Reaching net zero is a high financial hurdle. All in, we’ll need close to $6 trillion of global funding per year–more than 2x what’s being spent today–for twenty years or more.
After hitting our target three years straight, venture capital (including private equity) has pulled back. With a challenging swing in U.S. federal policy, rising inflation, and competition for dollars from AI, climate startups are facing a difficult investment environment. And cleantech deployment–the biggest slice of the spending pie–has more than doubled since 2020, though similar macro pressures are markedly slowing its growth rate.
Like venture capital, government research and development is needed to catalyze high-growth-potential technologies and to conduct basic research that private investors don’t fund. Philanthropy can support even higher-risk academic research where funders don’t expect to be paid back. At present, both government R&D and philanthropy are lagging; climate giving represents less than 2 percent of the total. One tide that might lift all funding sources is a fairer distribution of government incentives in the world’s advanced economies. Based on the latest data, support for clean power needs roughly to triple to match existing subsidies for fossil fuels. Given that every dollar of public investment for renewables leverages more than six dollars of private investment, this Key Result could both level the energy playing field and galvanize an era of abundance.