 authorities in countries responsible for more than 80% of the world’s emissions and central banks in countries with 50% of global emissions are beginning to conduct climate stress tests.
All of these initiatives aim to help investors identify and measure the returns and opportunities in the transition to net zero.
This video is now available for free. It is also part of a premium, accredited video course. Sign up for a 14-day free trial to watch more.