A new report anticipating the approach of the UN Climate Change Conference (COP26) has found that, in order to meet net-zero ambitions by 2050, global investment in decarbonization technology must increase by at least tenfold.
This includes cutting-edge green technologies, including hydrogen-based fuels, carbon capture, and bioenergy. Such early-stage innovations require urgent funding to be rolled out globally and with the appropriate infrastructure in place.
The How to Finance Industry Net-Zero report, released by the World Economic Forum and Oliver Wyman, compiles data from over 50 financial institutions, including banks, insurers, and the public sector.
According to the report, the blending of public and private capital as well as targeted public intervention is crucial in steering capital to green, cutting-edge technologies through active collaborative projects that promote decarbonization.
“The challenge ahead is significant, but not insurmountable,” said Derek Baraldi, Head of Sustainable Finance and Investing at the World Economic Forum. “If executed thoughtfully, the mobilization of finance to breakthrough technologies presents a tremendous investment opportunity.
“This study found that there is a real appetite from industry for thoughtful partnership and collaboration between private and public capital providers.”
The green investment gap described by the findings indicates that projects in decarbonization are effectively limited until universal global backing is achieved.
“Organisations have announced ambitious pledges to finance the transition to net-zero, but the progress made to date is not enough,” added Ted Moynihan, Managing Partner and Global Head of Industries at Oliver Wyman. “There is a huge gap in financing of early-stage decarbonization technologies, which will be absolutely critical to achieving our targets from 2030 to 2050.
“With more research breakthroughs coming, we are now in a vital moment to accelerate the mobilization of capital towards decarbonization technologies in hard-to-abate industries.”
