A third of investment required to meet net zero targets must be spent in the EU and US combined and nearly a quarter in China, according to the Bank of New York Mellon Investment Management (BNYMIM) research.
The research conducted by the American investment banking services corporation, titled ‘An investor’s guide to Net Zero by 2050’, suggests the global economy is drastically behind schedule in hitting 2050 net zero goals but could be reached with $100 trillion of green investment.
The report argues 3.5% of that investment will be required in Germany, 2.6% in the UK, 2.5% in France and 2.1% in Italy. More than 50% is expected to be needed in emerging markets, and nearly a quarter in China alone, according to the report.
China’s electricity sector, which generates 60% of its power from coal, was the largest carbon-emitting industry in 2021. The report says China will need some US$25 trillion (£21.5 trn) of green investments, more than any other country, due to the size of its economy and its fast pace of growth.
Chief economist at BNYMIM, Shamik Dhar, said: “Achieving net zero by 2050 will require transformational investment, but it is attainable. Get it right and the payoff to society and investors can be substantial. Investment is just one side of the coin.
“Wider policy action is needed to accelerate the pace of decarbonisation and there have been calls for a global carbon tax, but we think a coordinated approach is unlikely, so other incentives must be considered. Governments need to encourage and incentivise private sector investment whilst alleviating transition risks through policy levers,” he added.
Global head of responsible strategy at BNYMIM, Kristina Church added: “Engagement allows for the directing of capital to the sectors and geographies that need it most. This is where the biggest transition opportunities for investors lie.
“As responsible investors and stewards of our client’s capital, we see significant value in companies with credible transition plans. Continuous engagement with the public sector and corporations is key to ensure a just transition.” Europe is currently responsible for 8.5% of global carbon emissions.
President Xi Jinping recently announced that China will give priority to environmental protection and promoting green lifestyles. Proclaiming the conservation of nature is an essential part of building a modern socialist country and vowed to eliminate heavy air and water pollution while bringing soil contamination under control.
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