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The Baku climate change conference is being held in turbulent geopolitical conditions. In addition to shifting strategic alliances, trade tensions and armed conflicts, the “year of elections” also brought a period of heated political rhetoric and changes of government.
However, this should not distract us from the current state of the planet and the real economy. The effects and costs of climate change are increasing. Extreme weather events, from hurricanes in the Caribbean to catastrophic floods in Europe and droughts in the Amazon, are becoming more frequent and intense, increasing the risk of financial instability, especially in the world’s most vulnerable and indebted countries.
At the same time, the energy revolution is already in full swing:
- the use of renewable energy sources increases exponentially,
- and investments in clean energy sources its annual level now far exceeds investments in fossil energy carriers.
Both citizens and companies are increasingly aware that adaptation to climate change requires investments. Made fresh on behalf of the European Investment Bank (EIB) Group public opinion poll 94% of Europeans and 88% of Americans support climate adaptation measures, and about half of the respondents think that such measures should be a national priority.
Furthermore, economic growth is fast separates from carbon dioxide emissions thanks to breakthroughs and innovation in clean energy production and efficient technologies that help fight climate change and boost competition. The European Union pioneering role is filling in this area, reducing greenhouse gas (GHG) emissions by more than a third since 1990, while its economy has grown by 68% during that time.
The International Energy Agency prediction renewable energy sources will cover nearly half of the global electricity demand by 2030.
The emissions of the EU, the United States and most developed economies are decreasing despite the increase in their economic performance, while China’s carbon dioxide emissions are much earlier than expected, already this year can peak.
After years of warnings and calls for action, there are finally signs that the pace of the green transition shifted into higher gear. The reason for this is simple:
clean energy today cheaper and more efficientlike fossil energy sources, which is largely due to more advanced battery energy storage.
As a result, the right move for our planet is now the smart move for our economy. For every dollar invested in climate change adaptation and resilience, $5-7 to reduce the costs of future disasters, not to mention human lives and livelihoods.
Most businesses are aware of these opportunities and act accordingly. By the EIB Group in the EU and USA he asked 60% of more than 12,000 companies are investing in the green transition, and 90% have taken measures to reduce their GHG emissions. Reducing the amount of waste, reducing costs and strengthening resilience is considered a good business decision. This is what, more than international pressure, impassioned speeches and official commitments, will encourage companies and investors to finance the decarbonisation of the global economy.
The EIB Group allocates more than half of our annual lending – nearly EUR 50 billion ($53 billion) annually – to projects that accelerate the green transition in Europe and elsewhere. Investing in resilience and adaptation to climate change protects our infrastructure, agriculture and livelihoods, and enables strong and rapid recovery from disasters such as the deadly floods that inundated entire cities in Central Europe in September , and in October they were destroyed in my country, Spain.
However, a successful transition is quick and fair, ensuring that no one is left behind. Developing countries and low-income households are more exposed to the dangers of global warming and the distributional effects of green transition policies, as new technologies disrupt traditional industries and established business models (disruption). The EIB therefore increases the proportion of green investments outside the EU, supports small island countries on the front lines of climate change, and finances resilient infrastructures worldwide, as well as promotes the global green bond market.
Multilateral development banks are at the forefront in this field:
2023-ban a record amountinvested $125 billion in green projects and doubled the amount of financing mobilized from the private sector compared to 2022.
In addition to exceeding our commitments, we are committed to continuing to work together to mobilize climate finance in the coming years.
Global cooperation is the only way to advance planetary transformation. The green transition is underway, thanks in part to our joint efforts. But building on existing international forums and decision-making frameworks, we must continue to follow the right direction to find win-win solutions that strengthen the security, stability and prosperity of all countries.
Copyright: Project Syndicate, 2024.
Nadia Calvino
President of the European Investment Bank since the beginning of 2024. Before that, he was the first deputy prime minister of Spain from July 2021. He also headed the Ministry of Economy between June 2018 and the end of 2023.
The cover image is an illustration. Cover image source: Portfolio
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