Achieving Carbon Neutrality is the New Climate Change Investment Trend

Around the world, countries are racing to achieve net-zero emissions by the middle of the century. What challenges and opportunities will this create for the financial sector? How can green technologies accelerate progress towards carbon neutrality goals?

As part of the 2021 International Finance Forum (IFF) spring meetings on May 30, the Paulson Institute and IFF jointly hosted the Carbon Neutrality International Summit to explore these questions and more.

Carbon neutrality brings new investment opportunities

The first session of the summit focused on carbon neutrality and global investment opportunities. It was moderated by Lin Xu, China-US Green Fund chairman.

A key theme of the session was how facilitating carbon neutrality will transform China’s economic and social development. Like digitalization, it could revitalize China in every aspect. The drive for carbon neutrality will generate ample opportunities for innovation, entrepreneurship, and investment. And China is poised to be at the center of the climate business boom, in part because it is a leader of green finance innovations and clean technology. Still, there are many challenges ahead. China has to attract green investment from private companies and government authorities need to provide investors with more guidance and confidence.

Another topic of discussion was how carbon neutrality goals will drive global action. For example, there is now considerable efforts to “green” the Belt and Road Initiative. Carbon neutrality goals are also helping to accelerate carbon pricing mechanisms around the world.

Technological innovation leads green transformation

Gracie Sun, Managing Director of the Green Finance Center and Senior Advisor of the Paulson Institute

The second session of the summit focused on climate investment opportunities and green technology innovations. It was moderated by Gracie Sun, Managing Director of the Green Finance Center and Senior Advisor of the Paulson Institute.

Estimates say by 2060, the total infrastructure investment in China’s clean energy technology sector will reach $16 trillion dollars and create 40 million jobs driving significant economic growth.

China’s carbon neutrality goals will need to be facilitated by green technological innovation, which can be accelerated through strong engagement with the finance community. Some early successes, such as in solar energy, wind energy, and new energy vehicles, provide good precedent for future investments that will be centered on energy, transportation, architecture, industry and green agriculture sectors, and also technologies for carbon capture and storage, hydrogen energy, biomass energy, and new materials. The financial industry should be key in promoting technologies, driving the commercialization and implementation of technologies, and leading the green transformation.

Chinese regulators will also play an important role in creating policy frameworks driving green innovation. China has led in this area, for example, by jointly developing a Global Green Investment Guide with the EU.

China and the world are in a critical moment for tackling climate change. As the Paulson Institute-IFF summit demonstrated, there is a wide variety of financial, technological, and regulatory tools available. If the world is to reach its carbon neutrality goals, it should put these tools to use.