Monday, September 15, 2014

Only $1 Trillion: Annual Investment Goal Puts Climate Solutions Within Reach

A wind farm in Illinois. (Credit: Tom, flickr) Click to Enlarge.
A two-year-old number is changing the way governments, companies, and investors approach the fight against climate change:  $1 trillion.

That is roughly the amount of additional investment needed worldwide each year for the next 36 years to stave off the worst effects of global warming and keep the Earth habitable, according to the International Energy Agency.  The Paris-based organization of 29 developed countries calculated the cost in 2012 and raised its estimates this year.  Ceres, a Boston-based nonprofit investor group that advocates environmental sustainability, framed it as the "Clean Trillion" in an investment campaign that has become a rallying cry.

While $1 trillion sounds like a lot, knowing the figure is good news, according to climate activists, investment experts and United Nations organizers of the next round of global climate talks.   Worldwide, almost $4 trillion a year will need to be invested over that time anyway in electric grids, power plants and energy efficiency, the IEA says.  In a global economy of $75 trillion, $1 trillion works out to 1.3 percent of the world's annual output of goods and services, or about $10,400 a person.  The calculation also focuses the discussion on investment—suggesting the potential for returns and profits—rather than on costs for disaster response and losses to rising oceans.

"One of the things we're trying to show is that this is an opportunity story in response to the horror of the risks we're facing," says Sean Kidney, chief executive officer of the Climate Bonds Initiative, a London-based nonprofit promoting large-scale investment in a low-carbon world.  "We're in a big hole.  The key thing is for government and investors to sit down and work it out.  It's got to be a grand collaboration to get out of the hole."

Putting a price tag on the energy sources, transportation systems, energy-saving steps and reductions in carbon-based greenhouse gas emissions provides a framework for discussion, according to the IEA, corporate leaders, and others.  It has also shifted the perspective of companies and investors.  On Sept. 23, the UN is hosting a Climate Summit in New York that's meant to showcase new climate-related pledges from governments and to boost support for an international climate treaty.  Next year in Paris, negotiators hope to sign a successor agreement to the expired Kyoto climate accord.

Only $1 Trillion: Annual Investment Goal Puts Climate Solutions Within Reach

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