Oil stays close to multi-year highs as energy crisis continues

A Bank of America report warned that achieving net zero would cost the global economy $ 5,000 billion annually over the next 30 years.

On the eve of the UN’s COP26 environmental conference in Scotland this month, where countries that signed the 2015 Paris Agreement to reduce carbon emissions will review their progress and set policies to achieve net zero by 2050, the report bluntly recalls the cost of transitioning to greener energy.

However, the report also warned that failure to address climate change could result in the loss of 3% of global gross domestic product each year this decade, rising to around $ 69 trillion by the end. of this century.

A key priority at COP26 is for governments to agree on specific cash-backed policies that will accelerate the transition to net zero, including a commitment to phase out the use of coal, dramatically reduce deforestation , to accelerate the transition to electric vehicles and green heating. and implement fiscal measures to encourage increased investment in renewable energies.

In addition, the summit, which is taking place in the former Scottish industrial center of Glasgow, will also try to get Western governments to fill the shortfall of $ 20 billion a year to help emerging countries switch to an energy greener.

Developed countries had agreed to provide $ 100 billion per year to emerging countries. Not only have they failed to honor this commitment, but the UN wants an agreement in Glasgow to further increase this funding.

The United Nations Environment Program estimates that the cost of transition in emerging countries will reach $ 140 to 300 billion by 2030 and $ 280 to 500 billion by 2050. The San Francisco think tank , the Climate Policy Initiative, estimates that Africa alone could require up to $ 3 billion by the end of this decade.

Against this backdrop, Bank of America estimates that the total cost of the transition will be $ 150 trillion, at least four times the amount that global COVID-19 stimulus packages are expected to cost governments this decade.

The report says funding the trillions of dollars in investments needed for net zero will require “significant changes in capital allocation.”

As Arab News reported last week, the World Resources Institute said G20 countries still account for 75 percent of global greenhouse gas emissions. Meanwhile, a Moody’s Investors Service report found that G20 financial institutions were exposed to nearly $ 22 trillion in carbon-intensive sectors.

However, Bank of America said the use of labeled bonds and loans to address environmental issues is growing rapidly.

It plans more than $ 1,000 billion in labeled bond issuance this year, including $ 900 billion in green, social and sustainable bonds and an additional $ 100 billion in sustainability bonds.

The report adds that labeled bonds already account for over 20% of European high quality and high yield European issuance for companies this year, driven by environmental, social and governance (ESG) concerns and EU regulations. , more than double the rate in 2020.

However, while the report is optimistic about the ability of Western governments to pay for the greening of the planet, the report notes that while around 50 countries, as well as the EU – which together account for nearly 75 percent CO2 emissions – have committed to achieving net zero, only 10 countries have so far enshrined this commitment in law.

The report adds that while a number of countries have committed to long-term goals, focusing on 2050 or the end of the century, they have not made commitments to 2030 in line with the Paris Agreement.

The good news? Well, Bank of America’s cost estimate is considerably lower than a previous forecast, released this summer, by BloombergNEF’s New Energy Outlook, which estimated the figure at $ 173 trillion, or $ 5.8 trillion. dollars per year.

Progress of sorts as the world moves towards Glasgow.

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