Vast sums are now pointed in the direction of reaching net-zero emissions by 2050. That’s good news: We require somewhere between $100 to $150 trillion in climate investment over the next three decades, and ignoring global warming would prove a costly and potentially irreversible cataclysm. In fact, the crucial coming years need to see sums going into the energy system to more than double from the current $1.7 trillion a year. But does the promised cash add up to what the planet needs? Not quite.

There’s the inconvenient fact that the cash isn’t reaching every corner of the globe in sufficient quantities. Too much stays in the developed world: That’s a problem, given developing economies will account for nearly 70% of global power demand by 2050. In 2020, 90% of energy transition funding went to high- and upper-middle income economies, according to BloombergNEF.

There’s also, less obviously, a technology problem. Yes, more funding is going into renewable energy sources, electric vehicles and the like — and that’s vital, given the scale at which those sources and the infrastructure supporting them need to expand and develop. More is needed.

Yet a significant proportion of emissions abatement will have to come from elsewhere, often using applications that deal with harder-to-tackle industrial corners of the economy. Then there’s green food production and the need to rethink energy efficiency. Many of these technologies already exist, but remain too small and too expensive to be put to widespread use — say, direct air capture, which extracts carbon straight from the atmosphere; or green hydrogen, which produces the versatile energy carrier by using renewable energy to split water; or, indeed, modular nuclear power plants, green steel and alternative fuels for aviation or shipping. 

In time, costs for successful technologies do come down, as seen with the drop in the cost of wind and solar energy. In the decade to the start of this year, the unsubsidized cost of utility-scale solar has fallen 90% since 2009 and wind is down more than 70%, according to investment bank Lazard Ltd. That’s transformational — even if supply chain woes have lately reversed some of that price decline. But the drop owed something to time, a luxury the world doesn’t have, and much to government support. Can that effect be repeated, faster?

Take carbon removal. In the likelihood that we overshoot the global carbon budget, technologies that could help us remove billions of tons of carbon from the atmosphere, as well as from smokestacks, and store it, may well prove crucial. Direct air capture is up and running — but at a tiny scale. The landmark Orca direct-air capture facility, which opened in September in Iceland, will capture 4,000 tons of CO2 a year, making it the largest in the world. That makes up for the annual emissions of about 250 U.S. residents. 

The cost is also exorbitant: individuals can pay up to $1,200 per metric ton of CO2 while the cost for bulk purchases is closer to $600. Carbon is currently trading close to record levels on the European market at over 70 euros, or roughly $80. Research suggests that a price below $100 is not only potentially desirable but achievable — the U.S. government’s “Earthshot” initiative is targeting carbon removal and storage at $100 — but that requires far more capital to come into the business, not just a handful of firms and individuals wanting to offset their emissions. Governments have to step in and create demand to help attract the industrial players who will scale it up. 

This pre-commercial and emerging territory is usually the domain of venture capital, and early-stage funding for climate- and clean-technology startups from private equity, accelerators, angel investors and the like surged to a record in the first nine months of this year, reaching just under $37 billion, according to BNEF. Much of that, though, is going into improving existing areas: funding for battery companies and electric-vehicle companies has soared. More importantly, venture capital cannot solve this problem alone. Attracting industrial players to riskier tech that has immediate applications and green benefits may matter more to final development and use.

So what needs to happen? Education and risk reduction, for one. Larger investors, who don’t play at the cutting edge, will not invest in what they don’t understand and haven’t experienced. Philanthropic capital and multilateral banks, too, can help lower risk and open up investments to a wider pool of potential backers.

The real game-changer, though, is government support, with clear policy direction and, crucially, by creating demand. That can succeed especially when building on existing strengths, as Europe is doing with green hydrogen. 

Looking back to renewables, Germany offers one successful model, with its policy of feed-in tariffs that for two decades provided subsidies for energy from renewable plants. Anyone generating electricity via wind, solar or biomass was guaranteed a fixed price, and the acceleration was swift. Citizen energy became a phenomenon. In the end it wasn’t smooth — or cheap — but renewable sources now account for more than 40% of Germany’s power consumption, and the subsidy has phased out. Like U.S. renewable portfolio standards for wind, it may have done more to get renewables off the ground than tech breakthroughs.

It’s true that not all next-stage climate technology will achieve the vertiginous price drops that solar and wind saw. Some projects, say in carbon capture or nuclear, are large engineering projects, harder to just replicate. And, of course, none are solutions on their own. But accelerating the most promising of these fixes may just add up to the difference between success by 2050, and inadmissible failure.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.

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