Earth Today | New report champions mitigation investments in developing world
Published:Thursday | November 14, 2024 | 12:06 AM
THE NEED for Small Island Developing States (SIDS) to secure new, predictable and adequate financing to address climate change is supported by findings from the latest Emissions Gap Report.
Among other things, the 2024 report – titled ‘No more hot air … please!’ and published by the United Nations Environment Programme – makes the case for greater investments in emerging market and developing economies (EMDEs).
“Meeting investment needs, particularly in EMDEs, presents both a pressing challenge and a significant opportunity for growth and development,” the report noted.
There is a particular need, it said, for scaled up investment in mitigation, that is, in efforts to reduce greenhouse gas emissions from human activity, such as in the sectors including agriculture, energy, and transportation.
“A considerable increase in mitigation investments will be needed, particularly in EMDEs outside China. Investment growth in these countries has slowed since the 2008 global financial crisis, with annual growth rates dropping from six per cent in the 2000s to just three per cent in the 2010s,” the report said.
Realities in SIDS and other EDMEs, it added, necessitate the investment.
“In EMDEs outside China, the need for climate investment is closely tied to broader development challenges and needs. These regions are already struggling with public health, human capital, food and energy security, rising debt and political tensions, all of which are exacerbated by climate change,” the report said.
“In addition, these countries also face an urgent need for infrastructure and human capital investments as a result of rapid demographic growth, urbanisation and economic transformations,” it said further.
According to the report, with the world’s population set to balloon by 1.9 billion people by 2050 and “with all this growth concentrated in EMDEs outside China, a rapid and sustained increase in investment is essential to support sustainable development and ensure long-term growth in these countries”.
And there are options to getting it done.
“While the required scale of investment (an estimated increase of US$6.7 trillion to US$11.7 trillion annually by 2035) may seem daunting, most of this involves shifting existing capital flows from high- to low-carbon activities, with global incremental investment for a net-zero transition estimated at US$0.9 trillion to US$2.1 trillion per year between 2021 and 2050,” the report explained.
Countries, it said, also need to put in place the right policy frameworks, institutional structures and financial tools in order to make the transition “financially feasible in the broader context of the US$110 trillion global economy”.
It will also be necessary, the report said, for “concerted efforts across all capital pools, with a particular focus on catalysing private and domestic finance, and the mobilisation of resources across four key areas”.
Those areas include domestic resource mobilisation, including improved “tax collection, phasing out harmful subsidies and enhancing the efficiency of public spending”; private sector finance; and multilateral development banks, through ongoing reforms aimed at “enhancing their ability to reduce, manage and share risks, thereby lowering the cost of capital and supporting critical public sector programmes”.
The fourth area is concessional finance, which, the report said, “will be crucial for investments in public goods that do not generate revenues or savings for businesses, including some areas of nature conservation and the just transition”.