Climate markets have huge potential, says International Finance Corporation

A new report from the International Finance Corporation (IFC) highlights the “myriad” opportunities that exist for private companies and investors to get involved in climate finance.

The “Creating Markets for Climate Business” report argues that private investment holds the key to mitigating the effects of climate change and urges governments to translate their climate ambitions into successful markets for business.

The report not only addresses private investors, but also advises governments on how to create favourable rules and regulations.

Seven key climate business sectors that provide growth opportunities for the private sector are renewable energy, off-grid solar and storage, climate-smart agriculture, green buildings, sustainable urban transport and logistics, urban water infrastructure and urban waste management.

Each of these sectors already has a set of proven policies and regulations, financial innovations, and business models.

The report also states that, in 2016, there was $280 billion of investment in renewable energy, two times the investment in fossil fuels.

China and India are the leading markets, but more than 100 countries have targeted renewable energy in their Nationally Determined Contributions (NDCs), set under the Paris Agreement.

There is a $6 trillion in new investment in wind and solar up to 2040, half of it located in the Asia-Pacific region.

The global energy storage market was $2.5 billion in 2016, with Sub-Saharan Africa and South Asia leading the way for off-grid solar and storage solutions.

61 countries specifically target climate-smart agriculture; 86 countries target energy efficiency in buildings; and more than 80 countries target transport in their NDCs.

Electric vehicles now constitute a $163 billion market, with more than 750,000 EVs having been sold to date.

Governments are increasingly addressing air pollution through policies in transportation, and they are trying to establish attractive policies for strong EV markets.

Waste recovery markets are worth approximately $265 billion, with Asia-Pacific and Latin America set to see the biggest growth in sustainable waste management and waste-to-energy solutions.

Philippe Le Houérou, Chief Executive of the IFC, said: “The private sector holds the key to fighting climate change”.

“We can help unlock more private sector investment, but this also requires government reforms as well as innovative business models, which together will create new markets and attract the necessary investment. This can fulfill the promises of Paris”.

So far, climate solutions have seen an investment of more than one trillion dollars.

You can download the full “Creating Markets for Climate Business Report: A Climate Investment Opportunities Report” here.