The Sustainable Infrastructure Imperative: Financing for Better Growth and Development

This paper documents the assumptions and analysis that underlie the presentation and discussion of the exhibit on the Global GHG Abatement Benefit and Co-benefit Curve: 2030 in our 2014 Better Growth, Better Climate report. This analysis emphasises the importance of considering a fuller range of benefits of actions to reduce carbon emissions when comparing these with higher-carbon alternatives.

The costs of fossil fuel subsidies far outweigh the benefits when considering the full economic, social, and environmental impact of these subsidies in sub-Saharan Africa. If done right, phasing out fossil fuel subsidies in sub-Saharan Africa will lower greenhouse gas emissions, reduce air pollution, and create the fiscal space to provide access to energy and meet social development objectives. 

Greater energy efficiency can benefit countries at all stages of development, but particularly fast-growing economies trying to achieve universal energy access with limited resources. By offering cost-effective opportunities to avoid new energy supply, energy efficiency is increasingly recognised as the “first fuel”. 

Most sub-Saharan households cook using traditional biomass stoves, and 200 million more will do so by 2020. For maximum health and environmental benefits, policymakers in sub-Saharan Africa should aim to transform their countries’ cookstove markets to drive a large-scale shift from traditional biomass to stoves using clean fuels or electricity.  

What happens to clean infrastructure finance when countries are big and fast-growing but have immature financial systems and a scarcity of long-term domestic investors? The Climate Policy Initiative (CPI) compares two different financing models from middle income countries: the highly centralized model of Brazil and the decentralized model from India. While evaluating the strengths and weaknesses of each model, the paper finds both countries end up with public financing dominating clean infrastructure projects with similar levels of leverage in both. 

After several years at high levels, oil prices dropped by more than half between June 2014 and January 2015, leading many to ask questions about the implications for the economy and for countries’ and companies’ energy choices. Although such price swings have happened before, the issues being discussed are indeed quite important. 

This analysis weighs the potential benefits and risks of relying on expanded natural gas expansion and use as a “bridge” to a lower-carbon energy future, based on a review of the research literature and of recent modelling studies, as well as interviews with sector experts. It also examines the extent to which natural gas could play such a role, and the conditions that would be required. 

Momentum for a low-carbon economy is building, but much more needs to be done. International partnerships can help catalyse the economic growth and emissions reduction to get us there. The Global Commission makes 10 key recommendations in which partnerships can help deliver better growth and a better climate. 

The Global Commission on the Economy and Climate recommends that cities commit to developing and implementing low-carbon urban development strategies by 2020, using where possible the framework of the Compact of Mayors, prioritising policies and investments in public, non-motorised and low-emission transport, building efficiency, renewable energy and efficient waste management. The actions suggested could reduce annual greenhouse gas (GHG) emissions by 3.7 Gt CO2e by 2030. 

This paper provides population, GDP and carbon emissions estimates up to 2030 for 69 cities across 35 countries in sub-Saharan Africa for which data is available. The analysis has been undertaken using the Oxford Economics’ Global Cities 2030 database (covering 750 cities) and other published data. 

Strong, predictable and rising carbon prices send an important signal to markets and can reduce greenhouse gas emissions without harming the economy. Around 40 national jurisdictions and over 20 cities, states and regions, have adopted or are planning explicit carbon prices, covering about 12% of global GHG emissions.

This report documents a wide range of projects, programmes and plans currently being pursued by African cities as part of a new mode of low-carbon urbanism that is simultaneously helping to realise virtuous cycles of local economic development and social inclusion, as well as climate risk reduction. 

This report finds that growth strategies which fail to tackle poverty or climate change will prove to be unsustainable, and vice versa. A common denominator to the success of both agendas is infrastructure development. 

The report recommends that parties to the Montreal Protocol approve an amendment to phase down the production and use of HFCs. In addition, countries that are not already working to phase down HFCs should begin developing and implementing domestic regulations to do so, while also increasing their appliance energy efficiency standards. Incorporating HFC production and consumption into the Montreal Protocol would provide significant near-term gains to slow climate change and could lead to avoiding 1.1–1.7 GtCO2e of annual GHG emissions per year by 2030. 

This report defines sprawl and its alternative, “smart growth,” describes various costs and benefits of sprawl, and estimates their magnitude. It identifies policy distortions that encourage sprawl and discusses factors to consider when determining the optimal amount and type of urban expansion for various types of cities. 

What happens to clean infrastructure finance when countries are big and fast-growing but have immature financial systems and a scarcity of long-term domestic investors? The Climate Policy Initiative (CPI) compares two different financing models from middle income countries: the highly centralized model of Brazil and the decentralized model from India. 

Global aviation and shipping together produce about 5% of global CO2 emissions, and by 2050 this is expected to rise to 10–32%. Yet these sectors offer some of the most cost-effective emission reductions available today, particularly through improved fuel efficiency. The Global Commission on the Economy and Climate recommends that emissions from the international aviation and maritime sectors be reduced in line with a 2°C pathway through action under the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO). 

This technical note sets out the analysis underpinning the emission reduction recommendations of the Global Commission on the Economy and Climate’s 2015 report. It explains baseline scenarios and the estimate of the emissions required for a 2C pathway.

The New Climate Economy project has estimated the extent of greenhouse gas (GHG) emission reductions that could result by 2030 from undertaking some of the measures and actions discussed in our 2014 annual report Better Growth, Better Climate. We estimate the potential emission reductions of undertaking these measures that would narrow the gap between a baseline emissions pathway and one compatible with a two-thirds chance of keeping global average warming below 2°C by at least 50% in 2030

Countries at all income levels have the opportunity to build lasting economic growth and at the same time reduce the immense risk of climate change. But action is needed now. The Global Commission, advised by some of the world’s leading economists, sets out a ten point Global Action Plan for governments and businesses to secure better growth in a low-carbon economy.