Financing a fair transition to net zero is an enormous challenge.
More than 140 countries now have net zero greenhouse gas emission targets, covering close to 90% of global emissions.
In the current cost of living crisis, financing a fair transition that will relieve financial pressures on households becomes an urgent priority.
Russia’s invasion of Ukraine has led to major disruptions impacting the global energy system.
The disruption has thrown energy markets into turmoil and created major energy security and energy poverty risks across the globe.
On a global scale, Europe is facing an energy crisis, with forward prices for winter 2022/23 four to five times the prices experienced on average last winter.
The US is also experiencing its worst energy crisis in nearly five decades.
We need solutions to this ongoing crisis – the rapid deployment of renewables, energy efficiency and other low emissions technologies can solve supply and demand issues.
Financing net zero must be a principal priority.
However, the transition faces multiple challenges alongside financing and funding net zero infrastructure:
- delivering the necessary infrastructure to tight timescales;
- gathering and maintaining political support and commitment across the political spectrum; and
- retraining and skilling a workforce to operate net zero technologies.
By starting with filling in the gap when it comes to financing and funding net zero ambitions, policymakers, businesses and local and national government will be better placed to address these supplementary challenges.
So, what happens next?
Significant questions must be addressed as to who is responsible for paying for net zero, how the public can be brought along on the transition, and defining what constitutes a net zero investment:
- What is the scale of investment needed for net zero infrastructure?
- How can investment priorities be realigned to focus on net zero?
- Do we have sufficient data and metrics available to work out who should be paying for net zero and the longer-term costs this will incur?
- What are the options for funding net zero (taxpayer, billpayer, borrowing etc.) and which should be prioritised?
- What is the role of regulation relating to financing net zero?
- Are the public willing to pay for net zero? And how much?
- How can we achieve public buy-in for net zero and communicate the benefits?
- How can we ensure that the burden of paying for the transition in the long term does not affect those suffering most from the cost-of-living crisis in the short term?
- How are net zero investments being defined? Do we also need to look at climate change mitigation/adaptation/resilience/nature-based solutions as part of a wider definition?
- What should governments do if they fail to leverage the private investment needed for net zero? What interventions are needed for when things go off course?
- If governments took or continue to take limited action to facilitate net zero finance, what else can be done to move things forward?
We want to hear from you
ICE wants to hear views from across the sector on these questions and more when considering financing and funding net zero infrastructure.
Using the ICE’s Infrastructure Blog as the platform for debate, we are keen for opinions and thoughts on the main issues policymakers should be considering to be brought to the forefront.
This briefing paper provides an initial starting point for this discussion, which will lead into an online panel debate providing an honest look at options for what policymakers need to do next.
Please contact [email protected] if you are interested in authoring a guest blog on this topic.
ICE briefing paper: financing and funding net zero – what happens next?
Content type: Policy
Last updated: 23/11/2022