Putting Global Investment into Perspective

It’s all about your outlook.

There are two main views on the amount of investment needed to adequately mitigate climate change: either it’s a reasonable [small] amount… or it isn’t.

McKinsey’s 2012 report on resource requirements claims that about $2 trillion is needed to adequately improve energy efficiency, resource use, and climate change impacts.

They also wisely point out:

“Today, governments are subsidizing the consumption of resources by up to $1.1 trillion. Many countries commit 5% or more of their GDP to energy subsidies.”

They acknowledge that changing our behaviors to account for climate change is expensive but very realistic, given that we would have to spend most of this amount anyway for harder-to-extract oil, more expensive land, scarcer water, etc.

The International Finance Corporation (IFC, part of the World Bank Group), in contrast, says:

“Mitigating climate change by reducing greenhouse gas emissions in developing countries will require considerable investments—estimated by the World Bank’s 2010 World Development Report to be as much as $4.6 trillion to keep global average temperature rise within 2 degrees Celsius by the end of the century.”

A friend working at WRI (the World Resources Institute) told me yesterday that solar power is already financially sustainable (read: pays for itself) in Hawaii, and will likely get there soon in California and Texas. But this is never publicized; instead, there are tons of debates about how these “green energy” investments are not feasible and too expensive in a time of deficit. It’s a shame that much of Washington still doesn’t realize that their arguments of needing national energy sovereignty are completely aligned with smarter energy sources.

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About Development_Tango

Every nation's refugee. But more specifically, an open-minded French- and Russian-speaking former Moldovan-Ukrainian jumping between New York and California. Who hugs trees but tries to be logical about it. And wants to heal this broken planet by helping others help themselves.

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