Climate Business Solutions Market Accelerates to $1Tn Annually

(3BL Media/Justmeans) – Between now and 2030, the climate commitments made following the Paris Agreement are expected to realize over $23 trillion in investment potential in 21 emerging markets. Apart from the governments, more than a thousand large businesses have made ambitious climate commitments, and are putting their pledges into action by investing in low-carbon solutions.

A new report from the International Finance Corporation (IFC) highlights the myriad opportunities that exist for private companies and investors to get involved in climate finance. The “Creating Markets for Climate Business: An IFC Climate Investment Opportunities Report argues that private investment holds the key to mitigating the effects of climate change and urges governments to translate their climate ambitions into successful markets for business.

The report not only addresses private investors, but also advises governments on how to create favorable rules and regulations. Seven key climate business sectors that provide growth opportunities for the private sector include renewable energy, off-grid solar and storage, climate-smart agriculture, green buildings, sustainable urban transport and logistics, urban water infrastructure and urban waste management.

According to the report, annual global investment in climate business solutions is already over $1 trillion, and is growing. The combined markets for renewable energy ($297 billion), energy storage ($2.5 billion), green buildings ($388 billion), climate-smart urban transport ($288 billion), water recycling ($23 billion), and municipal waste management ($160 billion) are today worth more than $1.1 trillion.

Electricity delivery and use is becoming a decentralized, community-based business, particularly in Africa and Asia, where communities are using smarter energy by combining small-scale solar, and batteries. Electric vehicles are also gaining popularity as battery costs continue to drop (down 50 percent since 2014) and governments invest in charging infrastructure. This rapid growth is expected to continue.

Bloomberg New Energy Finance projects $6 trillion in new investment in wind and solar power between now and 2040. Just less than half of global investment in new power capacity to 2040 will be in Asia Pacific, with $4 trillion going to China and India. Businesses and cities are also collaborating to develop low-carbon, resilient urban infrastructure to provide citizens with sustainable transport, water, and waste management services.

The IFC report points out that the global waste market is already worth $154 billion and is expected to double by 2020, while water supply and sanitation services require more than $13 trillion in investment between 2016 and 2030. Companies are partnering with local governments to offer low-carbon water savings and recycling services, as well as waste-to-energy systems.

Climate-smart agriculture is also a rapidly expanding market, as food producers strive to meet growing demand for modern, sustainable diets. Between 2004 and 2013, global investment in the agribusiness sector tripled to more than $100 billion. Climate-smart agricultural practices are gaining ground as businesses seek to address the combined challenges of food security and climate change.

Source and Image: Climate Action Program