Climate investment trends to expect in 2022 – Middle East & Gulf News

How will countries and leaders respond to growing concerns about our climate? We look at different trends and the expected investments to be made in healing the planet.

Nathaniel Bullard is Chief Content Officer of Bloomberg NEF and as part of strategic research on how the energy, transport, industry, building and agriculture sectors can adapt to the energy transition, he analyzed the following green energy trends.

  • $1.1 trillion in sustainable debt in nine months

Sustainable debt products such as loans and bonds for positive environmental investments only emerged as a class of instruments eight years ago. Since then, issuance has skyrocketed, surpassing $750 million in 2020. The world reached its first-ever year of issuing $1 trillion in sustainable debt in September 2021.

Seed investments in climate tech companies have skyrocketed. Today, climate tech companies are raising billions of dollars across asset classes, deal stages and technologies every month, and at every stage, from pre-seed funding to pre-IPO rounds of a billion dollars. Through November 2021, climate tech companies have raised over $49 billion for seed business in 2021.

Renewable energies: the only growing source of electricity production

Wind generation has a compound growth rate of 16.6% over the past decade, while solar’s rate was 38.8%. This means that the production of each technology doubles in less than 5 years and less than 2 years, respectively. If wind generation were to grow at its current 10-year rate for just one more year, it would become the largest source of new electricity generation since 2010. If solar were to grow at the same rate, it would be the largest source of new electricity generation since 2010. largest contributor to electricity generation growth by 2023.

Renewables with nuclear

In 1965, nuclear energy produced 24 terawatt hours per year. All wind, solar, geothermal and biomass power plants generated 15 terawatt hours. For four decades, the gap between nuclear and renewable generation has widened. From the 2000s, however, nuclear generation leveled off and renewables continued to rise in a smooth and steep curve. Result: renewable electricity production exceeded nuclear production in 2020.

From a climate point of view, nuclear and renewable energies are not in competition. Growth in electricity demand will be sufficient to support significant expansion of each carbon-free electricity generation technology. Some of that expansion may even come from merging, as investors who recently invested $1.8 billion in Commonwealth Fusion Systems are hoping.

Electric vehicles now account for 10% of passenger car sales

In the first quarter of 2010, a total of 395 electric vehicles were sold worldwide. In the third quarter of 2021, 1.7 million were sold, more than half of them in Asia. This sales growth has taken electric vehicles from 0.002% of passenger car sales to 10.8% of sales globally, and more than that in Europe and Asia.

The growth of electric vehicle sales in China in particular is extraordinary. The world’s largest automotive market now accounts for almost 20% of electric vehicle sales on a monthly basis.

Other climate trends to watch

Some of the top things to watch in 2022 that could influence the state of the climate crisis and the direction the planet is heading.

Losses and damages

But 2022 could be the year of change. At COP26, the discussion on loss and damage gained momentum and Scotland became the first country to contribute (approximately $2.74 million) to loss and damage funding for developing countries. It is hoped that COP27 to be held on African soil, a continent that is suffering some of the worst impacts of the crisis, will mean a stronger push to deal with loss and damage.

Climate finance

Global warming is increasing the severity and frequency of extreme weather events and vulnerable countries lack the capacity and funding to mitigate and adapt to these impacts. In 2009, high-income countries that have historically produced the most emissions pledged to provide $100 billion in climate finance per year by 2020 to help developing countries cope with the impacts of the climate crisis. . But this climate finance target was not met in 2020, nor in 2021.

UN Secretary General António Guterres has called for 50% of climate finance to be spent on adaptation to climate change, which currently accounts for only 25% of global climate finance. Commitments have been made to increase adaptation funding to 40% by 2025.

Science

This year will see the publication of two major scientific reports. The Intergovernmental Panel on Climate Change (IPCC) published a report in 2021 which warned the world that the average global temperature rise would reach 1.5°C before 2040 and could reach 5.7°C by 2100.

In February 2022, the IPCC will publish an assessment of how the climate crisis is affecting people, ecosystems and biodiversity, our ability to cope and how we can adapt.

Major events

In May 2022, the Indonesian government will host the 2022 Global Platform for Disaster Risk Reduction. Countries will discuss how to build stronger systems to manage disaster risk and protect those at risk. With climate hazards accounting for 90% of all major disasters worldwide, disaster risk reduction policies and practices are a crucial element for effective management of the climate crisis.

Egypt is hosting the next UN Climate Change Conference (COP27) in Sharm el-Sheikh in November 2022. The conference will build on commitments and discussions from COP26 in Glasgow, UK. The key elements to watch before and during COP27 are:

  • Providing $100 billion a year to help developing countries mitigate and adapt to the impacts of climate change
  • The creation of a loss and damage fund and the mobilization of financing
  • New commitments, and the implementation of existing announcements, to limit global warming to well below 2°C by the end of the century.