The world needs US$3.3 trillion (S$4.5 trillion) a year in energy-related investments through the rest of the decade if it hopes to reach net-zero carbon emissions by 2050, according to the International Monetary Fund.
The current financing effort "falls far short of what is needed", IMF Managing Director Kristalina Georgieva said in prepared remarks to the fund's Policy Dialogue on climate-related financial risks and green finance in Asia-Pacific. Countries must find urgent ways to attract more climate funding, especially for emerging economies, she added.
"The biggest risk for us - and for the world of finance - is to miss the net-zero path," Georgieva said.
A record US$755 billion was spent globally on the deployment of low-carbon technologies in 2021, according to estimates by BloombergNEF.
The IMF in April approved the creation of a new trust that could eventually provide US$50 billion for vulnerable countries to support structural reforms intended to address risks including climate change and pandemics. So far that trust has reached US$40 billion, Georgieva said. Markets and the private sector play a critical role in mobilising and efficiently allocating resources, she said. The amount of investment needed for green energy is dwarfed by the massive benefits of achieving net zero, which she said includes tens of trillions of dollars a year "just from phasing out coal".