US President-elect Joe Biden has promised to go full tilt into action against climate change from the first day of his presidency on January 20. But, in fighting an impending climate crisis, he and other advanced-nation leaders may encounter an unexpected enemy – a crisis of market capitalism. The two things are closely connected, but this fact does not appear to have dawned yet on policymakers, investors and others who are raring to go into battle against climate change and other existential threats. Saving the planet is going to cost money, and no one is sure where it will come from. In round terms, half of the multitrillion-dollar amount needed is envisaged to come from governments and the other half from financial market investors. Just how exactly this latter half is supposed to find its way from private savings into public projects is far from clear. This is an extraordinary situation given the reams of analysis that have accumulated on global warming and its fallout – by way of floods, droughts, hurricanes, famines and (maybe) more pandemics. It is even more extraordinary given the other massive socioeconomic challenges facing the world now. The United Nations has identified what needs to be done in its Sustainable Development Goals (SDGs) – but not how and by whom. Great faith is being placed in so-called ESG (environment, social and governance) investing (another UN initiative) but this faith is very probably misplaced. So, unless capital markets can come up with some radical new ideas on how to translate private savings into the colossal amounts needed to save the planet and its inhabitants, and do so quickly, state intervention to bypass markets will almost certainly become necessary. State-dominated financial systems (among which China’s is by far the biggest) seem likely – by virtue of their ability to marshal savings behind mega social and economic projects – to leave market economies behind in the race to “go green” and contribute to saving life on Earth. This has already been illustrated in the case of infrastructure, such as transport, energy and telecommunications, where market systems struggle to attract capital and investor support on anything like the scale required – another problem Biden will need to confront in the US once he takes office. In 2015, the UN identified 17 planet-saving Sustainable Development Goals we need to aim for. These included various types of climate action, infrastructure and industry development, building sustainable cities and communities, health and well-being, and so on. This shopping list of social and economic goals seemed to represent just what was needed for a new era of cooperation among the 193 UN member nations and between public and private sectors of the global economy. But it did not say how we are expected to pay for and achieve the goals. Covid-19 is only a dress rehearsal for the challenges of climate change Attaining the goals, the UN said, was going to be very costly. The total bill could amount to US$5 trillion per year over the 15-year life of the SDG implementation period up to 2030, or around US$75 trillion in total – roughly equal to one year’s global gross domestic product. Even then, the figure almost certainly understated required spending in areas such as infrastructure, where various estimates suggest financing needs of up to US$100 trillion between now and 2040. And it doesn’t take into account required spending on improved medical facilities in the wake of the Covid-19 pandemic. It is customary for governments to finance public goods, but the UN suggested that governments would not be able to foot anything like the entire bill. The public sector would be unlikely to supply more than around a half, leaving savers and investors in capital markets to provide the rest. That implied private investor spending of some US$2.5 trillion a year or some US$38 trillion between 2015 and 2030 or US$25 trillion between now and 2030. But even supposing such amounts could be found, we come back to the question of how they can be channelled into projects needed to save the planet. A belief has grown that ESG can somehow, and almost magically, achieve this, so much so that ESG investing is claimed by industry associations to have attracted US$20 trillion or more already into ESG funds, generating handsome returns for fund managers in the process. In reality, ESG is all about encouraging companies to act as better corporate citizens – a worthy objective that could contribute to slowing climate change by reducing carbon dioxide emissions, but one that is far from channelling savings directly into a coordinated investment plan. For this to happen – unless state or quasi-state bodies are to take over the job – financial markets need to come up with funds linked directly to long-term investment in individual SDGs and which enable savers to put their money into “hard” planet-saving ventures instead of soft and fuzzy ones. The task needs not just a climate change tsar, such as former secretary of state John Kerry whom Biden has appointed to the task, but also a financial system tsar who can get Wall Street and other financial centres properly focused on the task in hand. That would be a good New Year resolution for Biden and other leaders. Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs