IG has been given early sight of a new report that reveals a far larger sustainability investment gap than previously estimated.
Work by EY and FIDIC’s Global Leadership Forum warns of a $64tn gap that must be filled to meet net zero targets by 2050.
Due to be published in September, the report entitled “Closing the sustainable infrastructure gap to achieve net zero” looks not only at the scale of the problem – a huge gap in investment for much needed sustainable infrastructure – but the lack of tools available to help decision-makers arrive at the most effective paths to net zero and share learning on how to accelerate project initiation.
The scale of the problem
The world’s largest economies already require the largest increases in annual investment, although issues and challenges faced by individual countries differ according to their legacy infrastructure and their ability to leverage different types of renewable energy and carbon capture or nature-based solutions.
At the same time, the report suggests previous large estimates of investment gaps have fallen short. Indeed, while the Global Infrastructure Hub projects a gap of $15tn for meeting infrastructure needs in general, this report finds a far larger sum of $139tn is required to achieve net zero, of which only $75tn is so far going to be achieved under present policies. And the report warns that the longer the world waits to ramp up investment, the more expensive the gap may become.
The biggest area of spend for net zero will likely be the transition of energy sectors around the world. The gradual electrification of sectors like transport, and the transition of electricity production away from fossil fuels and into renewables, will be vital to achieving a net zero world. However, the report also looks at the scale of change needed in other sectors like heavy industry.
“The world needs to deliver $139tn of sustainable infrastructure by 2050 to meet net zero. Our analysis shows current policies have addressed $75tn with a further $64tn required.”
Chris Lewis, EY
The industry’s need for better tools and sharing of learning
With the world set to miss targets to keep global warming below 1.5C, the new report examines not only the nature of the sustainable infrastructure gap but also the required changes in different regions and sectors – as well as some of the political and economic constraints to delivering sufficient investment in net zero and sustainable infrastructure.
In recent years the wider infrastructure ecosystem has grown acutely aware of the limitations of the tools in place to help achieve effective decision-making on sustainability and share learning from successful projects to rapidly accelerate initiation. The lack of universal comparable data has been one such challenge, as has the diverse nature of what different decision-makers consider low carbon to mean. The development of the OECD’s Blue Dot and the EU’s Taxonomy for sustainable finance have made some impact on this, though that have not been without their own controversies too.
So the report also sets out clear priorities for pre-and-post 2030 policies and investments, stressing that clear pathways will be crucial to identifying the most effective use of money for decarbonisation.
“The world needs investors, engineers, constructors, technologists, legal and risk experts, clients and policy makers to all come together to find sustainable and bankable solutions and create the tools that enable all of us to succeed.”
Dr Nelson Ogunshakin OBE
Industry committing to solutions
The Global Leadership Forum behind the report was created not only to identify challenge or even advocate solutions for others to take action, but to commit as a whole infrastructure industry to solve them. As a result, the report includes a number of commitments that the forum will take forward.
Chris Lewis, Global Infrastructure Leader at EY who co-authored the report explained: “The world needs to deliver $139tn of sustainable infrastructure by 2050 to meet net zero. Our analysis shows current policies have addressed $75tn with a further $64tn required. The Global Leadership Forum made commitments, detailed in the report, to set out and support a new net zero path to prosperity.”
Dr Nelson Ogunshakin OBE, CEO of international engineering federation FIDIC, commented “Climate Change is an existential threat to all of humanity and fixing the sustainability gap must not be treated as somebody else’s problem. The world needs investors, engineers, constructors, technologists, legal and risk experts, clients and policy makers to all come together to find sustainable and bankable solutions and create the tools that enable all of us to succeed. That is why we led the formation of the Global Leadership Forum and we believe the commitments derived from this report will have a profound impact.”
The full findings and commitments of the new report, which were debated by industry leaders at a summit in the Spring, have since been finalised and will be launched publicly in September at the Global Infrastructure Conference in Singapore.
To find out about attending the Global Infrastructure Conference on the 11 and 12 of September, click here.
