Global investment in activities that reduce the threat of climate change fell for the second year in a row from $359 billion in 2012 to $331 billion in 2013, according to a new study by the Climate Policy Initiative.
Global Landscape of Climate Finance shows that, while public sources and intermediaries contributed $137 billion—a figure largely unchanged from last year—private investment totaled $193 billion, falling by $31 billion from 2012.
The study credits much of the decrease in private investment to falling costs of solar PV, with deployment of this technology growing as investment shrinks. Solar deployment cost $40 billion less in 2013 than would have been the case with 2012's solar investment costs.
However, the International Energy Agency estimates that an additional $1.1 trillion in low- carbon investments is needed every year between 2011 and 2050, in the energy sector alone, to keep global temperature rise below two degree Celsius. In cumulative terms, the world is falling further and further behind its low-carbon investment goals.
The study shows climate finance spending was split almost equally between developed (OECD) and developing (non-OECD) countries, with $164 billion and $165 billion, respectively. Almost three-quarters of all spending was domestic: It originated in the country in which it was used. Private actors had a particularly strong domestic investment focus with $174 billion or 90 percent of their investments remaining in the country of origin. These figures illuminate a bias by private investors toward environments that are more familiar and perceived to be less risky, Climate Policy Initiative says. But public sector money made up the vast majority of developed to developing country flows, which fell by around $8 billion from the previous year to between $31 and $37 billion in 2013.
The UN recently released a report saying governments can keep climate change in check at manageable costs but will have to cut greenhouse gas emissions to zero by 2100 to limit risks of irreversible damage. The 40-page synthesis is a summation of 5,000 pages of work by 800 scientists already published since September 2013, and says global warming is now causing more heat extremes, downpours, acidifying the oceans and pushing up sea levels.
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Founder & Principal Consultant, Hower Impact
Mike Hower is the founder of Hower Impact — a boutique consultancy delivering best-in-class strategic communication advisory and support for corporate sustainability, ESG and climate tech.
Published Nov 20, 2014 8am EST / 5am PST / 1pm GMT / 2pm CET