Ramping up investment to protect the planet

For long, we have neglected the planet that has been the source of our lives and livelihoods. Each year, the situation is getting direr with increasing climate change-led catastrophes across the globe.

Most agree with the scientific assessments that human activities are responsible for causing potentially irreversible damage to the planet. But more often than not, we do not follow up on this understanding by channelling the necessary investment to build green and climate-resilient infrastructures. Unfortunately, this lack of investments may exacerbate the climatic conditions.  

The world is currently 1.1° C warmer than the pre-industrial levels and could well experience a 3° C mean temperature rise by the end of this century. The climate change-induced disasters and their costs at the present level of warming have already reached alarming proportions in the developing and least developed countries.

After being exposed to natural disasters last year, even the developed countries - thought to be safer and more prepared to battle the climate change-related adversities - have realised that their preparations were insufficient.

Even if we can contain the global mean temperature rise within 1.5° C by the end of this century, we cannot assume it to be safe, given the unprecedented levels of climate-related disasters we are experiencing now. To put it simply, at a 1.5°C mean temperature rise, the world is likely to experience more disasters compared to the 1.1°C warming.

Even worse, we are presently not on track to meet the 1.5° C temperature goal. That means, based on different scientific projections, we are heading for a more catastrophic and horrific future. 

Therefore, the required pace and scale of the transformation appear to be unprecedented, if the worst of the climate risks, such as severe disruption and economic downturn, is to be avoided.

While planning and investment in adaptation and resilience are essential to reduce vulnerability to climate change, mitigation of root causes of climate change is also necessary. All these posit the need for accelerated investment, both in clean technologies and climate-resilient infrastructures.

For instance, the estimated annual investment required to be 1.5° C compatible, according to a McKinsey report released earlier this year, is in the order of $9.2 trillion. Notably, we should consistently invest such a high amount in clean technologies per annum for decades.

The report has concluded that the estimated investment is 60% more than what is currently being channelled to clean technologies. As such, the countries, if they want to protect the planet from irreversible damages, must step up their investment in clean technologies.

We need to look into another facet, i.e., adaptation, as well for the damages that we have already done to the natural system. The challenge is monumental as no country is safe in the event of climate change.

The situation is the worst for the poor and least-developed countries as they struggle to meet the basic needs of their population. Moreover, the latest IPCC assessment of Working Group II has harped on several key issues, maladaptation, short-termism, adaptation gap, etc. It is, therefore, imperative to ramp up the flow of adaptation finance while also avoiding the issues like maladaptation.

Well, the revised Nationally Determined Contributions (NDCs) of different countries demonstrate more ambition but analyses find them non-compatible with the 1.5° C goal.

The reasons for insufficient ambition might vary from country to country, but generally include the perceived costs of climate policies and stringent measures that may diminish competitive edge.

Furthermore, early actions on climate change are affected by the impression that the damages of climate change would be in the distant future. However, climate change can no longer be considered a future phenomenon. It is here and affecting every country, albeit at varying scales and frequency. And the investment required to drive mitigation measures and spearhead climate-resilient development represents huge opportunities but not risks.

Investment in clean energy and different climate change mitigation measures has a business case as well. For example, clean energy delivers more financial returns than coal-based power plants. More importantly, clean energies create more jobs than traditional fossil fuel-based systems and minimise the societal burden of fossil fuels in terms of the environment and health care.

Likewise, well-thought-out adaptation projects could deliver a return that is several times more than one-off upfront investment. The economics of saving lives, livelihoods, and infrastructures along with health and environmental benefits, in the long run, provide the sufficient rationale to pursue adaptation projects sooner rather than later to avoid climate risks.

On the other hand, the benefits that flow from adaptation measures could significantly outweigh the upfront costs if the greenhouse gas mitigation component is attached to the projects.

As Earth Day 2022 is being celebrated today with the theme "Invest in our planet", the governments, businesses, and individuals should agree on early investment and actions to avoid the insurmountable costs of no actions. The evidence of the last several decades and the scientific recommendations should be the basis for the decision on investment in our planet to make it safe and liveable for us and our future generations instead of the dilly-dally approaches that some have opted for. 

Shafiqul Alam is an environmental economist.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.