World Economy

World Needs $90t to Avoid Climate Disaster

The world is expected to invest about $90 trillion in infrastructure over the next 15 years, requiring an “urgent” shift to ensure that the money is spent on low-carbon, energy-efficient projects
Greener infrastructure is said to be the key to Paris climate deal.Greener infrastructure is said to be the key to Paris climate deal.

Global spending on infrastructure will total $90 trillion in the next 15 years and is the key to greener economic growth after the Paris agreement on climate change won a formal go-ahead, a new study said on Thursday.

A global commission, including former heads of government, business leaders and economists, said resilient infrastructure from the design of roads to rural water supplies could limit both global warming and pollution and ensure economic growth, Business Insider reported.

A gigantic overhaul of the world’s buildings, public transport and energy infrastructure costing trillions of dollars is required if dangerous climate change is to be avoided, former Mexican president Felipe Calderon, head of the Global Commission on the Economy and Climate, said in a statement.

"Investing in sustainable infrastructure is the wisest decision we can take for our future," he said.

On Wednesday, the 2015 Paris Agreement on climate change passed a key threshold of support needed to enter into force.

"We have agreed to a global climate agenda, now we should act on it," Calderon said.

The study took a broad view of infrastructure saying it encompassed energy supplies, public transport, buildings, water and sanitation as well as what it called the "natural infrastructure" of forests and wetlands.

Overall, it projected infrastructure investments from now until 2030 of around $90 trillion, roughly double recent levels and mostly in developing nations and cities.

Rising Populations

Investment needs will rise partly because of a rising global population. A billion more people will live in urban areas by 2030, roughly the equivalent of building a city the size of Washington every month, Calderon told Reuters.

The projected investments in the period to 2030 are slightly bigger than the World Bank's estimate of global gross domestic product of $73 trillion for 2015.

The report called for a rapid phase-out of fossil fuel subsidies, which it estimated at $550 billion in 2014, to help greener investments, and wider pricing of emissions of carbon dioxide, the main man-made greenhouse gas.

Nicholas Stern, of the London School of Economics and a co-chair of the commission, said governments and investors needed to adopt new policies for investments in the next two or three years, given long lead times.

He said the world economy had been weak since the financial crisis around 2008, despite government attempts to spur growth.

“We cannot continue with business as usual, which will lock in high-carbon infrastructure and create further congestion and pollution while choking off development opportunities, particularly for poor people,” he said.

The world is expected to invest about $90 trillion in infrastructure over the next 15 years, requiring an “urgent” shift to ensure that this money is spent on low-carbon, energy-efficient projects.

“We can and should invest in and build cities where we can move and breathe and be productive, while protecting the natural world that underpins our livelihoods.”

Burdens for Future Generations

The report states that more than 60% of the world’s greenhouse gases are associated with ageing power plants, roads, buildings, sanitation and other structures.

Around 1,500 coal plants are estimated to already be in construction worldwide, which would send the world spiraling towards disastrous environmental changes. Carbon-heavy infrastructure “literally kills people by causing deadly respiratory illnesses, exacerbating road accidents and spreading unclean drinking water, among other hazards”, the report reads.

 “It also puts pressure on land and natural resources, creating unsustainable burdens for future generations such as unproductive soils and runaway climate change.”

The financial system will need to be adjusted to make this change, the report finds. Subsidies to fossil fuels, currently totaling about $550 billion a year, will need to be eliminated; better planning of projects will be required; and tools such as green bonds and green investment banking will need to be deployed, the study said.


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