Corporations and investors are doing a first-rate job of investing in clean energy, according to Paul Bodnar, director of sustainable finance, industry and diplomacy at the Bezos Earth Fund. But the most important emerging opportunities for climate finance lie in two other areas: fossil fuel disinvestment; and resilience in the face of rising global temperatures.
The Bezos Earth Fund has committed to investing $10 billion into climate and nature programs by 2030. Remodeling the economy to make it more resilient to climate change is an overlooked field and a growing financial opportunity, said Bodnar.
“It’s the next wave of climate investment,” he said June 18 in a keynote interview with GreenBiz Editor-at-Large Heather Clancy at the GreenFin conference in New York. “It’s a growth industry in the 21st century … but it’s a blind spot for capital markets.”
Investors devoted almost $1.3 trillion annually to climate finance in 2021-22, according to the Climate Policy Initiative, but at least $8 trillion a year is needed going forward.
Among the areas that will see more need, and more investment, are wildfire prevention and recovery, access to clean water, coastal rehabilitation and flood prevention.
“It’s like healthcare,” Bodnar said. “It’s unfortunate that people get sick, but we do want to drive capital and innovation into the field.”
The world is on a carbon diet, and when you’re on a diet you can’t just count the salads, you have to count the ice cream as well.
Time to draw down fossil fuel assets
Bodnar stressed the need for “capital stock turnover” — the replacement of the old with the new via investment. While investment in clean energy has reached all-time highs, the drawing down of fossil fuel assets is not keeping pace.
“The world is on a carbon diet, and when you’re on a diet you can’t just count the salads, you have to count the ice cream as well,” he said. “All the assets the global economy runs on, they have long lifetimes, and we need to measure not only the green money that’s flowing, but also the money going into the high fossil-intensive economy, and how we reduce and redirect that.”
Businesses and communities rely heavily upon fossil-fuel power plants and carbon-intensive industrial facilities, and the energy transition will falter if it fails to take those dependencies into account.
“We have to recognize the value that coal mines bring to communities and to people,” Bodnar said. “We need to retire them before the end of their productive lifetimes, but also to limit the destruction associated with doing that.”