IFC REPORT IDENTIFIES US$20 TRILLION IN CLIMATE INVESTMENT OPPORTUNITIES IN ASIA BY 2030
BY Zoe Phoon
With about 1.2 billion more people expected to live in Asian cities in 35 years, the cities have the potential to attract more than US$20 trillion in climate-related investments in six key sectors by 2030, says a new report by International Finance Corporation (IFC), a World Bank Group member.
Analysing cities’ climate-related targets and action plans in six regions, the Climate Investment Opportunities in Cities report has identified opportunities in priority sectors such as green buildings, public transportation, electric vehicles, waste, water and renewable energy.
It highlights innovative approaches that cities are already using, such as green bonds and public-private partnerships, to attract private capital and build urban resilience.
The report says with its plans, policies and projects, the Asia Pacific region has the highest climate smart investment potential of any region in the world.
The biggest opportunity is in green buildings, estimated at a US$17.8 trillion opportunity by 2030.
With more than half of the world’s population currently living in urban areas, cities consume over two-thirds of the world’s energy and account for more than 70% of global carbon dioxide emissions.
How cities address climate change will be critical to efforts to limit global warming to 1.5 degrees Celsius, it says, citing the Intergovernmental Panel on Climate Change (IPCC).
“There’s a great urgency to address climate change. We must take meaningful action now,” said IFC CEO Philippe Le Houérou.
He said cities are the next frontier for climate investments, with trillions of dollars in untapped opportunities.
To deliver on the promise of climate-smart cities, the public sector needs to enact reforms aimed at attracting more private sector financing.
IFC regional director for East Asia and the Pacific, Vivek Pathak, added that with the expected dramatic increase in urban population centres in Asia, there’s even more of an opportunity for a low-carbon transition in cities, which already account for much of the GDP in this region.
“In Jakarta, there’s about US$30 billion investment opportunity, particularly in green buildings, electric vehicles and renewable energy. The report shows megacities in Asia also have significant potential for investments that yield emission reductions.”
According to IPC, green buildings globally will account for US$24.7 trillion of cities’ climate investment opportunities.
Significant investment potential exists in low-carbon transportation solutions such as energy-efficient public transport (US$1 trillion) and electric vehicles (US$1.6 trillion).
At the same time, clean energy (US$842 billion), water (US$1 trillion) and waste (US$200 billion) remain essential components of sustainable urban development.
In Asia Pacific, the report estimates the investment potential in green buildings is US$17.8 trillion, in waste US$104 billion, public transport US$352 billion, renewable energy US$407 billion, climate-smart water US$571 billion and electric vehicles US$783 billion.
According to an IFC statement, addressing climate change is a strategic priority for the organisation.
Since 2005, IFC has invested US$22.2 billion in long-term financing from its own account and mobilised another US$15.7 billion through partnerships with investors for climate-related projects.
The latest report is part of the Climate Investment Opportunities report series initiated by IFC in 2016.
IFC is the largest global development institution focused on the private sector in emerging markets.
It works with more than 2,000 businesses worldwide, using its capital, expertise and influence to create markets and opportunities in the “toughest areas” of the world.
In fiscal year 2018, it delivered more than US$23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.