Investments into Nature-Based Solutions (NBS) have to be more than double their current levels, reaching $384 billion a year by 2025 and $674 billion by 2050 to deal with the global crises of climate change, biodiversity loss and land degradation, according to a UN report.
The UN report entitled the “State of Finance for Nature” said that doubling investments into protecting and managing the world’s ecosystems is the key to address those triple crises. The authors reveal that NbS are still significantly under-financed.
The report comes 10 days after the end of the COP27 and a week before the start of the UN Conference on Biodiversity (COP15 CBD) in Montreal, Canada. COP15 is where nations will try to agree on a deal to protect nature and wildlife from further losses and degradation.
Authors of the report said in a statement that UNEP urges governments to come up with an agreement at COP15 mandating countries to require the financial sector to align investments with nature-positive goals.
Investments in Nature-Based Solutions (NBS)
According to one of the authors who is the director of McKinsey & Company Robin Smale, Nature-based Solutions refer to:
“Actions to protect, conserve, restore, sustainably use and manage natural or modified terrestrial, freshwater, coastal and marine ecosystems, which address social, economic and environmental challenges effectively and adaptively, while simultaneously providing human well-being, ecosystem services and resilience and biodiversity benefits are all considered as nature-based solutions…”
The current global investments in NB$&%S are around $154 billion per year. But that amount has to increase to $384 billion by 2025 to tackle the triple crisis of land degradation, climate, and nature as the chart shows.
Last year, investments into nature-based solutions was at around $133. But this estimate will be altered as the scope of NbS and how they’re assessed keeps on changing, too. Take for instance the case of marine NbS; they are the newest inclusion to the report’s latest edition.
In contrast, investments from governments in economic activities that pollute the air are 3x to 7x higher than financing for NbS.
These subsidies are highest in the sectors of energy and agriculture estimated at $340 billion – $530 billion a year and $500 billion a year, respectively. The report suggested phasing out of these investments.
Nature and The Economy
The authors of the report further noted that:
“This report is a reminder that lots of short-term efforts to boost gross domestic product (GDP) by Governments… without paying attention to the fact that nature underpins many economies, will impose greater costs for both present and future generations in the years to come.”
In fact, about 50% of global GDP is dependent on healthy and well-functioning ecosystems. So, countries have to go beyond just the economics of GDP and consider the principles of natural capital accounting and circular economy.
According to one author, there are already trends pointing to that direction and considering nature in making investment decisions.
Meanwhile, the report also found that governments spend $500 billion-$1 trillion a year on potentially damaging subsidies. And with ~100 parties to last year’s biodiversity summit in Kunming, China, they weren’t able to agree to fund nature conservation efforts in poorer countries.
Over a decade ago in Japan, world leaders who signed a biodiversity pact in 2010 have set targets to cut loss by 2020. Unfortunately, none of those goals were also met.
NbS and Carbon Markets
The third major point of UNEP’s report was the need for private investments in nature-based solutions.
Financing from the private sector accounts for only 17% despite their pledges to reduce deforestation and carbon emissions. With this, the report recommended that private investors will have to “combine ‘net zero’ with ‘nature positive’.”
That means they must do the following actions:
Create a sustainable supply chain
Reduce activities that negatively impact climate and biodiversity,
Offset any unavoidable activities through high-integrity nature markets,
Pay for ecosystem services, and
Invest in nature-positive activities.
Closing the nature-finance gap means directing additional investments in ecosystem restoration, protection, and sustainable land management. The chart below shows how much financing NbS requires to meet the 1.5 degree scenario.
Carbon markets have a role to play in propelling private financing for NbS. And public investments can’t scale up soon due to several issues that governments face, said the report. So working on creating standards and ensuring integrity in carbon markets is crucial.
An officer from the UNEP noted that including NbS in the COP climate summit agenda wasn’t possible before. Making it to the cover text of COP27 and the upcoming COP15 in Montreal is a success.
Discussions on mitigation finance were still not enough but “ambition without finance does not lead to action” the officer said. Financial commitments are vital for negotiations to be in good faith, she added.
The report was released by the UNEP along with the Federal Ministry for Economic Cooperation and Development (BMZ) of Germany, the UN Convention to Combat Desertification (UNCCD) and the European Commission.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
