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According to NASA, 16 of the 17 warmest years on record have occurred since 2001. So—with climate change high on the global agenda—almost every nation signed the 2015 Paris Agreement, the primary goal of which is to limit the rise in global temperatures to below 2°C above pre-industrial levels. However, with the acute effects of global warming already being felt, further resilience against climate change is needed.
To meet both mitigation and adaptation objectives, “green infrastructure” can help.
For example, enabling investment for more energy-efficient and low-carbon transport solutions can help to reduce the transportation sector’s greenhouse gas (GHG) emissions—which are currently the second highest of any sector. Indeed, we are already seeing progress. Sixty-one percent of the $895 billion climate-aligned bond universe—as identified by the Climate Bonds Initiative—is dedicated to projects within the green transport sector, such as electric vehicles and cleaner public rail infrastructure.
Movement towards sustainability has been seen in other infrastructure sectors too. Notably, buildings require huge amounts of energy to run, which contributes to GHG emissions. Green building projects aim to reduce the environmental impact of buildings over their lifespan by targeting water-saving and energy-efficient initiatives such as smart meters and LED lighting.
With more climate-friendly technologies under development, disruption is likely to continue across the coal- and energy-intensive infrastructure industries. And as more financing is made available via Paris Agreement-aligned initiatives, we can expect further developments for green infrastructure as efforts intensify to mitigate the effects of climate change.
Building resilience
In addition to mitigation measures, there is also a growing need to address the consequences of climate change. Due to the risk of extreme weather, and the reality of longer-term shifts and variability in weather patterns caused by global warming, adaptation projects aim to strengthen the resilience of buildings, critical infrastructure (such as transportation), and, principally, communities.
Such projects may include new and robust roads and railway lines, or flood defenses in coastal areas to protect against the impact of storm surges. All of which contribute to better-protected communities in the face of weather disasters or a gradually changing climate. Post-Hurricane Katrina, for example, a huge amount of time and money was spent rebuilding New Orleans. With more resilient infrastructure, relief efforts can be executed more swiftly and huge economic expenditure at the cost of the community can hopefully be avoided.
At COP23
The UN Framework Convention on Climate Change (UNFCCC) COP23, which took place this month in Bonn, highlighted the need for these types of fortifying infrastructure projects. Climate finance for mitigation and adaption initiatives was one of the pillars of COP23: Fiji, which presided over the convention with the support of Germany, issued 100 million Fijian dollars of green bonds (~US$50 million) for climate-related projects, with support from the World Bank Group and the International Finance Cooperation (IFC). The issuance will fund green infrastructure including weather-resilient schools and hospitals, and flood defenses for vulnerable coastal and river areas—efforts that stand to protect Fiji’s citizens against the results of global warming. Fiji’s is the first sovereign green bond to be issued by a developing country, and is one of many in a growing green bond market worth around $220 billion .
Ultimately, the advantages of green infrastructure projects are two-fold: they can mitigate the production of GHG emissions and also provide extra resilience against the effects of global warming. And, in doing so, they can bring communities and economies together to find common strategies to tackle climate change.
To see some of S&P Global Ratings’ research on green infrastructure, click here .
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