Contributed by Robert Lyman © 2020
In a previous article, I summarized the findings of an organization called the Climate Policy Initiative (CPI) concerning the global public and private sector expenditures on climate-related measures. In brief, total expenditures over the 2011 to 2018 period were US $3.66 trillion, 55% of which were on solar and wind energy. The CPI reports extensively on other topics related to climate finance, and is obviously very well-funded itself. Although it does not publish online its budget or annual report, it lists a large number of well-heeled donors, including Bloomberg Philanthropies, Climate Work Foundation, Green Climate Fund, International Development Finance Club, Gordon and Betty Moore Foundation, Oak Foundation, Rockefeller Foundation, and the World Wildlife Fund. Its most recent report, entitled Global Landscape of Climate Finance 2019, provides even more information that is worthy of comment.
The report notes that the “tracked” climate finance in 2017 and 2018 crossed the US dollar half- trillion mark for the first time. Annual flows rose to US$ 579 billion on average over the two-year period. A quarter of the increase over previous periods was due to the incorporation of new sources of funding, including private investments on “sustainable infrastructure” and the use of proceeds of bonds issued by the private sector and regional and municipal governments.
Average annual public sector finance totaled US$ 253 billion in 2017/2018, representing 44% of total commitments that year. Private finance, which reached US$ 326 billion on average annually in 2017-2018, accounted for the majority of climate finance, at around 56%. Most of the financing was in the form of market-rate debt, averaging $US $316 billion annually.
Based on the information currently available to the Climate Policy Initiative organization, 2019 climate finance flows will amount to US$ 608 billion- $622 billion, a 6% to 8% increase over the 2017-2018 averages.
One might have thought that this would be greeted by the proponents of climate spending as a success. Instead, it was described as not nearly enough. Climate Policy Initiative, driven by the mandate of attaining the IPCC’s goal of avoiding an increase in global average temperatures to no more than 1.5 degrees Celsius over those that prevailed in pre-industrial times, estimates the range of necessary spending to be between US $1.7 trillion and $3.9 trillion per year, three to seven times as much as the 2017-2018 average. At those levels of expenditure, over the 30-year period 2021 to 2050, the global cost of climate spending would be between US $51 trillion and US $117 trillion. It is difficult to imagine how much that is. US $117 trillion is US $10.7 billion per day, or U.S. $446 million per hour, for 30 years.
This might be a useful number to recall when others say that climate change policy measures will not cost very much.
About the Author
ROBERT LYMAN is an economist with 27 years’ experience as an analyst, policy advisor and manager in the Canadian federal government, primarily in the areas of energy, transportation, and environmental policy. He was also a diplomat for 10 years. Subsequently he has worked as a private consultant conducting policy research and analysis on energy and transportation issues as a principal for Entrans Policy Research Group. He is a frequent contributor of articles and reports for Friends of Science, a Calgary-based independent organization concerned about climate change-related issues. He resides in Ottawa, Canada. Full bio.