Ensuring new infrastructure is climate-smart

Working and discussion papers
October 2015
James Rydge, Michael Jacobs and Ilmi Granoff
About US$90 trillion in infrastructure investment is needed globally by 2030 to achieve global growth expectations, particularly in developing countries. To achieve this, infrastructure investment needs to be both scaled up, and, due to climate risk, integrate climate objectives.

Infrastructure investment has become a core focus of international economic cooperation through the G20 and also for established and new development finance institutions.

Integrating climate objectives into infrastructure decisions will increase resilience to climate change impacts, avoid locking in carbon-intensive and polluting investments, and bring multiple additional benefits, such as cleaner air and lower traffic congestion. Shifting to low-carbon infrastructure could add as little as 5% to upfront investment costs in 2015-2030. These costs could be offset by resulting energy and fuel savings. 

A number of institutions have already started integrating climate risk into their investment decisions, but this needs to be done in a far more systematic way, making best practices the norm. For example, several international institutions are working to halt unabated coal project financing, but this effort will need to extend to national development banks and newer multilateral development banks.

International finance will also have to be significantly scaled up to deliver the US$90 trillion. This includes increasing capitalisation of both national and  multilateral development banks.

The Global Commission on the Economy and Climate recommends that G20 and other countries adopt key principles ensuring the integration of climate risk and climate objectives in national infrastructure policies and plans.

These principles should be included in the G20 Global Infrastructure Initiative, as well as used to guide the investment strategies of public and private finance institutions, particularly multilateral and national development banks.

Governments, development banks and the private sector should cooperate to share experience and best practice in mainstreaming climate into infrastructure policies, plans and projects.

Read the research