The Economic Commission for Latin America and the Caribbean (CEPAL) has stated in a report presented at the United Nations Climate Summit that the region must mobilize between seven and ten times more resources each year until 2030 to meet its climate action commitments.
José Manuel Salazar-Xirinachs, the Executive Secretary of ECLAC, emphasized that the impacts of climate change in the region are exponential, the cost of inaction surpasses that of action, and global warming will exacerbate the negative effects of extreme weather events. He presented the report at the Expo City in Dubai.
The document, titled “Economics of Climate Change in Latin America and the Caribbean 2023,” was unveiled during the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change, hosted in the United Arab Emirates.
The region aims to reduce its greenhouse gas emissions by 24-29% by 2030.
However, to achieve this goal, the decarbonization rate, currently at 0.9%, would need to be four times faster, according to Salazar-Xirinachs.
In 2020, climate financing in the region totaled $22.91 billion, just 0.5% of its GDP.
Closing the gap and achieving the greenhouse gas reduction objectives would require investing between seven and ten times more, equivalent to 3.7-4.9% of the GDP, totaling between $215 billion and $284 billion annually for climate action projects.
The total investment required from 2023 to 2030 would be between $2.1 trillion and $2.8 trillion.
Mitigation actions, aimed at lessening the severity of climate change effects, would necessitate an investment equivalent to 2.3-3.1% of the region’s annual GDP, ranging from $105 billion to $142 billion based on 2020 parameters.
These funds are intended for energy and transportation systems, deforestation reduction, with transportation being the sector requiring the most investment. For instance, reducing CO2 emissions through the use of electric buses in urban fleets could be achieved with significant investment.
Adaptation measures, covering early warning systems, poverty prevention, coastal protection, water and sanitation services, and biodiversity preservation, would require between 1.4% and 1.8% of the region’s annual GDP, equivalent to $64 billion to $80 billion.
The study highlighted that in 2020, of the $22.91 billion invested in climate action projects, $10.67 billion came from multilateral development banks, $9.4 billion from green bonds, $670 million from climate-focused entities, $1.54 billion from national development banks, and $632 million from other local resources.
Salazar-Xirinachs emphasized that increasing climate financing could yield additional benefits beyond environmental impacts, including economic growth, job creation, and social development. Conversely, failure to take action against climate change could lead to significant losses.
The report indicates that by 2030, the loss of labour productivity due to thermal stress could reach 10% in some countries, directly affecting the region’s growth potential.
ECLAC underscores the need to channel investment flows into activities that stimulate key economic sectors for more productive, inclusive, and sustainable development.
It identifies sectors such as energy transition, electromobility, circular economy, bioeconomy, pharmaceutical industry, digital services, and the care economy as crucial.
Agricultural, livestock, and forestry activities, responsible for 58% of greenhouse gas emissions in the region, are a focal point.
The report specifies various instruments, such as carbon pricing – taxes and incentives to reduce energy consumption and use less polluting fuels – and the inclusion of climate change in environmental impact assessments of projects.
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