- We must mobilize the market.
- Current commitments are not enough.
- We need public money, we need private money,
we need philanthropic money.
- [Narrator] It's no secret that limiting global warming
is going to cost a lot of money,
but just how much is still a sticking point.
$131 trillion between now and 2050 is one answer.
According to the International Renewable Energy Agency,
much more than previously estimated.
For context,
the world's GDP was nearly $85 trillion last year.
Of course, it's basically impossible
to estimate the final cost,
but the world is trying to figure out
how to meet the 1.5 degrees Celsius goal set out
in the Paris Agreement, amongst other commitments.
(speaking in foreign language)
- The whole economic system will need to adapt
and align with the climate objectives.
- [Narrator] It's a huge bill that would have to be split
between governments, businesses, and consumers.
So we broke it down to understand
where the money needs to go.
First, we'll need to phase out fossil fuels.
According to this report, $24 trillion in planned investment
in fossil fuels will need to be redirected
to energy transition technologies.
- A carbon price and the carbon tax
is what has been highlighted as the main instrument
we should develop to facilitate the transition.
- [Narrator] Economist Danae Kyriakopoulou
studies climate and economic development.
She says there are a number of ways
the world could pay to phase out fossil fuels.
Although so far, governments have been reluctant
to raise taxes.
- Subsidies, taxes, direct investments, regulation,
all needs to be adjusted to incentivize this transition.
- [Narrator] Many experts for example,
say rich countries should help poor countries
pay to phase out fossil fuels
and governments would have to retrain fossil fuel workers
for new jobs in clean energy sectors.
Investment in new energy systems would make up the bulk
of the $131 trillion price tag.
$116 trillion would go to things like efficiency,
electrification, and new technologies designed
to help clean energy solutions become economically viable.
- This amount is covering the costs in infrastructure,
the cost for ensuring more energy efficiency
and the deployment of renewable green hydrogen
and sustainable biomass.
- [Narrator] But new technologies,
including sucking carbon out of the atmosphere
through carbon capture and using waste to generate power,
may actually turn out not to provide
any large-scale solutions at all.
And estimates for those ideas like green hydrogen
to fuel trucks and aircraft are based on how much
we think they will one day cost.
Spending this much money over the next 30 years
would require commitments from the public
and private sectors.
But there is some debate about how much money
each sector should provide.
- Clearly, the private sector has far more money
than governments in their ability
to be able to move on this.
- [Narrator] Right now,
governments are negotiating investment packages
and spending and investors are pouring money
into sustainable funds.
- Finance has a crucial role to play in this transition.
It is a very powerful lever that policymakers have
to direct financial close away from farming activities
to activities and sectors that support this transition.
But while the financial system is a very powerful lever,
it is not enough by itself.
- [Narrator] Investors will also have one eye
on unpredictable energy prices.
Recently, the prices of oil and natural gas have risen,
laying bare the world's continued dependence
on fossil fuels and the many worry about the destruction
of jobs in these industries.
- Even though it is something that will require
a lot of investment, there are returns to this.
There are benefits that will be new jobs,
and it is the growth story of the 21st century.
And if we do not invest, the cost will be even higher.
- [Narrator] At the current rate of emissions,
scientific models predict the earth will warm
by a potentially dangerous 2.7 degrees Celsius
by the end of the century,
compared to pre-industrial levels.
Well above the 1.5 degrees Celsius target
that would limit the impact of climate change
and that most countries have said, they aim to hit.
- We have, today, all the technologists that we need
for fighting climate change
and be consistent with the Paris Agreement.
The market is already driving us to a new energy system
that will be dominated by renewables.
So the hour the English may say
the direction of travel is clear.
(light music)