Since the Paris Agreement was adopted in December 2015, up to 189 countries have submitted national plans that target aggressive growth in climate solutions – including renewable energy, low-carbon cities, energy efficiency, sustainable forest management and climate-smart agriculture. These plans offer a clear roadmap for investments that will target climate-resilient infrastructure and offset higher up-front costs through efficiency gains and fuel savings.
IFC’s study, based on national climate-change commitments and underlying policies of 21 emerging-market economies, identifies sectors in each region where the potential for investment is greatest. This includes green buildings in East Asia and the Pacific – where China, Indonesia, the Philippines and Vietnam show a |climate-smart investment potential of $16 trillion.
Latin America and the Caribbean offer the next largest opportunity – particularly in sustainable transportation, where the potential for investment in Argentina, Brazil, Colombia and Mexico is about $2.6 trillion. Opportunities in South Asia are mostly in climate-resilient infrastructure, where $2.5 trillion of opportunities exist in India and Bangladesh.
“There has never been a better time than now for climate-smart investing,” Philippe Le Hourou, IFC executive vice president, said. “This reflects the dramatic reduction in the price of clean technologies and the rise of smart policies that are driving businesses to invest. In this context, it is important to set ambitious goals – which is why IFC has pledged to increase our climate investments to a goal of $3.5 billion a year by 2020 and catalyse another $13 billion through other investors.”
Sub-Saharan Africa represents a $783 billion opportunity – particularly for clean energy in Cote d’Ivoire, Kenya, Nigeria, and South Africa. In Eastern Europe, the biggest markets – Russia, Serbia, Turkey, and Ukraine – show a combined investment potential of $665 billion, mostly in energy efficiency and new green buildings. And in the Middle East and North Africa, the total climate-investment potential for Egypt, Jordan and Morocco is estimated at $265 billion, over a third of which is for renewable-energy generation, while 55 per cent ($146 billion) is for climate-smart buildings, transportation and waste solutions.
The report also finds that government action will be critical to unlock the full scale of investment potential. It recommends that governments integrate national climate commitments into their development strategies and budget processes, strengthen the investment climat8e for climate-smart industries and deploy public funds strategically to mobilise private capital, by reducing risk and providing project support, for example.