Global recession fears could slow needed climate investments
The huge gap between the sums needed for developing countries to transition to renewable energy sources and adapt to climate change — estimated at $1 trillion in external funding per year — and current funding levels (half that, at most) has been a central focus of the COP27 climate conference.
Why it matters: Experts, activists and leaders from vulnerable countries have been warning of dire consequences if much more money doesn’t flow much more quickly. But with countries and companies staring down a potential global recession, investment levels could actually decrease.
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”