Chapter 1 | INTRODUCTION
Achieving net zero CO 2 emissions is critical and requires substantial reduction in fossil fuel use, widespread adop- tion of renewable energy, carbon capture and storage as well as improved energy efficiency. Scaling up climate action involves implementing near-term adaptation and mitigation measures, which in turn demand various policy reforms and updates to environmental regulations. Overall, the challenges are complex and difficult to address. Given the current emission trajectory, limiting the global temperature rise to 1.5°C is becoming increasingly diffi- cult, further complicating the achievement of the SDGs. Therefore, there is an emerging consensus on the need for increased climate-focused financing, transforming this challenge into an opportunity and integrating climate con- siderations into all mainstream activities.
Global Climate Finance Needs
According to the Climate Policy Initiative (CPI), global climate finance increased from US$653 billion in 2019-2020 to an annual average of US$1.3 trillion in 2021–2022. 7 Sig- nificant investments have been made globally in emission reductions as climate finance almost doubled between 2019-20 and 2021-22. However, about five times more fi- nancing is required annually to keep global warming be- low 1.5°C. 8 Thus, the demand for increased climate financ- ing has been consistently raised at the global level and the MDB community has been urged to do more in addressing climate change impacts. According to estimates by the IPCC, annual climate finance needs range from US$5 to 12 trillion until 2050. Emerging markets and developing economies alone, excluding China, need US$2.4 trillion annually by 2030 for climate and
7 Climate Policy Initiative: Global Landscape of Climate Finance 2023: Climate Policy Initiative 8 World Economic Forum: Speed, Scale, Pragmatism: How to boost Climate Finance in 2024
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