According to calculations by the reinsurer Swiss Re, achieving the Paris climate goals would cost 270 trillion dollars. Investments of this magnitude would be necessary in the four economic sectors with the highest CO2 emissions: energy, transport, buildings and industry, as the Swiss company announced on Friday in Zurich.
In order to comply with the Paris Agreement and reduce net CO2 emissions to zero by 2050, “earlier and much more investment in climate protection must be made”.
At the current rate, the target year 2025 will be missed
“Investments in decarbonization have increased by an average of 5 percent per year between 2016 and 2021,” said Jérôme Haegeli, the company’s chief economist. “If they continue to increase at the current rate, they will probably miss the 2050 target year for net-zero emissions by 20 years.”
The experts at the company’s own Swiss Re Institute see the greatest need for investment in the transport sector at an estimated 114 trillion dollars, especially in the development of the necessary infrastructure for electric vehicles.
For the energy sector, the study authors estimate the investment gap at $78 trillion. Eliminating CO2 emissions from buildings would therefore require investments of 65 trillion, while industry would have to bear a comparatively small share of 14 trillion.
According to Swiss Re, the gap could be closed by “joint efforts by the public and private sectors” – with an unequal distribution of roles: the majority of investments must come from the private sector, and the public sector must create the framework for this.
According to the study, the international financial sector could also make its contribution by investing more in climate-neutral technologies and infrastructure. “The market for green bonds accounts for less than 2 percent of the total volume of the global bond market,” said Haegeli.
