Global investment in climate change plateaued at $359 billion in 2012, slightly less than the $364 spent the previous year, according to a Climate Policy Initiative (CPI) study.
The Global Landscape of Climate Finance 2013 says once again the figure falls far short of what’s needed. The International Energy Agency projects that an additional investment of $5 trillion is required by 2020 for clean energy alone, to limit warming to 2 degrees Celsius. The World Bank, however, projects the earth is on track to 4 degree Celsius warming.
Public sources provided $135 billion, or 38 percent of total finance, and played a critical role in enabling private finance through incentives, low-cost loans, risk coverage mechanisms, direct project investment and technical support, the CPI report says. These public measures facilitated $224 billion in private investment, or 62 percent of total investment, from sources such as project developers ($102 billion), manufacturers and corporations ($66 billion), and households ($33 billion).
While public support for climate activities was significant, it was still dwarfed by current government support to fossil fuel energy consumption and production, estimated at $523 billion each year for developing and emerging economies alone, according to a recent report from the OECD.
Climate investment was split almost evenly between developed and developing countries, with $177 billion and $182 billion respectively. Private investment into renewable energy projects in Europe totaled $73 billion, while investment in China was $68 billion, the US $27 billion, Latin America $7 billion and India $5 billion. Latin America also received additional $19 billion in public money.
However, 76 percent, or $275 billion, of all spending was domestic: It originated in the country in which it was used.
Of the remaining $84 billion that flowed between countries, a significant amount was private money flowing between developed countries. On the other hand, public sector money made up the vast majority of developed to developing country flows. CPI says these figures illuminate a bias by private investors toward environments that are more familiar and perceived to be less risky.