The atmosphere at the end of last month's UN Climate Change Conference (COP27) in Egypt was rather sobering. Russia's invasion of Ukraine has forced countries to turn to thermal coal and other fossil fuels to meet their energy needs, likely postponing the transition to a net-zero economy. But COP27 also underscored the need to leverage public policy, regulation, and technological innovation to achieve a climate-secure future.
By now, it has become abundantly clear that supporting climate-related projects around the world at the necessary scale will require vast amounts of capital. The International Energy Agency estimates that the clean-energy transition alone will cost trillions of dollars annually, even without factoring in loss and damage, particularly in developing countries. The breakthrough agreement reached at COP27 to create a fund to help lower-income countries deal with the worst effects of climate change suggests that world leaders are aware of this fact.
But capital from donations and multilateral development banks alone will not be enough. The private sector must step up, too. Thus far, there has been no clear path to unlocking global capital markets' vast potential. There are, however, good reasons to be hopeful.
