World economy needs a quick financing makeover to contain global warming, panellists tell Green Swan conference
- The world needs ‘blended finance’ – a mix of funding from public and private sector sources, with much of it provided by developed nations to developing nations, experts say
- The world will need to invest US$9.2 trillion a year in the most polluting sectors in the coming three decades if the Paris climate goal is to be reached, according to McKinsey
A drastic makeover of the world economy and huge cross-regional investment flows are needed over the next three decades if the world is to meet its climate goal of keeping global warming at 1.5 degrees Celsius, experts said.
In the process, a great deal of “blended finance” from both public and private sector sources – much of it provided by developed nations to developing nations – will be needed, said academics, policymakers and bankers at the annual Green Swan conference on sustainable finance organised by the Bank of International Settlements.
“We have to change the structure of the world economy – all countries, all sectors – very rapidly over 20 or 30 years,” said Nicholas Stern, a professor of economics and government at the London School of Economics and Political Science on Tuesday. “All systems have to change – energy, transport, cities, land. It has to be fast, and we have to invest a lot.”
The climate transition and decarbonisation process also needs to be “just” to ensure that the poor have access to affordable decarbonisation tools – such as electric vehicle charging facilities and energy efficiency solutions like home insulation, he added.
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This will require a private-public “blended finance” approach, said Paulina Dejmek Hack, a senior official responsible for financial markets stability at the European Commission.