The Paris Agreement was signed six years ago, but with nearly every country behind on stated carbon reduction commitments, it is private capital that is proving to be pivotal to the development of decarbonization solutions.
Some climate action experts estimate that a blend of existing technology, energy-efficiency measures, and the electrification of homes, buildings, and vehicles can get somewhere between 65 to 70 percent towards reaching net zero emissions by 2050. The remainder must come from breakthrough climate technologies that have yet to reach commercial scale, requiring investments of up to $150 trillion over the next 30 years.
As impressive as those numbers are, they’re still a far cry from the estimated $5 trillion in annual investments needed to bridge the climate tech gap. The cold, hard truth is that private climate solutions and ESG investment funds are still fairly nascent, and many emerging climate tech companies remain high-risk and capital intensive and therefore have difficulty securing adequate financing to reach commercial-scale deployment.
That’s where public funding comes in—risk-tolerant, patient, low-interest government-backed investments that can reach across sectors and geographies to accelerate the discovery, development, and commercialization of critical climate solutions.
On a national and international scale, the amount of funding for renewable energy, electric vehicles, energy-saving products, and other decarbonization technologies is still up in the air. (We’ll learn more as the COP26 unfolds over the next few weeks.) But there is certainly an increased appetite to support climate solutions to address the ever-intensifying climate emergency, as well as mounting political and social pressure.
In fact, according to the United Nations, just under $15 trillion of global pandemic stimulus funding has been committed to carbon reduction initiatives.
Within the NSB sector, investments in forest carbon tech have tripled in 2021. As carbon credits become an essential tool for governments and corporations to meet their climate goals, ensuring the transparency and accountability of market solutions is essential.
This is where forest carbon tech comes in, leveraging advanced technology that can quantify carbon sequestration (the process of taking free carbon out of the air and anchoring it in trees,) which is currently the fastest, cheapest, and safest way to store carbon. Given that carbon credits are expected to outpace supply by 2024, it’s no surprise that forest carbon tech is in such high demand.
Make no mistake, the unique problems presented by climate change require a spectrum of solutions. Some of these solutions, like advanced climate tech, will be sophisticated and cutting-edge. But technology can’t solve climate change alone, and we’ll need a blend of practical, simple solutions too, like energy efficiency and planting trees, to reach our goals.
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Image Credit: CarbonCure