Investments of $13.5 Trillion Needed for Sustainable Transition by 2050, Says WEF Report

November 29, 2023

A new report from the World Economic Forum (WEF) emphasizes the need for USD 13.5 trillion in investments by 2050 to transition to a sustainable and carbon-neutral future. The report highlights the production, energy, and transport sectors as key areas requiring significant investments. Major producing countries, including India, China, the US, and the EU, have committed to net-zero targets, necessitating businesses to align their operations with evolving regulatory landscapes.

Challenges and Imperatives

The complex and ever-changing policy regimes pose challenges for businesses, leading to substantial resources being allocated for compliance. The report underscores the importance of establishing consistent and stable regulatory frameworks with well-defined timelines to mitigate risks and facilitate progress. The report calls for global funding and stronger policy incentives to scale clean power, clean hydrogen, and carbon capture around industrial clusters.

Net-Zero Industry Tracker 2023

The World Economic Forum Net-Zero Industry Tracker 2023 report assesses progress towards net-zero emissions for eight industries responsible for 40% of global greenhouse gas emissions. These industries include steel, cement, aluminum, ammonia, oil and gas, aviation, shipping, and trucking. Decarbonizing these sectors, which heavily rely on fossil fuels, presents technological and capital-intensive challenges.

Investment Areas and Pathways

The report identifies clean power, clean hydrogen, and infrastructure for carbon capture, utilization, and storage (CCUS) as critical investment areas for accelerating industrial decarbonization. The USD 13.5 trillion in investments is derived from average costs of clean power generation, electrolyzer costs for clean hydrogen, and carbon transport and storage costs.

Mobilizing Necessary Investments

The report suggests that carbon pricing, tax subsidies, public procurement, and the development of strong business cases can support in mobilizing the necessary investments. However, it acknowledges the challenges of raising capital for high-risk projects with unproven technologies and highlights the role of institutional investors and multilateral banks in providing access to low-cost capital linked to emissions targets.

National-Level Initiatives

In countries like India and China, national-level action plans and roadmaps for clean hydrogen have been adopted to encourage investments across the hydrogen value chain. The G20 member countries have also agreed to guiding principles facilitating the production, consumption, and global trade of clean hydrogen.

Sector-Specific Considerations

The report notes sector-specific considerations, such as the challenges in the steel industry, where the distribution between primary and secondary steelmaking varies among regions. It also highlights the need for accelerated action to decarbonize the cement sector in response to increased production.

Urbanization and Population Growth

Urbanization and population growth are identified as driving forces behind cement consumption in China and India, necessitating accelerated efforts to decarbonize the sector.

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