Implementing these actions will in many cases require significant investment. International and national public finance will be needed to catalyse and help leverage private finance, in particular for low-carbon energy and urban development; action to halt deforestation and restore degrade land; to build capacity; and to scale up research, development and demonstration of clean technologies and processes. The economic benefits of such investment will be substantial, even without consideration of the gains for the climate.
The Global Commission urges the international community to seize the opportunity of the unique series of meetings occurring in 2015 to put the world on a pathway to low-carbon, climate-resilient growth and development. Cooperative action, between governments at all levels and with the private sector, international organisations and civil society, can help achieve both better growth and a better climate. This will require strong and sustained political leadership. But the prize is immense. Together, a secure, prosperous and sustainable future is within our reach.
The Commission makes the following recommendations:
All cities should commit to developing and implementing low-carbon urban development strategies by 2020, using where possible the framework of the Compact of Mayors, prioritising policies and investments in public, non-motorised and low-emission transport, building efficiency, renewable energy and efficient waste management.
Compact, connected, and efficient cities can generate stronger growth and job creation, alleviate poverty and reduce investment costs, as well as improving quality of life through lower air pollution and traffic congestion. Better, more resilient models of urban development are particularly critical for rapidly urbanizing cities in the developing world. International city networks, such as the C40 Cities Climate Leadership Group, ICLEI (Local Governments for Sustainability) and United Cities and Local Governments (UCLG), are scaling up the sharing of best practices and developing initiatives to facilitate new flows of finance, enabling more ambitious action on climate change. Multilateral development banks, donors and others should develop an integrated package of at least US$1 billion for technical assistance, capacity building and finance to support commitments by the world’s largest 500 cities. Altogether, low-carbon urban actions available today could generate a stream of savings in the period to 2050 with a current value of US$16.6 trillion, and could reduce annual GHG emissions by 3.7 Gt CO2e by 2030.
Governments, multilateral and bilateral finance institutions, the private sector and willing investors should work together to scale-up sustainable land use financing, towards a global target of halting deforestation and putting into restoration at least 500 million ha of degraded farmlands and forests by 2030. Developed economies and forested developing countries should enter into partnerships that scale up international flows for REDD+, focused increasingly on mechanisms that generate verified emission reductions, with the aim of financing a further 1 Gt CO2e per year from 2020 and beyond. The private sector should commit to extending deforestation-free supply chain commitments for key commodities and enhanced financing to support this.
Halting deforestation and restoring the estimated one-quarter of agricultural lands worldwide which are severely degraded can enhance agricultural productivity and resilience, strengthen food security, and improve livelihoods for agrarian and forest communities in developing countries. Developing countries, supported by international partnerships between governments, the private sector and community organisations, and initiatives such as the New York Declaration on Forests, REDD+, the 20x20 Initiative in Latin America, the Africa Climate-Smart Agriculture Alliance and the Global Alliance for Climate Smart Agriculture, are helping to improve enabling environments for forest protection and agricultural production, and reducing and sharing investment risk to facilitate larger financial flows. The Consumer Goods Forum and companies representing 90% of the global trade in palm oil have committed to deforestation-free supply chains by 2020, while major commodity traders and consumers are working to widen such pledges to other forest commodities. Enhancing such partnerships could enable a reduction in annual GHG emissions from land use of 3.3-9.0 Gt CO2e by 2030.
To bring down the costs of financing clean energy and catalyse private investment, multilateral and national development banks should scale up their collaboration with governments and the private sector, and their own capital commitments, with the aim of reaching a global total of at least US$1 trillion of investment per year in low-carbon power supply and (non-transport) energy efficiency by 2030.
The rapid scale-up of low-carbon energy sources and energy efficiency is essential to drive global growth, connect the estimated 1.3 billion people currently lacking access to electricity and the 2.7 billion who lack modern cooking facilities, and reduce fossil fuel-related air pollution. Increasing international financing for energy access is a key priority. International cooperation coordinated by development finance institutions is helping improve the risk-return profile of clean energy projects, particularly for renewables and energy efficiency, lowering the cost of capital for investment and increasing its supply. It is also starting to drive a shift in investments away from new coal-fired power and fossil fuel exploration; this needs to be accelerated, starting with developed and emerging economies. Scaling up clean energy financing to at least US$1 trillion a year could reduce annual GHG emissions in 2030 by 5.5-7.5 Gt CO2e.
G20 and other countries should converge their energy efficiency standards in key sectors and product fields to the global best by 2025, and the G20 should establish a global platform for greater alignment and continuous improvement of standards.
Co-operation to raise energy efficiency standards for appliances, lighting, vehicles, buildings and industrial equipment can unlock energy and cost savings, expand global markets, reduce non-tariff barriers to trade, and reduce air pollution and GHG emissions. Cooperation should be facilitated and supported by the G20, empowering existing sectoral initiatives, and international organisations such as the International Energy Agency (IEA), the International Partnership for Energy Efficiency Cooperation (IPEEC), and Sustainable Energy for All (SE4All). Globally, enhanced energy efficiency investments could boost cumulative economic output by US$18 trillion to 2035, increasing growth by 0.25–1.1% per year. Aligning and gradually raising national efficiency standards could reduce annual GHG emissions in 2030 by 4.5–6.9 Gt CO2e.
All developed and emerging economies, and others where possible, should commit to introducing or strengthening carbon pricing by 2020, and should phase out fossil fuel subsidies.
Strong, predictable and rising carbon prices send an important signal to help guide consumption choices and investments in infrastructure and innovation; the fiscal revenues generated can be used to support low-income households, offset reductions in other taxes, or for other policy objectives. An estimated 12% of annual GHG emissions are now covered by existing or planned carbon taxes or trading systems around the world. Businesses are increasingly calling on governments to implement carbon pricing, and over 150 now use an internal carbon price (typically around US$40/t CO2 for oil companies) to guide investment decisions. International cooperation on carbon pricing and subsidy reform, including through the G20 and with the support of the World Bank, the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF), can help mitigate concerns about competitiveness impacts from unilateral policy measures, improve knowledge-sharing and transparency, provide opportunities to link emission trading schemes, and reduce the costs of action.
G20 and other countries should adopt key principles ensuring the integration of climate risk and climate objectives in national infrastructure policies and plans. These principles should be included in the G20 Global Infrastructure Initiative, as well as used to guide the investment strategies of public and private finance institutions, particularly multilateral and national development banks.
About US$90 trillion in infrastructure investment is needed globally by 2030 to achieve global growth expectations, most of it in developing countries. Infrastructure investment has become a core focus of international economic cooperation through the G20 and for established and new development finance institutions. Integrating climate objectives into infrastructure decisions, often at no or very modest additional cost, will increase climate resilience and avoid locking in carbon-intensive and polluting investments. International finance will have to be significantly scaled up to deliver the up-front infrastructure investments needed to achieve development and climate goals, including increased capitalisation of both national and multilateral development banks.
Emerging and developed country governments should work together, and with the private sector and developing countries, in strategic partnerships to accelerate research, development and demonstration (RD&D) in low-carbon technology areas critical to post-2030 growth and emissions reduction.
Public funding for low-carbon RD&D is currently too low to catalyse innovation for long-term growth and cost-effective emissions reduction beyond 2030. It should be at least tripled by the major economies by the mid-2020s. International partnerships enable countries to share the costs of innovation, and the knowledge generated by it. This can be of particular benefit to low and middle-income countries, enabling them to “leapfrog” to new technologies and enhance their innovation capacity. Priority areas for low-carbon cooperative innovation include agriculture and energy access, particularly in developing countries; longer-term global solutions such as bioenergy and carbon capture, utilisation and storage; and key technologies to avoid lock-in of carbon-intensive infrastructure, including buildings, electricity networks and transport systems.
All major businesses should adopt short- and long-term emissions reduction targets and implement corresponding action plans, and all major industry sectors and value chains should agree on market transformation roadmaps, consistent with the long-term decarbonisation of the global economy. Financial sector regulators and shareholders should actively encourage companies and financial institutions to disclose critical carbon and environmental, social and governance factors and incorporate them in risk analysis, business models and investment decision-making.
Businesses are driving a US$5.5 trillion global market in low-carbon and environmental technologies and products, and many large companies are now cutting their emissions, realising significant cost savings and often enhancing profitability. Business- and finance sector-led initiatives are setting new norms for corporate action, including long-term target-setting and the integration of climate risk into investors’ analysis and strategy. Initiatives such as the Tropical Forest Alliance 2020 and the Low Carbon Technology Partnership initiatives seek to transform markets in key sectors and value chains, driving innovation and creating global low-carbon markets. Companies should work with governments, unions and other stakeholders to ensure a “just transition” to a low-carbon economy, supporting job creation, skills development and community renewal.
Emissions from the international aviation and maritime sectors should be reduced in line with a 2°C pathway through action under the International Civil Aviation Organization (ICAO) to implement a market-based measure and aircraft efficiency standard, and through strong shipping fuel efficiency standards under the International Maritime Organization (IMO).
Global aviation and shipping together produced about 5% of global CO2 emissions, and by 2050 this is expected to rise to 10–32%. Yet they offer some of the most cost-effective emission reductions available today, particularly through improved fuel efficiency. Two new IMO standards are expected to save an average of US$200 billion in annual fuel costs by 2030. Adoption by the ICAO in 2016 of a market-based measure (an emissions trading or offset scheme) can both cut emissions and potentially generate finance for climate action or other purposes. This should be complemented by a new aircraft standard to ensure emissions reductions within the sector. The IMO should adopt a global emissions reduction target and promote fuel saving through strong operational efficiency standards and a supporting data-sharing system. These measures could help reduce annual GHG emissions by 0.6–0.9 Gt CO2e by 2030.
Hydrofluorocarbons, used as refrigerants, as solvents, in fire protection and in insulating foams, are the fastest-growing GHGs in much of the world, increasing at a rate of 10–15% per year. Replacing HFCs with greener refrigerants has low upfront costs and can result in both energy and cost savings. Cooperative initiatives such as through the Climate and Clean Air Coalition to Reduce Short-Lived Climate Pollutants (CCAC), the Consumer Goods Forum, and Refrigerants, Naturally! are helping countries and companies scale back HFC use. Incorporating HFCs into the Montreal Protocol could realise significant near-term gains to slow climate change and provide support to developing countries, avoiding 1.1–1.7 Gt CO2e of GHG emissions per year by 2030, while driving significant energy efficiency improvements.