Report: $700 billion annually needed to curb climate change

A new report by the Green Growth Action Alliance says “greening” global economic growth requires that $700 billion annually be invested in green infrastructure, transport, energy efficiency and forestry to combat climate change and to sustain a future world population of 9 billion people.

“Greening the economy is the only way to accommodate 9 billion people by 2050,” Thomas Kerr, director of climate change Initiatives at the World Economic Forum, said in a statement.

The report argues that increasing government yearly spending on “greening” the world economy to more than $130 billion would mobilize $570 billion in private capital, roughly meeting the report’s recommended $700 billion in yearly green spending. (RELATED: Environmental groups praise Obama for promising action on climate change)

In order to get to this point, the report recommends that the government should subsidize more private investment in green technology while getting rid of fossil-fuel subsidies, putting a price on carbon emissions, promoting more trade in green technologies and investing more in climate adaptation.

“There are many successful cases where governments have strategically targeted their public funds to mobilize significant sums of private investment for green infrastructure,” Kerr added. “It’s now time to scale up these proven solutions.”

However, economics have not been going in favor of green investments this past year, as government funding of green technology has been scaled back across the developed world.

“If $36 billion can unlock $570 billion in private capital, then private investors should find a way to provide that seed money,” said Nick Loris, economist at the conservative Heritage Foundation.

Green energy investment globally fell in 11 percent 2012 due to regulatory uncertainty and the scaling back of government green energy subsidies, according to data from Bloomberg New Energy Finance.

“If greening the economy would actually provide companies with green, those investments will happen,” Loris said. “But this historically has not been the case, which is why Western Europe is scaling back on state-funded green investments, not doubling down.”

The U.S. saw a 32 percent drop in  green investment on fears of expiring tax credits for wind power and because of low-priced natural gas. Western Europe fared little better, as Italy saw a 51 percent plunge in green investment due to cutbacks in solar power subsidies. Spain saw a 68 percent decrease in green investment as government officials announced a moratorium on green subsidies for projects that have not been approved.

However, green investments in some developing countries — mainly China — have increased and helped offset some of the investment losses in the developed world. China is also heavily ramping up its use of fossil fuels, which troubles environmentalists.

A World Bank study warned the world could warm by four degrees Celsius by 2100 if no further measures to address climate change are taken — which would bring on more extreme weather.

“A world in which warming reaches 4°C above preindustrial levels … would be one of unprecedented heat waves, severe drought, and major floods in many regions, with serious impacts on human systems, ecosystems, and associated services,” reads the report.