The next 15 years of investment will determine the future of the world’s climate system. Climate change caused by past greenhouse gas emissions is already having serious economic consequences, especially in more exposed areas of the world. The 2018 New Climate Economy Reports states that without stronger action in the next 10-15 years, which leads global emissions to peak and then fall, it is near certain that global average warming will exceed 2°C, the level the international community has agreed not to cross. On current trends, warming could exceed 4°C by the end of the century, with extreme and potentially irreversible impacts. By building up greenhouse gas concentrations and locking in the stock of high-carbon assets, delay in reducing emissions makes it progressively more expensive to shift towards a low-carbon economy.
The underlying principle behind the New Climate Economy is that future economic growth does not have to copy the high-carbon, unevenly distributed model of the past. The concept believes that there is now huge potential to invest in greater efficiency, structural transformation and technological change in three key systems of the economy:
Cities are engines of economic growth. They generate around 80% of global economic output and around 70% of global energy use and energy-related GHG emissions. How the world’s largest and fastest-growing cities develop will be critical to the future path of the global economy and climate. But much urban growth today is unplanned and unstructured, with significant economic, social and environmental costs, notes the New Climate Economy Report. As pioneering cities across the world are demonstrating, more compact and connected urban development, built around mass public transport, can create cities that are economically dynamic and healthier, and that have lower emissions. Such an approach to urbanization could reduce urban infrastructure capital requirements by more than $3 trillion over the next 15 years. The New Climate Report indicates that compact cities of the future will produce fewer emissions because they will tend to offer better access to public and active transportation modes, have greater energy efficiency, have lower environmental costs for infrastructure, and allow for more urban green spaces.
Energy systems power growth in all economies. The world is on the cusp of a clean energy future. Coal is riskier and more expensive than it used to be and a source of rising air pollution. Rapidly falling costs, particularly of wind and solar power, could lead renewable and other low-carbon energy sources to account for more than half of all new electricity generation over the next 15 years. Greater investment in energy efficiency – in businesses, buildings and transport – has huge potential to cut and manage demand. In developing countries, decentralized renewables can help provide electricity for more than one billion people without access.
Raising resource efficiency is at the heart of both growth and emissions reduction. In many economies, both market and policy failures distort the efficient allocation of resources while simultaneously increasing emissions. While subsidies for clean energy amount to around $100 billion, subsidies to polluting fossil fuels are now estimated at around $600 billion per year. Phasing out fossil fuel subsidies can improve growth and release resources that can be reallocated to benefit people on low incomes. A strong and predictable price on carbon will drive higher energy productivity and provide new fiscal revenues, which can be used to cut other taxes. Well-designed regulations, such as higher performance standards for appliances and vehicles, are also needed.
Land use productivity will determine whether the world can feed a population projected to grow to over eight billion by 2030 while sustaining natural environments. Food production can be increased, forests protected, and land-use emissions cut by raising crop and livestock productivity, using new technologies and comprehensive approaches to soil and water management. Restoring just 12% of the world’s degraded agricultural land could feed 200 million people by 2030, while also strengthening climate resilience and reducing emissions. Slowing down and ultimately halting deforestation can be achieved if strong international support is combined with a strong domestic commitment to forest protection and rural income development.
Investment in infrastructure underpins modern economic growth. Low-carbon forms of infrastructure are essential to reduce current emissions trajectories. Yet many economies today are failing to mobilize enough finance to meet their infrastructure needs. This is not due to a shortage of capital in the global economy. In many countries, it results from a lack of public financing capacity and the market perception that investments are high-risk. Financial innovations, including green bonds, risk-sharing instruments and products which align the risk profile of low-carbon assets with the needs of investors, can reduce financing costs, potentially by up to 20% for low-carbon electricity. National and international development banks should be strengthened and expanded.
What Vasari Energy is Doing
The New Climate Economy requires innovative technologies to steer the world into a new future, Vasari Energy allows individual investors concerned about the future of the economy to invest in its stock. Vasari Energy is a California-based solar energy developer established to develop, engineer, build, and operate utility-scale electric power plants that produce reliable and clean energy. It seeks to capture growth in the dynamic and fast-growing solar energy market by investing in the development of utility, commercial, industrial, municipal, and community solar power systems. Vasari Energy uses the broad experience of its management team to play an active role in all phases of renewable energy generation, from planning and development through construction and commercial operation.