The Green Economy
The Green Economy
IN Numbers
1.5°c
The rise in global temperatures considered the ‘climate tipping point’, breached for the first time over a 12-month period from Feb 2023 to Jan 2024.
$2tn
Global spending on clean energy technologies and infrastructure in 2024, almost double the amount going to fossil fuels.
$100tn to $300tn
The expected cost of the green transition by 2050, – or 2% to 8% of global annual GDP.
THE BIG Picture
The world is in climate chaos…
Fires, floods and droughts have become the norm.
As climate tipping points are passed, the urgency of transitioning to a green economy intensifies. Biodiversity loss is increasing at the fastest rate in history, with natural ecosystems declining by an average of 47%.
These impacts are no longer distant threats, but present realities. Look closer, though, and there are some green shoots of hope – along with a need for some careful gardening.
A central challenge lies in ensuring that a green transition is just and inclusive. As we transition from fossil fuels to green energy and economies, those in ‘old’ industries will feel left behind, risking inequality and schisms in society. This concept is pivotal, focusing on
A challenge lies in ensuring that a green transition is just and inclusive
creating pathways that support workers and communities through reskilling and investment in green jobs.
The green economy represents a powerful opportunity, and the chief enemy may be the mindset that it cannot be done. In the words of Christiana Figueres, former UN climate chief and architect of the 2015 Paris Agreement, when speaking at The Conduit in 2024: “Doom and gloom is the new climate denial, because it leads to the situation of not doing anything about it”.
THE BIG Fixes
The world may be on fire, but it also has some remarkable firefighters.
GREEN JOBS AND RESKILLING
Selling the green economy to the public means a buy-in from everyone and this means not only new, greener, jobs but also the reskilling needed for adaption. This ‘just transition’ would, for example, help gas fitters become heat pump engineers or miners to transition to renewable energy roles.
This is a moving target – the definition of ‘green jobs’ is itself evolving. While roles in renewable energy dominate, the scope now includes diverse sectors, from corporate sustainability to local environmental stewardship. This breadth underscores the green economy’s potential – not just for reducing emissions but also for reshaping industries and revitalising communities.
FIND THE MONEY
Amid economic and political turmoil, the challenge lies in financing these green economy and job goals. Some of the macro figures are impressive – global spending on clean energy technologies and infrastructure was forecast to hit $2 trillion in 2024, almost double the amount going to fossil fuels in 2024.
Cash is desperately needed, though, from both the private and public purse. Innovative financial instruments, such as green bonds incentivise private sector engagement and the market for these is growing rapidly.
They work like regular bonds with one key difference: the money raised from investors is used exclusively to finance projects that have a positive environmental impact, such as renewable energy and green buildings.
Annual issuance of all GSSSBs (green, social, sustainability, and sustainability-linked bonds) could hit $1trillion in 2024, according to S&P Global.
SUPERCHARGE CLIMATE TECH
Climate tech, powered by AI, is part of the answer, playing a key role in monitoring and improving energy efficiency. AI-powered smart grids help resource distribution, while much is being done to address the high energy demands of data centres.
This is much needed, as AI is itself energy intensive and need lots of water to keep it cool. This is why some tech companies are adopting nuclear energy for their data centres to try to align AI with sustainability.
Businesses have a big role to play and there are signs that it is a role that they are growing into in other ways. Corporate nature strategies are increasingly coming into focus, in the same way that sustainability did about a decade ago.
Doing ‘least harm’ is not enough – now the challenge for business is to replenishing biodiversity and embrace the importance of nature as an asset. Reforestation projects, marine conservation, and urban greening initiatives can all demonstrate progress towards a corporate job well done.
INCENTIVISE GREEN CONSUMER HABITS
Insurance can also influence individual behaviour for the better. For example, motor insurers can offer reduced premiums for efficient driving and reduced miles, with carbon offsets for the miles driven. This approach could also support the push to retrofit our built environment – another key battle in the fight to reduce carbon emissions. In the UK, outdated, drafty homes contribute significantly to emissions. And with the energy sector responsible for about 35% of all global emissions, premiums can be reduced for energy-efficient homes.
Among the world’s largest institutional investors, insurance companies can also throw their weight around in pursuit of sustainable causes. The UK insurance industry alone manages investment of £1.8 trillion, around 15% of the UK’s total net worth, according to ABI, so the way it invests really does matter.
Green bonds incentivise private sector engagement
SHARE THE BURDEN
The real bedrock for progress, though, must be the commitment of governments to work together. Here, the news is more worrying. COP29 is over, with developing countries complaining that the $300bn a year in climate finance they will receive by 2035 is nowhere near enough and disappointing mixture of grants and loans. The arrival of the second Trump administration is likely at best to muddy the waters around commitments already made. Forums like COP foster dialogue, but action must follow. Nations must be held accountable to their commitments, but these are clearly tricky to enforce.
Even so, there are several encouraging national announcements from some corners of the world. In the UK the government has pledged £22bn in funding for carbon capture and storage projects. And countries with clear frameworks, like Sweden and Denmark, demonstrate how ambitious targets can drive meaningful change.
This is a huge subject and knowledge sharing is key to overcoming the challenges of financing and delivering the transition.
CASE STUDY
MISSION POSSIBLE PARTNERSHIP
Collaboration is key for the challenges ahead. One promising example is The Mission Possible Partnership (MPP) – an association of climate leaders who are supporting the move towards net-zero greenhouse gas emissions by 2050. They are comprised of four core partners: the Energy Transitions Commission, Rocky Mountain Institute (RMI), We Mean Business Coalition and the World Economic Forum. Focusing on industrial sectors that include aviation, heavy-duty transport, shipping and steel, the MPP encourages innovation and collaboration among public and private sector partners. The partnership works to create tipping points in these industries by facilitating alliances, improving efficiency across value chains, financing innovative technologies and introducing policies to help decarbonise these sectors and make the transition to net-zero possible.
IN Action
The Conduit’s commitment
Following the success of our Green Economy Forum conferences on Green Jobs and Financing the Green Transition, we will once again convene leading thinkers, financiers and economists, to share new ways to ensure a just, sustainable, and profitable green transition.
Our conference on 6 November will explore the innovative financial instruments and policies needed to deploy capital and mitigate risk at this critical juncture, developing the ideas developed in 2024, to guide policy- makers, business leaders and the finance industry in putting capital to best use in service of the planet.
