WASHINGTON, DC: October 06, 2016. The 191 members of the International Civil Aviation (ICAO) have agreed a scheme to reduce and offset carbon emissions beginning in 2021. The announcement coincided with U.N. confirmation that the Paris Agreement on Climate Change will come into force on November 04 this year following ratification by the U.S. and China.
The agreement has been endorsed by 175 countries and calls for the adoption of a sustainable low-carbon future by limiting the rise in global temperature to "well below" two degrees Celsius.
In anticipation of this global action, the Global Commission on the Economy and Climate (GCEC) has called on government leaders to increase investment in sustainable transport and infrastructure to spur growth. In a new report it said the cost of new investments required by 2030 would be US$90 trillion.
"Investing in sustainable infrastructure is essential to solve all the world's most pressing problems," said Felipe Calderón, former president of Mexico and chair of the GCEC. "It's key to reigniting global growth. It's key to reducing poverty. And it's key to meeting the Paris Agreement. Infrastructure can be the pillar on which we build a sustainable economy, or it can crumble beneath us. It all depends on whether we get financing right, only then will capital fully shift in the low-carbon direction."
The Commission's report says a major obstacle to sustainable infrastructure investment has been the price distortion from continued use of fossil fuel subsidies that totaled US$550 billion in 2014.
"Green finance and climate risk are two sides of the same coin. The finance sector is increasingly grasping the opportunity side of the low-carbon transition. But any prudent investor looks not only at the opportunities in the portfolio, but also the risks, especially of legacy investments," said Commissioner Caio Koch-Weser, former vice-chairman of Deutsche Bank.
The report notes that a single infrastructure project can require dozens of financial institutions, all with their own demands, and take more than a decade to build. The cost of project preparation is substantial says the GCEC, typically 2.5–5.0 percent of total investment.
As Qatar Airways announced an order for 30 B787-9 Dreamliners and 10 more B777-300ERs, IATA director general and CEO Alexandre de Juniac commented on the ICAO agreement: "The aviation industry understands that sustainability is critical. Airlines will continue to invest in new technology—particularly new aircraft and sustainable alternative fuels —to improve their environmental performance. And we will continue to ask governments to do their part with investments to modernize air traffic management and with supportive polices to help commercialize sustainable alternative fuels for aviation."