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November 7, 2022

Chart of the Week: $100 trillion needed for net zero — it’s not that much

by Fathom Consulting.

In a recent joint study with BNY Mellon Investment Management, Fathom concluded that $100 trillion of investment in non-polluting fixed assets would be needed to reach net zero by 2050[1] — an apparently colossal figure, but one that is perhaps a lot more attainable than the headline might suggest, for two key reasons. First, while the number may sound large, global investment (formerly termed gross fixed capital formation) already equates to around $20 trillion per year, as the chart below indicates, and is likely to continue growing with time. Indeed, the $100 trillion required between now and 2050 represents less than 20% of the total investment needed across the global economy over that period, and to around just 3% of cumulative GDP. Second, a large portion of this will be used to replace existing ‘dirty’ capital with ‘clean’ infrastructure when that capital reaches the end of its useful economic life. In other words, most of this investment would be needed anyway even in a world where we do not attempt to transition to net zero.

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Click here for more on the Fathom and BNYM report on the world’s green investment needs

[1],       It should be noted that this is not the cost of preventing climate change. Rather, it is the sum of investment in non-polluting fixed assets.

The views expressed in this article are the views of the author, not necessarily those of Refinitiv Lipper or LSEG.

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