The world’s rapidly growing urbanization helps lift global economic growth, but it also generates most of the global energy demand which, at present, is met mostly with fossil fuels.
Cities are responsible for 70 percent of global carbon emissions and are especially vulnerable to climate change.
International organizations have started to warn that limiting global warming won’t be an easy task and the world and its cities need to turn to climate-friendly projects and industries if we were to curb the damages of environmental pollution and climate change.
Cities can lead the way for global actions to mitigate climate change, according to the International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets.
The fast-growing cities in emerging markets represent a huge investment opportunity for green initiatives and industries—from renewable energy and electric vehicles (EVs) to green buildings and public transportation and climate-smart water and waste solutions, the IFC says.
The six key areas of green investments—EVs, renewables, waste, water, green buildings, and public transportation—in the world’s emerging cities could attract US$29.4 trillion in investments by 2030, a new IFC report shows. Related: What Crashing Refining Margins Mean For Oil Markets
Currently, more than half of the world’s population lives in cities, and this share is expected to jump to 70 percent by 2050. Cities generate 80 percent of the world’s gross domestic product (GDP), but they also account for two thirds of the world’s energy demand and 70 percent of global carbon emissions, the IFC has estimated.
As much as 60 percent of the world’s area expected to be considered ‘urban’ by 2030 has yet to be built, so climate-friendly considerations must play a major role in planning in the next few decades, according to the IFC.
The institution has calculated that the investment potential in EVs is US$1.6 trillion to 2030, waste solutions could attract US$200 billion, renewable energy US$842 billion, public transportation US$1 trillion, climate-smart water US$1 trillion, and green buildings as much as US$24.7 trillion, for a total global of US$29.4 trillion over the next 12 years.
Of course, city budgets alone will not be capable of financing projects at such an enormous scale and amount, so the private sector, public-private partnerships (PPPs), and green bonds must also be used to finance climate-friendly initiatives, the IFC noted in its report.
The world needs such initiatives, especially in the light of the latest UN report which showed last week that global carbon dioxide (CO2) emissions increased again in 2017 after a three-year hiatus.
“The science is clear; for all the ambitious climate action we’ve seen – governments need to move faster and with greater urgency. We’re feeding this fire while the means to extinguish it are within reach,” said the United Nations Environment Programme’s (UNEP) Deputy Executive Director Joyce Msuya.
Cities around the world have started to commit to more actions to mitigate climate change. For example, 26 major cities around the world—including Paris, London, Los Angeles, Copenhagen, Barcelona, Vancouver, Seattle, Mexico City, Auckland, Milan, Rome, Oslo, Oxford, Rotterdam, Santa Monica, Seoul, and Tokyo—have pledged to procure only zero-emission buses from 2025 and ensure that major areas of their city are zero emission by 2030.
This could be a huge opportunity for electric buses makers and for zero-emission vehicle manufacturers to continue working to bring battery costs down to internal combustion engine (ICE) parity.
If cities around the world adopt the right policies to attract investment and private partnerships, urban centers can lead the way to industry-wide transitions to limit global warming.
By Tsvetana Paraskova for Oilprice.com
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