Report by Barclays and
Accenture pegs required investment to reach 2020 goal at €2.9trn,
says Alastair Tyler, head of strategic asset finance,
is a critical global, social and economic challenge and is set to
affect us all for generations to come.
The transition to a low-carbon
economy – which is essential if we are to meet this challenge –
will require significant investment from both the public and
There is scientific agreement that
the level of greenhouse gas emissions should be stabilised by 2015
and reduced thereafter. But the current rate of investment is
markedly lower than that required, giving rise to a widening carbon
The Stern report valued the level
of investment needed to address climate change at one% of global
GDP. Other experts put the figure nearer double that and indeed
Stern himself has indicated an upward revision.
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An estimate in a new report by
Barclays and Accenture puts the figure at around €2.9trn.
Whatever the final number, it will
require an unprecedented inflow of capital, an order of magnitude
higher than that of the internet and telecom revolutions of the
Taking our best estimate, of the
€2.3trn of procurement capital identified, 73% (€1.65trn) will need
to be funded externally, creating unprecedented demand for private
capital and associated bank products and services.
It goes without saying asset
finance will play a significant part in financing a major share of
the capital and we estimate the figure to be around €482bn.
Asset leasing will also be required
to support consumer adoption of micro-generation and energy
efficient equipment by spreading the upfront cost over its lifespan
and using the energy savings to cover lease payments.
High public sector debt and
maturing technology now mean that private sector capital, primarily
intermediated by banks, must be provided to accelerate the
investment we need to meet our 2020 European goals.
However, with banks under pressure
to reduce risk and build their deposit base in order to ensure
there is enough capital to satisfy new or anticipated regulations,
European governments must also play a role in stimulating demand
and stabilising carbon markets with transparent and long-term
Encouragingly, during the past year
we have seen leasing included in the Carbon Trust loan scheme and
deals are starting to be written on renewable energy equipment.
Low-carbon technologies are on the brink of the wide scale
rollout Europe needs to reach its 2020 targets. But unless we
bridge the carbon capital chasm, Europe will likely fall short in