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July 5, 2016

Why Finance Is Key To Climate Change

Posted by Rangarajan V. R. (View Profile | View All Posts) at 6:13 AM

Learn about the potential of perovskite-based solar cells [Source: https://www.youtube.com/watch?v=yHOawKWFE7A]

The Top 10 Emerging Technologies 2016 list, compiled by the World Economic Forum's Meta-Council on Emerging Technologies, was released right before last week's WEF summit in Tianjin, China. One of the most promising emerging technologies is the perovskite solar cell. According to WEF experts, this new photovoltaic material offers three improvements over the classic silicon solar cell: it is easier to make, it can be used just about anywhere, and it generates power more efficiently than older solar cells. In some ways, the perovskite solar cell is a metaphor for the Asian economies. These nations and their people are helping to spearhead the Fourth Industrial Revolution (this year's summit is called 'Annual Meeting of the New Champions'), but are also keenly aware that this time around, the revolution must take place with climate in mind.

Therefore, I was honored to be part of one of the most interesting panel discussions of the summit - 'Policy, Incentives, and Finance for Climate-Smart Growth.' Stemming from the crucial United Nations Climate Change Conference (COP21) in Paris last year, where global leaders signed an agreement to limit global warming to less than 2 degrees celcius compared to pre-industrial levels, our discussion focused on incentivizing climate investment, carbon pricing and the energy revolution.

While discussing government priorities with regard to climate change, there were some crucial revelations. Most governments across the world are yet to acknowledge that we are facing a serious problem. According to the World Meteorological Organization, between 1990 and 2014 there was a 36 percent increase in warming due to greenhouse gases. The World Resources Institute estimates that the number of people exposed to flooding each year is at risk of tripling from 21 million to 54 million by 2030. Acknowledging a problem is the first step towards finding a solution. Secondly, many governments have instituted ministries for environment and energy initiatives, but they often work in silos. When it comes to climate investments, the decision is taken by the finance ministry, which often has no idea about the environment and energy imperatives. It is crucial for these ministries to collaborate to bring about a positive change, led by finance, who holds the proverbial 'coin'.

This September, China will host the G20, and I applaud China for placing climate finance as a core topic for the G20. Without a doubt, organizations should be encouraged to invest in green initiatives, but it should make financial sense for them to do so as well. That's why governments must give financial subsidies or tax rebates to companies that are keen to approach their businesses with eco-consciousness. And even for banking institutions, specific targets should be set to ensure that a larger percentage of their funding is awarded to companies/individuals investing in green initiatives. When it comes to climate change, public-private partnerships are key.

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