Request Free Trial
November 8, 2022

Over $2tn a year needed by 2030 for ‘loss and damage’ and to cut EMs’ emissions

A new study says that the annual investment needs of emerging and developing economies, excluding China, will exceed $2tn by 2030 to reduce carbon emissions, improve resilience, and deal with the loss and damage caused by climate change.

The ‘Finance for climate action: scaling up investment for climate and development’ report prepared by the Independent High-Level Expert Group on Climate Finance estimates annual investment needs of $1tn in 2025 and $2.4tn by 2030.

Around $1tn a year should come from external sources like foreign investors, developed countries and multilateral institutions by 2030. This figure, warns the report, is not comparable with the $100bn a year that rich countries pledged to provide by 2020. The annual $1tn “is a requirement based on an analysis of the investment and actions necessary and the domestic finance potentially available, for an internationally agreed and vital purpose,” it says, while the annual $100bn “was negotiated, not deduced from analyses of what is necessary for a purpose.”

In a note, Nicholas Stern, co-chair of the Independent High-Level Expert Group on Climate Finance, said: “Given the pressure on public budgets in all countries, the role of the multilateral development banks, including the World Bank, will be critical in increasing the scale of external finance for emerging market and developing countries, and bringing down the cost of capital for investors. The flow of finance from these institutions should triple from about $60bn a year today to around $180bn a year within the next five years.”

The report was commissioned by the Egyptian Presidency of COP27 and the UK Presidency of COP26 and published by the London School of Economics’ Grantham Research Institute on Climate Change and the Environment, and the Brookings Institution.

Read report

Photo credit: Getty

A service from the Financial Times