Enhanced financing can unlock $50tn in global green transition: report
POWER & RENEWABLE ENERGY

Enhanced financing can unlock $50tn in global green transition: report

According to Deloitte's report on "Financing the Green Energy Transition," the implementation of enhanced financial mechanisms has the potential to generate savings of up to $50 trillion for global decarbonisation initiatives. The study underscores a substantial rise in the annual global investments required, estimated to be between $5 trillion and $7 trillion, to meet the target of achieving net-zero greenhouse gas emissions by 2050. This marks a significant increase from the current annual investment of less than $2 trillion.

The report pinpoints two key issues contributing to the underinvestment and heightened return expectations in green projects: perceived risk by private investors and the necessity for increased collaboration among governments, financial institutions, and investors in developing economies to address these risks. The proposed solution involves establishing blended, low-cost finance solutions to make green projects more appealing for investment, thereby contributing to a fair and inclusive global energy transition.

Viral Thakker, Partner and Sustainability Leader at Deloitte India, emphasised the critical role of efficient financing mechanisms for India in the global shift to net-zero. Thakker stressed the significance of public-private partnerships and innovative finance structures in achieving this objective. Jennifer Steinmann, Deloitte Global Sustainability and Climate practice leader, underscored the urgency of removing financial barriers in developing economies to expedite the transition to green energy. Hans-Juergen Walter, Global Financial Services Industry Sustainability and Climate leader, highlighted the pivotal role of concessional finance and innovative financing structures in mobilising private capital for climate action, particularly in the Global South.

According to Pradeep Philip, Partner at Deloitte Australia and report author, implementing these financial strategies could potentially reduce the cost of the net-zero transition by 40% for developing economies, contingent upon proper international coordination and participation. The report also outlines specific actions for governments to address the green finance gap, including updating energy transition policies, creating transparent regulatory frameworks, addressing market barriers, and developing human capital for the green energy sectors.

Bernhard Lorentz, Founding Chair of the Deloitte Center for Sustainable Progress, emphasised the significance of the upcoming COP28 as a crucial moment for addressing the financial gap in the transition to net-zero. He stated, "Solving the financial gap is key to accelerating the transition."

According to Deloitte's report on Financing the Green Energy Transition, the implementation of enhanced financial mechanisms has the potential to generate savings of up to $50 trillion for global decarbonisation initiatives. The study underscores a substantial rise in the annual global investments required, estimated to be between $5 trillion and $7 trillion, to meet the target of achieving net-zero greenhouse gas emissions by 2050. This marks a significant increase from the current annual investment of less than $2 trillion. The report pinpoints two key issues contributing to the underinvestment and heightened return expectations in green projects: perceived risk by private investors and the necessity for increased collaboration among governments, financial institutions, and investors in developing economies to address these risks. The proposed solution involves establishing blended, low-cost finance solutions to make green projects more appealing for investment, thereby contributing to a fair and inclusive global energy transition. Viral Thakker, Partner and Sustainability Leader at Deloitte India, emphasised the critical role of efficient financing mechanisms for India in the global shift to net-zero. Thakker stressed the significance of public-private partnerships and innovative finance structures in achieving this objective. Jennifer Steinmann, Deloitte Global Sustainability and Climate practice leader, underscored the urgency of removing financial barriers in developing economies to expedite the transition to green energy. Hans-Juergen Walter, Global Financial Services Industry Sustainability and Climate leader, highlighted the pivotal role of concessional finance and innovative financing structures in mobilising private capital for climate action, particularly in the Global South. According to Pradeep Philip, Partner at Deloitte Australia and report author, implementing these financial strategies could potentially reduce the cost of the net-zero transition by 40% for developing economies, contingent upon proper international coordination and participation. The report also outlines specific actions for governments to address the green finance gap, including updating energy transition policies, creating transparent regulatory frameworks, addressing market barriers, and developing human capital for the green energy sectors. Bernhard Lorentz, Founding Chair of the Deloitte Center for Sustainable Progress, emphasised the significance of the upcoming COP28 as a crucial moment for addressing the financial gap in the transition to net-zero. He stated, Solving the financial gap is key to accelerating the transition.

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