IFC Study Finds Climate Pact Helped Open Up $23 Trillion in Emerging-Market Opportunities
Astudy released today by IFC, a member of the World Bank Group, shows thatthe historic global agreement on climate change adopted in Paris last yearhelped open up nearly $23 trillion in opportunities for climate-smart investmentsin emerging markets between now and 2030.
Since the Paris Agreement was adopted in December 2015, a total of 189countries have submitted national plans that target aggressive growth inclimate solutions—including renewable energy, low-carbon cities, energyefficiency, sustainable forest management, and climate-smart agriculture.These plans offer a clear roadmap for investments that will target climate-resilientinfrastructure and offset higher upfront costs through efficiency gainsand fuel savings.
IFC’s study, based on the national climate-change commitments and underlyingpoliciesof 21 emerging-market economies, identifies sectors ineach region where the potential for investment is greatest. This includesgreen buildings in East Asia and the Pacific—where China, Indonesia,the Philippines, and Vietnam show a climate-smart investment potentialof $16 trillion. Latin America and the Caribbean offer the next largestopportunity—particularly in sustainable transportation, where thepotential for investment in Argentina, Brazil, Colombia, and Mexico isabout $2.6 trillion. Opportunities in South Asia are mostly in climate-resilientinfrastructure, where $2.5 trillion of opportunities exist in Indiaand Bangladesh.
“There has never been a better time than now for climate-smart investing,”said IFC Executive Vice President Philippe Le Houérou. “This reflectsthe dramatic reduction in the price of clean technologies and the riseof smart policies that are driving businesses to invest. In this context,it is important to set ambitious goals—which is why IFC has pledged toincrease our climate investments to a goal of $3.5 billion a year by 2020and catalyze another $13 billion through other investors.”
Sub-Saharan Africa represents a $783 billion opportunity—particularlyfor clean energy in Cote d’Ivoire, Kenya, Nigeria, and South Africa.In Eastern Europe, the biggest markets—Russia, Serbia, Turkey, and Ukraine—showa combined investment potential of $665 billion, mostly in energy efficiencyand new green buildings. And in the Middle East and North Africa,the total climate-investment potential for Egypt, Jordan, and Morocco isestimated at $265 billion, over a third of which is for renewable-energygeneration, while 55 percent ($146 billion) is for climate-smartbuildings, transportation, and waste solutions.
The report also finds that government action will be critical to take advantagein order to unlock the full scale of investment potential. It recommendsthat governments integrate national climate commitments into their developmentstrategies and budget processes, strengthen the investment climate forclimate-smart industries, and deploy public funds strategically to mobilizeprivate capital—by reducing risk and providing project support, for example.
About IFC IFC, a member of the World Bank Group, is the largest global developmentinstitution focused on the private sector in emerging markets. Workingwith 2,000 businesses worldwide, we use our six decades of experience tocreate opportunity where it’s needed most. In FY16, our long-term investmentsin developing countries rose to nearly $19 billion, leveraging our capital,expertise and influence to help the private sector end extreme povertyand boost shared prosperity. For more information, visit www.ifc.org