A playbook for financing climate solutions | Nili Gilbert and David Blood | Ted Talks Daily

Intro

In this episode of Ted Talks Daily, Nili Gilbert and David Blood discuss the playbook for financing climate solutions. They explore the challenges faced by financial markets in addressing the decarbonization challenge and how to speed up and scale funding for climate solutions. Join them as they delve into the need for significant financing, the importance of transformational change, and the role of finance in driving sustainable growth.

Main Takeaways

Tackling Climate Change with Financing

• Tackling climate change requires significant financing.
• Financial markets have been slow to address the decarbonization challenge.
• The need for $3 to $4 trillion per year to globally decarbonize the economy through 2050.

Transformational Change and Capital Allocation

• Transformational change is needed in economies, businesses, and financial institutions to address climate change.
• The finance sector relies on businesses and entrepreneurs to lead the way, and public policy and regulation need to change.
• The investment community lacks tools to evaluate decarbonization, and there is a need to change the way people think about capital allocation.

Capital Allocation and Sustainable Solutions

• There is enough capital and no legal barriers to allocate capital to sustainable solutions.
• Amazing entrepreneurs and business people, as well as advancing technology, are contributing to climate solutions.
• Finance has evolved over time, with a shift towards being paid for risk and deploying capital in different industries.

The Pathway to Net Zero

• The finance pathway to net zero is challenging as it impacts every aspect of the global economy and requires support for individual sectors and communities.
• The energy sector is crucial for driving the transition to clean energy, but there is a need for a massive scale and change in a short amount of time.
• The focus should be on limiting finance for fossil fuels, scaling up finance for clean energy, and investing to end the demand for fossil fuels, particularly in hard-to-abate sectors.

Transitioning Hard-to-Abate Sectors

• Sectors like cement, steel, aviation, and shipping contribute almost a third of global emissions.
• Solutions exist to transition these sectors to cleaner alternatives due to policy, rising demand, and technological improvements.
• Sustainable aviation fuel presents an opportunity for decarbonizing the aviation sector, but current supply is insufficient to meet demand.

Summary

Tackling Climate Change with Financing

Tackling climate change is a daunting task that requires significant financing. However, financial markets have been slow to address the decarbonization challenge. To globally decarbonize the economy through 2050, an estimated $3 to $4 trillion per year is needed. The funds flowing to climate solutions are not nearly enough and are not reaching the hard-to-abate sectors and the global south. This highlights the urgent need for accelerated and scaled funding for climate solutions.

Transformational Change and Capital Allocation

Addressing climate change requires transformational change in economies, businesses, and financial institutions. The finance sector relies on businesses and entrepreneurs to lead the way, but public policy and regulation also need to change to support sustainable initiatives. The investment community lacks tools to evaluate decarbonization, and there is a need to change the way people think about capital allocation. Shifting towards a mindset that considers the environmental impact of investments is crucial for driving sustainable growth.

Capital Allocation and Sustainable Solutions

While there is enough capital available and no legal barriers to allocate it to sustainable solutions, the finance industry needs to adapt. The investment community should recognize the potential of amazing entrepreneurs, business people, and advancing technology in contributing to climate solutions. The evolution of finance, with a shift towards being paid for risk and deploying capital in different industries, provides opportunities for sustainable investments. Changing the way capital is allocated and evaluating investments based on their environmental impact is essential.

The Pathway to Net Zero

Achieving net zero emissions requires a challenging pathway that impacts every aspect of the global economy. The energy sector plays a crucial role in driving the transition to clean energy, but it requires a massive scale and change within a short timeframe. To accelerate the transition, finance should limit funding for fossil fuels, scale up investments in clean energy, and support initiatives that reduce the demand for fossil fuels, particularly in hard-to-abate sectors. This comprehensive approach is necessary to achieve the goal of net zero emissions.

Transitioning Hard-to-Abate Sectors

Sectors like cement, steel, aviation, and shipping contribute significantly to global emissions. However, solutions exist to transition these sectors to cleaner alternatives. Policy changes, rising demand for sustainable options, and technological improvements provide opportunities for decarbonization. For example, sustainable aviation fuel presents an opportunity to decarbonize the aviation sector, but the current supply is insufficient to meet the demand. Exploring multiple production pathways for sustainable aviation fuel, such as ethanol and carbon from municipal solid waste, can help bridge this gap.

Conclusion

The financing of climate solutions is a complex and urgent challenge. Tackling climate change requires significant funding, and financial markets need to accelerate their efforts to address the decarbonization challenge. Transformational change is needed in economies, businesses, and financial institutions to drive sustainable growth and allocate capital effectively. By transitioning hard-to-abate sectors and investing in clean energy alternatives, we can make significant progress towards achieving net zero emissions. It is crucial for the finance sector to adapt and evaluate investments based on their environmental impact. Together, we can create a sustainable future for generations to come.