For all the headlines generated throughout the summit, evaluating its success at the end is all that really matters and should remain the focal point for all participants and observers. But first remains the not so simple task of defining and agreeing on what success looks like.
There are officially two targets: to limit warming “well below” 2°C, and to “pursue efforts” to limit at 1.5°C. Without any action, we had been heading for a world 4°C warmer, or more. But given the policies we have already put in place, we are predicted to be heading for just under 3°C, perhaps a little lower. Under the official pledges updated before last month — if successfully translated into effective policies — we would limit warming to around 2.5°C.
Some could see in these numbers a sign of progress and the number of countries announcing pledges to achieve net-zero emissions over the coming decades is expected to grow. But the pledges by governments to date – even if fully achieved – fall well short of what is required to bring global energy-related carbon dioxide emissions to net zero by 2050 and give the world an even chance of limiting the global temperature rise to 1.5°C1. Furthermore, how can we assess the value and impact of domestic pledges against a global issue?
The carbon cost of economic growth
In 2019, the world’s total emissions of CO₂ amounted to just over 36 billion tons. If we look at where these emissions come from, China is the biggest contributor with just over 10 billion tons, then it is the US and India with 5.3 billion and 2.6 billion tons respectively. Adding up the whole of the Asia region gives 16.6 billion tons – almost exactly one half of the global total. But what do these numbers tell us in terms of prioritisation of our action?
We believe these emissions should be looked at from a GDP perspective. This is why we have developed a concept called the ‘Carbon Cost of GDP’ aiming to measure the CO₂ emissions per unit of economic output. Specifically, we look at how much CO₂ is produced for every trillion dollars of GDP.
Our assessments2 estimate India has the largest carbon cost with 880 million tons, with China the second highest at 707 million tons. Looking at 10 of the largest economies in Asia, their carbon cost of GDP ranges from 880 million tons in India to 338 million tons in Bangladesh. The regional average of 566 million tons is more than four times the average of the four largest countries in Europe. In other words, if we really want to shift the dial on CO₂ emissions, we must act in Asia.
The role of blended finance
The G20 estimates that in just five countries in Asia – those where we intend to expand our activities – some $7.9 trillion is3 required by 2040: around $340bn per year. Addressing this issue will therefore require investment and with public finances heavily impacted by the COVID pandemic in the past couple of years, much of this is going to have to be a combination of private and public sector capital.
A concrete example of the type of public and private partnerships that can be developed to address this the funding gap and climate change is the UK Government’s MOBILIST (Mobilising Institutional Capital Through Listed Product Structures) programme, which ThomasLloyds’ Energy Impact Trust, alongside InfraCo – Helios CLEAR and the Green Guarantee Company was selected for.
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