Financing the low carbon economy

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Beth Ambrose
EMEA Upstream Sustainability Services

Two colleagues and I were invited to the launch event of a fascinating new research report last week – ‘Carbon Capital: Financing the low carbon economy’.

Written by an Accenture team with support from Barclays, the report authors have calculated a €2.9 trillion need for investment into buildings, energy and transport infrastructure between now and 2020, to prevent the EU missing its carbon reduction target.

The figure equals approximately 2 percent of Europe’s GDP and given the poor state of public finances, the source of €2.2 trillion of this investment need is currently unknown. Accenture’s MD of Sustainability labelled this the ‘Carbon Capital Chasm’.

Large financial institutions in Europe are clearly uncomfortably aware of the key role they need to play in helping to leverage finance into the low carbon technology (LCT) sector, which has fallen by around 75 percent since the global financial crisis.

The buildings sector will need over 25 percent of the total LCT investment, about €600 billion. The three LCT options proposed include the retrofit of existing commercial buildings, which requires the smallest amount of investment – €102 billion – but represents by far the greatest carbon emissions savings opportunity of the three (293 MT CO2e).

Virtually, all large renewables projects and the small-scale technology solutions involving many parties, need government policy backing either to ‘de-risk’ them or to scale them up sufficiently. Hence the importance of governmental ‘Green Deal’ type initiatives and tax breaks. The option of Green Bonds was also offered by the panel as a potential solution to accessing finance through securitizing debt.

As the event was appropriately hosted by the Science Museum, after the presentation, clutching our drinks and canapés we were able to explore their new Atmosphere gallery, with an amazingly interactive exhibition to help the public engage with climate change science.

As knotty and important as the financing problems might seem to us, the hard facts of the science puts them into perspective.

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