November, 30, 2017
South Asia’s ambitious plans to meet its climate targets under the Paris Agreement represent $3.4 trillion worth of investment opportunities in cities and infrastructure by 2030, according to a new report released today by IFC, a member of the World Bank Group.
Bangladesh, Bhutan, India, Maldives, Nepal and Sri Lanka, which represent 7.38 percent of global carbon dioxide emissions, have enormous but untapped opportunities in climate-smart investing in sectors including renewable energy, transport, green buildings, urban water, climate-smart agriculture, and municipal solid waste. The report identifies $18 billion of climate investment opportunities in Sri Lanka alone, along with $3.1 trillion in India, $172 billion in Bangladesh, $42 billion in Bhutan, $2 billion in the Maldives, and $46 billion in Nepal.
“The only way that the South Asian countries can take advantage of these climate investment opportunities is with a strong and engaged private sector,” said IFC CEO Philippe Le Houérou. “We also need to have a comprehensive approach to creating markets for climate business in key sectors. That means putting in place necessary policy frameworks, promoting competition, and building capacity and skills to open new markets.”
The impacts of climate change on business assets, supply chains, and business interruptions are already a major concern for South Asian companies. This concern coupled with the urgency of addressing the air pollution reinforce the need for immediate action while capitalize on the existing investment potential.
The South Asia region has seen a surge in investment in clean energy and energy efficiency in recent years, contributing to significant development gains. IFC’s report highlighted two sectors for future growth: due to rapid urbanization, green buildings represent an investment potential totaling more than $1.5 trillion across South Asia between 2018 and 2030; and green transport infrastructure and electric vehicles create an opportunity of over $950 billion to 2030. Such investments generate further benefits by providing access to markets, enabling trade, and ensuring mobility, which in turn stimulate economic growth and private investment.
According to the report, other significant opportunities in the region include:
The countries in the region are taking the lead in fulfilling their Paris commitments. Scaling and replicating such progress across South Asia will require catalyzing private finance and creating markets for climate business solutions through policies, financial innovations, and business models targeted at sector-specific local conditions. The report provides recommendations on how each country can further accelerate climate-smart investing, including demonstration projects to signal commercial viability and raise awareness, and promoting public private partnerships through streamlining procurement and processes.
IFC is strongly committed to supporting the private sector in the region. Since 2005, IFC has invested $2.6 billion of its own funds in long-term financing for climate-smart projects in South Asia and additionally mobilized almost $1 billion from other investors. The report is a follow-up to the Creating Markets in Climate Business report published earlier this month.