Unveiling its case this week, the UN-sanctioned Net-Zero Asset Owner Alliance (NZAOA) has issued an urgent plea to government officials worldwide. They're sounding the alarm bells on political obstructions that, they claim, are putting the kibosh on massive climate-focused investment ventures. And we're not talking about small changes here. According to their estimates, a staggering $275 trillion in investment opportunities beckons by the year 2050—if—and it's a big if—governments unshackle these prospective windfalls.
"What's at stake?" you might ask. If these governmental roadblocks remain in place, the alliance foresees a grim financial portrait: up to $4-6 trillion in lost GDP by the same milestone year of 2050. Essentially, a colossal opportunity cost looms.
Contrast this with the NZAOA's assertion that major decarbonization tech is not some pie-in-the-sky fantasy. It's already here, functional, and, get this—cost-effective. Think solar, wind, and other clean energy technologies poised for explosive growth as fossil fuels enter their twilight years, expected to peak as soon as this decade.
But here's the rub. A formidable bottleneck is a lack of investment in essential infrastructure, like beefing up the electrical grid and establishing more ubiquitous public electric vehicle (EV) charging points. These "political barriers" have the alliance sounding the horn for global action.
So, what's their prescription for unfurling this green financial bonanza? Quite simple. Policymakers need to get on board the decarbonization express by eliminating these hindrances. We're talking subsidies, grants, and tax incentives that sweeten the deal for risk-averse investors.
The NZAOA doesn't just see a problem; they offer a compelling vision of a greener, more prosperous future. But the clock is ticking, and the ball, as they say, is in the policymakers' court.
Günther Thallinger, the board member at Allianz and chair of the UN-convened NZAOA, said: "As we have learned from advanced climate solutions, such as renewable energy and vehicle electrification, advantageous policy environments are a crucial enabler of uptake. For example, public subsidies and incentives for electric vehicles doubled from 2021 to 2022 to about $30 billion globally, and we are seeing similar trajectories for renewable energy and heat pumps.
"We must see these approaches replicated to similarly drive emergent technologies, such as green hydrogen and sustainable aviation fuels, without which it will be impossible to reach net zero, given the scale of the transition. Asset owners have a huge role to play, with potential contributions up to $31trn by 2050, but only by removing current investment barriers will we be able to unlock the full potential of private capital."