Transforming our world into a low-carbon and resilient environment requires strategic focus on key drivers. To effectively address climate investment needs, setting tangible short-term goals is crucial for institutions, governments, and corporations to understand where scaling up is most necessary.
Energy System: The Backbone of Decarbonization
Of the estimated $2-2.8 trillion needed for Net Zero by 2030, energy systems will require the lion’s share (~40%), as energy plays a central role in decarbonization. Here’s a summary of key climate finance needs by 2030, categorized by sector:
- Power Systems: The transformation begins with electrification, which requires abundant clean energy to power not only current electricity needs but also emerging applications like electric vehicles. This makes the power system the backbone of progress, leading to the next crucial area.
- Transmission and Distribution: Often overlooked, this sector is essential for connecting the scaling up of low-carbon energy to society’s power needs. By 2030, it will need to be a critical link in the chain, despite current underinvestment.
Transportation: Shifting to a New Infrastructure
The transportation sector also demands significant finance. The key here is not just about electrification, better batteries, or faster chargers. The larger task is replacing the existing fossil fuel infrastructure with a new one that can support the vast majority of new vehicles being electric by the mid-2030s.
Adaptation, Resilience, and Natural Capital: Addressing Immediate Needs
- Loss and Damage, Adaptation, and Resilience: These areas are frequently overlooked, as funding for climate change loss and damage was only recently established at COP27. Adaptation and resilience remain underfunded, with only $46 billion on average (out of $632 billion) allocated to adaptation projects, according to the Global Landscape of Climate Finance by CPI.
- Natural Capital: Investing in natural capital provides important co-benefits for climate, nature, and society. However, there’s a significant underinvestment in scaling up these solutions.
Mitigation: Balancing Immediate and Long-Term Goals
While mitigation is justifiably a focus, it’s important to remember that many climate impacts are happening now and cannot wait for funding until 2030 or 2050.
By prioritizing these key areas and addressing the funding gap, we can accelerate the transition to a low-carbon and resilient future.