Net Zero Asset Owner Alliance calls on governments to unlock $275tr investment opportunity

The UN-backed alliance estimated there will be investment opportunities of up to $275tr by 2050 in an economic transition that would deliver a 1.5C warming scenario, while GDP losses are estimated to reach between $4-6tr by 2050 if governments fail to unlock this potential.

The NZAOA argued that key decarbonisation technologies were already “mature, cost-effective and deployed at scale”, with clean energy technology set for significant growth in the coming decades, as demand for oil, coal, and gas is expected to peak in the 2020s.

However, the group warned that a lack of public and private investment in infrastructure – such as grid upgrades and public chargers for electric vehicles (EVs) – create “key political barriers” to the net zero transition.

As a result, it has called on policymakers globally to remove such obstacles and introduce subsidies, grants and tax credits to improve the risk/return profiles of these investments.

Günther Thallinger, board member at Allianz and chair of the UN-convened NZAOA, said: “As we have learnt from advanced climate solutions, such as renewable energy and vehicle electrification, advantageous policy environments are a key enabler of uptake. Public subsidies and incentives for electric vehicles, for example, doubled from 2021 to 2022 to about $30bn 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.”

This article first appeared at Investment Week.