by Dan Vermeer, Associate Professor of the Practice and Executive Director, EDGE
On February 28, Duke will host the largest climate-related event ever convened at Fuqua School of Business. We expect more than 500 public officials, business leaders, Duke faculty and students to attend this event, called “From Billions to Trillions: The Inflation Reduction Act as a Catalyst for Private Investment.” The focus of the event is on the unique role that private sector investors can play in tackling climate mitigation and adaptation.
Climate finance has long been a hot topic in international climate negotiations, as governments negotiate who will pay the bill for decarbonizing the global economy. Climate change is a not only a daunting societal threat, but also a pressing economic challenge as we pursue a rapid shift toward decarbonized electricity grids, transportation networks, and food systems.
In the wake of the U.S. government’s passage of the Inflation Reduction Act, CHIPS Act, and the Bipartisan Infrastructure Law, we are seeing hundreds of billions of dollars in new investment in renewable energy, energy efficiency, electrified transportation, hydrogen production, carbon removal, and many other solutions. These investments are not only reducing our emissions, but are also sparking an industrial revolution across the country.
The influx of public investment in recent years has jumpstarted this process, but we know that this is only a down payment on the massive investment required to stabilize the climate. According to McKinsey Global Institute, the world faces a $41 trillion mitigation investment gap to 2030, with emerging markets facing a higher gap as a share of their GDP. There is also an adaptation financing gap of $600 billion required every year to 2050, which is up to 18 times greater than current flows.
This gap will not and cannot be filled with public investment alone. To get from the billions currently deployed to the trillions needed to reach our climate targets, it is clear that the private sector must play a pivotal role, including venture capital, private equity, banks, and corporations. In essence, we argue that the climate problem requires a finance solution.
On February 28, we are thrilled to welcome to Duke a couple of the leading public figures in the U.S. energy transition: John Podesta, President Biden’s new Senior Advisor for Clean Energy and Innovation, and Jigar Shah, Director of Department of Energy’s Loans Program Office, among many others. By engaging leaders from public and private sectors, and tapping Duke faculty’s deep expertise, we are hopeful that this event can create the momentum and shared vision needed to unleash private sector investment for climate action.
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