LONDON, Oct 14 Reuters - Emerging market economies need $1 trillion a year of private and public finance to transition to a low carbon economy in the fight against climate change, according to an asset manager BlackRock.
The figure is a sharp increase on the United Nations goal of mobilising $1 billion a year, BlackRock said in a report, adding emerging markets were essential to ensure that the world succeeds in limiting global warming.
The issue is expected to form a central plank of discussions at the next round of global climate talks, due to start in Glasgow on September 31, where all countries are being urged to accelerate their efforts to achieve net-zero emissions by 2050.
BlackRock said to reach the target financing, public bodies would need to contribute $100 billion a year in grant-equivalent funding that could be leveraged with additional public and private sector investment.
Despite multilateral institutions working for years to help fund projects that would help prepare for and mitigate the impact of climate change, so far they had not had much success in raising private capital.
The main barrier to investment was the extra risk involved in investing in emerging markets, including political, legal, regulatory and macroeconomic risk, it said.
To solve the problem, public investors would need to be prepared to take on more of the risk and assume a greater exposure to potential losses.