Emerging Markets Need $1.5 Trillion to Make Buildings Greener
Investment Requirements for Greener Buildings
Emerging markets are in need of $1.5 trillion in investments by 2035 to ensure that new and existing buildings are environmentally friendly and do not contribute to climate-damaging emissions. This significant investment is crucial to combat the rise in carbon emissions and limit global warming to 1.5 degrees Celsius. The International Finance Corporation (IFC), the World Bank’s private finance arm, revealed that China alone requires $1.33 trillion due to its size and urbanization. The rest of the funds will be allocated to Latin America, the Caribbean, Asia, Europe, and Africa, as stated in the IFC’s recent report.
The Scope of Investments
The allocated funds will primarily be used to electrify older, inefficient buildings with cleaner energy sources and construct energy-efficient new buildings using low-emission materials. The construction industry is a significant contributor to carbon emissions, accounting for approximately 40% of global emissions. As the construction boom continues, it becomes vital to prioritize sustainable building practices to mitigate environmental impact. Susan Lund, Vice President for Economics and Private Sector Development at the IFC, emphasized the existence of “low-hanging fruit” technologies that can significantly reduce construction-related emissions.
Opportunities and Challenges in Developing Countries
While there are existing technologies to reduce emissions, developing countries face challenges in adopting them due to weak policy incentives, limited financing options, and insufficient information about energy efficiency. Lund highlighted that these countries are in the midst of a massive construction boom, which presents an opportunity to implement greener building practices from the outset. She emphasized the importance of establishing energy efficiency building codes and increasing awareness about the efficiency of buildings.
Achievability and Economic Impact
Unlike other industries with hard-to-abate activities, the construction sector has the potential for achievable change. Implementing more responsible building practices would have a minimal impact on GDP. Lund stated that fully decarbonizing construction value chains would be more challenging but emphasized the feasibility of adopting greener building practices without significant economic costs.
IFC’s Investment and Collaboration
The IFC has already invested $10 billion in energy-efficient construction projects in developing countries, leveraging an additional $60 billion from various investors, including development finance institutions and project developers. These investments aim to meet the IFC’s energy efficiency criteria and promote sustainable construction practices.
By prioritizing greener buildings and investing in sustainable construction practices, emerging markets can significantly reduce carbon emissions and contribute to global efforts to combat climate change. The allocation of funds to electrify inefficient buildings and construct energy-efficient structures using low-emission materials is a crucial step towards a more sustainable future.