A new research released on Tuesday says serious and rapid investment in sustainable upgrades and alternatives is needed to limit climate change.
With high-carbon infrastructure responsible for the majority of global greenhouse gas emissions, a summary of an upcoming UN Environment, OECD and World Bank Group report, Financing Climate Futures: Rethinking Infrastructure, lays out six ways to bring public and private financial flows in line with the Paris Agreement goals, in particular in infrastructure finance.
The report says governments must adopt a more transformative agenda on financing for a low-carbon future to meet the Paris temperature goals by peaking CO2 emissions as soon as possible and then bringing them down to net zero or lower in the second half of the century.
Solutions in the report include better planning and foresight, integrating climate concerns into all budgetary decisions and leveraging public procurement into low-emission infrastructure.
“Building climate-compatible infrastructure is a cornerstone for the success of the Paris Agreement and broader sustainability goals, and we have seen encouraging momentum in this direction. But we need to start making real change happen,” said Erik Solheim, Head of UN Environment.
“Only sustainable infrastructure can deliver huge benefits to people and the planet. To encourage the capital allocation that will unlock this promise, however, we need new thinking. This report presents some of the steps we can take to make this change.”
While acknowledging that change is happening, but too slowly, the report finds that energy, transport, buildings and water infrastructure contribute more than 60 per cent of greenhouse gas emissions.
This means that scaling-up public and private investments in low-emission and sustainable infrastructure is critical to increase resilience and avoid further carbon lock-in.
The final report of the UN Environment Inquiry into the Design of a Sustainable Financial System, released in April this year, found that progress on reforming the global financial system over the last four years has started to deliver financing for sustainability and set up the next wave of action.
Sustainability, according to the Inquiry, is becoming part of routine practice within financial institutions and regulatory bodies, green bond issuance grew from US$11 billion in 2013 to USD155 billion in 2017, and the number and range of policy measures to advance sustainable finance increased from 139 in 2013 to 300 by 2017.
“We cannot ignore the new reality of powerful weather events that threaten jobs, homes, food security and other critical areas of our lives,” said Kristalina Georgieva, Chief Executive Officer of the World Bank.
She added, “The infrastructure that is built today must be ready to cope with tomorrow’s changing climate. We need the right incentives and regulations to urgently accelerate funding to these projects.”
Investment in sustainable infrastructure can boost economic growth
OECD analysis has shown that shifting infrastructure investment into low-carbon options, combined with structural reforms, could increase global Gross Domestic Product by as much as 5 per cent by 2050, while cutting emissions.
That includes the effects of lower risks of damage from extreme weather events. The cost of shifting from brown to green infrastructure would be more than offset by fuel savings.
According to the OECD, governments still spend half a trillion dollars a year subsidizing oil, coal or gas and are not making enough use of public spending as a lever to decarbonize economies by investing in low-emissions infrastructure and innovation.
Power plants under construction or in planning will lead to a near doubling of emissions from power generation, while incentives to shift to green energy and infrastructure, and disincentives to emit in all sectors, remain weak.
“After all the promises made in Paris and despite having all the tools we need at hand to move forward, this inertia risks us losing the war on climate change,” said OECD Secretary-General Angel Gurría.
“We need to urgently deliver on our climate and development goals, and to do that we need a systemic shift of trillions of dollars towards low-emission and resilient investment.”
The report, which will be released in full at the next climate conference in Poland this December, outlines the six key actions that will help deliver this investment which includes planning sustainable and resilient infrastructure for a low-emission and resilient future, innovation to accelerate the transition to low-emissions technologies, business models and services, ensuring fiscal sustainability for a low-emission, resilient future, resetting the financial system in line with long-term climate risks and opportunities, rethinking development finance for climate and empowering city governments to build low-emission and resilient urban societies.