Exploring climate solutions: An introduction for investors
A ‘climate solution’ can be broadly defined as an investment that offers a product, service or technology that enables the low carbon transition. This generally includes both climate mitigation (activities that help to reduce, avoid or remove greenhouse gas emissions from the atmosphere) and climate adaptation/resilience (activities that help the world adjust to cope with expected or actual climate change impacts).
According to the Climate Policy Institute (CPI), to meet a 1.5C scenario (limiting global temperature rises to this level above pre-industrial levels), the expected finance need is around $7.4tn each year through to 2030, with a significant proportion focused on climate mitigation.
As the warming scenario increases – i.e. for scenarios where temperatures rise above these levels – the need for adaptation activities increases to prepare, for example, for expected and increased extreme weather-related events. The CPI estimates the projected losses that can be avoided by 2100 by limiting warming to 1.5C to be five times greater than the climate finance needed by 2050 to meet this target.
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