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That $3 Trillion-a-Year Clean Energy Transformation? It’s Already Underway.
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Date:2025-04-18 23:01:14
To keep global warming in check, the world will have to invest an average of around $3 trillion a year over the next three decades in transforming its energy supply systems, a new United Nations climate science report says. It won’t be cheap, but it’s also a change that’s already underway.
Much of that investment is money that would be spent on energy systems anyway. Instead of continuing to invest it in fossil fuel-based energy that worsens global warming and can harm human health, the report provides a pathway for shifting those investments to clean energy.
The landmark report, released Oct. 8 by the Intergovernmental Panel on Climate Change (IPCC), sums up years of research into the risks to people and ecosystems if global temperatures rise 1.5 degrees Celsius above pre-industrial times, and it looks at how to stop that from happening. The planet has already warmed about 1°C, and it’s gaining about 0.2°C every decade, the report says.
Keeping warming under 1.5°C will require a near complete shift from today’s dependence on fossil fuels to a world powered almost entirely by clean energy, the IPCC says.
That transformation will require a global investment in clean energy and infrastructure of $1.6 trillion to $3.8 trillion a year (in 2010 U.S. dollars), with an average of about $3 trillion to $3.5 trillion a year from 2016 to 2050, the IPCC says. That compares to an estimated $2.4 trillion a year that would otherwise be invested in energy systems.
On a 1.5°C pathway, clean energy investments would overtake fossil fuel investments by about 2025, and all investments in coal that lack carbon capture and storage technology would be halted by around 2030.
“It’s not necessarily asking for some new pot of money to be magically created, but it’s a redirection from investment in fossil fuels to efficiency and renewables,” said Drew Shindell, a professor of climate science at Duke University and a coordinating lead author on the IPCC report.
Ramping Up Renewable Energy and Efficiency
Global investments in wind and solar, which currently total approximately $250 billion per year, would need to be increased several fold to meet the 1.5°C target, Laszlo Varro, chief economist with the International Energy Agency, said.
“The energy that you get from this $250 billion investment buys you the equivalent of one percent of global electric demand,” Varro said. “But global electricity demand is growing at 2 percent per year, so you don’t even catch the growth of global electricity consumption let alone [achieve] rapid decarbonizing.“
Energy efficiency efforts that stem the growth of energy demand will also play a key role in limiting future warming. That includes better-insulated homes that require less energy because they lose less heat, more efficient heating and appliances, and lighting like LEDs that require a fraction of the power of old conventional light bulbs.
“We simply don’t believe that it is possible to have a copy-paste transition from the high carbon age to the low carbon age,” Varro said. “You also have to reduce total energy consumption.”
At the same time, entire sectors of the global economy like transportation and heating will have to transition off of fossil fuels and onto electricity powered by renewables or other zero-emissions sources of energy, something Varro calls the “electrify everything strategy.”
“The two most important things in this is electric cars in transportation and electric heat pumps in building heating and industrial heat,” he said.
One key area that would require new sources of funding is energy efficiency, which could come through carbon pricing or other government regulations, the report says.
Such measures demonstrate the scale and urgency of the energy transformation that will be required, Varro said. “The IPCC was very clear that the impacts of high warming is the equivalent of a national emergency, but at a planetary scale.”
Companies Finding Benefits in the Transition
Some of these changes are happening now, led in part by corporations that have recognized the costs fossil fuel emissions and climate change create for their supply chains in the future. Corporate giants including Google and Apple, for example, purchase enough renewable energy to cover 100 percent of their power needs.
The research and sustainability advocacy group Ceres has been working with companies and large investors for years to help them understand both the risks to their portfolios from high-carbon sources and the opportunities of investing in cleaner infrastructure as renewable energy prices fall.
Ceres argued in a report released earlier this year that achieving a “clean trillion” in additional annual investment in clean energy and infrastructure is “eminently feasible.” Alongside the environmental and health benefits of reducing pollution, it highlighted some of the financial benefits from clean energy infrastructure, such wind or solar projects that can provide stable, long-term returns on the investment.
“We are in an all-hands-on-deck situation that requires transformational change in the public and private sectors, the likes of which the world has never seen,” Sue Reid, Ceres’ vice president for climate and energy programs, said after the IPCC report came out. “Fortunately, we already have at hand a range of tools that are needed—from clean energy technologies to effective policy models—to get us there.”
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