There is "no way" of getting to net zero without private-sector finance even with initiatives like the Glasgow Financial Alliance for Net Zero (GFANZ), US climate envoy John Kerry said.
GFANZ was launched at the UN Cop 26 climate summit last year and now has more than 500 members, representing more than $130 trillion in assets under management or advice. "It doesn't represent money that's ready to go out and take the risk or do the things we need to do," Kerry said at the Economist's Sustainability Week: Countdown to COP27 event on 6 October.
The challenge is how to deploy those trillions of dollars, he said. "We've heard lots of words. The terminology is out there, people quickly say ‘blended finance' and ‘MDBs' [multilateral development banks]," Kerry said.
MDBs include the World Bank, the Asian Development Bank, Inter-American Development Bank and the European Investment Bank. "We need MDB reform. They could be doing much more than they are today," Kerry added. "Structurally they need to be changed. They also need to kick into higher gear."
It is "the private sector in the end, by being creative and working with government and coming together to deploy that capital — that's how we're going to do it," Kerry said. "It's $2.5 trillion-4.5 trillion/yr for the next 30 years to effect what we need to do to meet our goal."
Paris-based IEA had previously said that clean energy investment needs to more than triple to $4 trillion/yr by 2030 to put the world on a path towards net zero emissions by 2050.
But Kerry called out the pace of the transition away from fossil fuels. "After 26 Cops… we're still not moving fast enough and we're still not serious enough on a global basis," he said.
Ultimately it will be cheaper to use renewables rather than coal and to have a fully capturing emissions facility than to build a coal plant or oil facility within the next 4-5 years. "It's just going to be the reality where the market's going," Kerry said.
