Sunday, January 24, 2021

Asia Is Going To Have To Come Up With $66 Trillion To Meet Their Paris Climate Treaty Commitments

Don't look at me, I don't have that kind of money.*

From The Asset (Hong Kong), January 25:

Climate finance must grow by US$3-5 trillion per year globally
Investment demand seen greatest in Asia in view of region’s rapid growth

The world’s climate finance market structure (CFMS) must grow at an unprecedented scale of US$3-5 trillion per year globally in order to meet the Paris Agreement target of limiting the global temperature rise to below 2 degrees Celsius from pre-industrial levels, and to pursue efforts to limit it to 1.5 degrees Celsius. CFMS collectively refers to financial market participants, products and financial instruments, policies and regulations, financial market infrastructure, and enablers that support capital markets activity in climate finance.

This means that the volume of climate-aligned finance, basically the financing that focuses on enabling climate change mitigation, that will be necessary to achieve the Paris Agreement targets will have to grow to over US$100–150 trillion cumulatively in the next three decades, according to a report issued by the Global Financial Markets Association (GFMA) and the Boston Consulting Group (BCG) in December 2020.

“The most significant regional investment demand, estimated at US$66 trillion, is expected to come from Asia. This is driven to a large extent by the scale and pace of growth of Asia’s economies, growing population, increasing urbanization, and rapid industrialization,” says Grace Hui, head of green and sustainable finance at Hong Kong Exchanges and Clearing Limited. Hui cited the report during a panel discussion at the Asian Financial Forum.

North America requires US$21 trillion in investments for decarbonization, while Europe requires US$17 trillion, and the rest of the world US$11 trillion.

The current market for climate finance is estimated to be approximately U$600 billion, implying that an increase of more than five to eight times in the short term will be needed to support transition pathways to a low-carbon economy, Hui says....


*Paraphrasing the Vatican spokesman who, when asked about wires to Australia amounting to A2.3 billion said: 

"It's not our money because we don't have that kind of money,"