With the world expected to accumulate US$2.3 quadrillion in damages by century’s end if climate change isn’t brought under control, Bloomberg opinion editor Mark Gongloff says investing a paltry $266 trillion through 2050 in climate-related projects should be an easy call.
Non-profit advisory group Climate Policy Initiative (CPI) recently landed on the $266-trillion figure for climate financing to limit global heating to 1.5°C above pre-industrial averages and “cope with the climate chaos already taking place,” Gongloff writes. It’s not too far off BloombergNEF’s $200-trillion estimate, nor the $275-trillion tally from consulting giant McKinsey.
“Such numbers are so huge they test the brain’s ability to process them,” Gongloff says. “‘Eleventy gazillion’ sounds almost as believable.”
Based on a 2022 scenario report by the Network for Greening the Financial System and its own analysis, CPI says [pdf] average annual climate finance flows reached nearly $1.3 trillion annually in 2021/2022—about 1% of global GDP. It was almost double the expenditure in 2019/2020, and might climb to $1.8 trillion in 2023.
Meanwhile, the world’s governments “lavished $7 trillion in implied and explicit subsidies on the fossil fuel industry in 2022 alone,” Gongloff says, and “they devoted $2.2 trillion to military spending that year.”
Yet we know decision-makers can move quickly and at scale when they choose to: “In another crisis, the COVID-19 pandemic, governments had little problem helicoptering $11.7 trillion to their citizens to keep them solvent.”
According to CPI, climate financing must increase to $8.6 trillion annually until 2030, ramping up to $10 trillion each year through 2050. Put in context, that’s around 6.8% of cumulative global GDP for those years, based on one of several projections of annual GDP growth.
“Ultimately, the necessary funds are available, but need to be redistributed or reallocated to uses consistent with global climate goals,” CPI says, noting that capital markets around the world had about $114 trillion in assets under management at the end of 2022.
Outlining what $266-trillion in investments could buy, CPI says that if the world held average global warming to 1.5°C pathway, losses would still amount to $1.062 quadrillion, accompanied by about $1.266 quadrillion in avoided losses. In a business-as-usual scenario that failed to check global temperature rise, the global economy would take a hit of $2.328 quadrillion.
“Those quadrillions would just be the direct economic damage of such tangible climate effects as floods, wildfires, droughts, hurricanes, productivity loss, and illnesses,” Gongloff writes. “They don’t include the destruction wrought by wars, forced migration, or biodiversity loss,” in a world where “hospitals filling and economies cratering could become routine events.”