A few trillion between friends

In November last year, Boston Consulting Group issued a warning. The firm said that there’s an $18-trillion funding gap in energy transition plans until 2030. There was $19 trillion in funding already committed to transition activities, BCG said. But it needed another $18 trillion and the gap needed filling if transition goals were to be achieved.

“Challenges include inflation, supply chain constraints and pressures, and higher costs of capital,” BCG said in its warning, essentially saying that the transition has got more expensive than previous believed, shocking the world.

That $18 trillion spread across the seven years until 2030 came in at some $2.6 trillion in additional annual investments. But that was just BCG’s estimates. Others foresee a much higher price tag, such as the tellingly named Climate Policy Initiative, which last year estimated the annual investments needed for a successful transition at $9 trillion globally by 2030, rising from $1.3 trillion between 2021 and 2022. The FT had the decency to say that “the bill will be immense”.

Investment is already on the rise, from that $1.3 trillion to $1.8 trillion last year. Of course, that’s nowhere near the target of BCG’s $2.6 trillion and the rate of increase suggests we’d never get to the 2030 target of the Climate Policy Initiative but it is an increase so it’s being celebrated… while companies ditch their emission-cutting plans, meaning transition investment plans.