## Fighting Climate Change with INNOVATION

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**Canonical URL:** [Fighting Climate Change with INNOVATION](https://www.imf.org/-/media/files/publications/fandd/article/2021/september/bezos-earth-fund-climate-change-innovation-levin.pdf)

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### Innovation driving progress
- By 2021, more than 60 countries—representing over half of global emissions—had committed to net zero emissions by mid-century.
- 4,500 non-state actors, such as companies, cities, regions, and other institutions, have embraced a net zero target.
- Asset owners and managers with over $40 trillion of assets under management have committed to net zero portfolios by 2050.
- Shifts in economic understanding: smart climate action is now seen to increase efficiency, drive new technology, lower risk, stimulate investment, generate jobs, and boost livelihoods even in the near term.
- Leadership and public demand have increased ambition following the IPCC recommendation for a maximum warming of 1.5°C.

### Scale of transformation required
- Share of renewables in power generation must move from about 25 percent today to almost 100 percent by 2050.
- Unabated coal will need to be phased out six times faster than it is today.
- Buildings must be renovated with zero-carbon heating and cooling and improved energy efficiency at a rate of 2.5–3.5 percent by 2030—significantly higher than today’s rate of 1–2 percent.
- Crop yields must rise faster on existing lands to meet a growing population’s food needs without encroaching upon forests, doubling recent rates over the next 10 years.
- The IEA notes that decarbonization by 2030 is largely achievable with readily available technologies, but by mid-century almost half of required emissions reductions will call for technologies that are not yet on the market.

### Key innovation opportunities and technology trends
- Three innovation opportunities—direct air capture and storage, advanced batteries, and hydrogen electrolyzers—can deliver roughly 15 percent of cumulative emissions reductions between 2030 and 2050.
- Battery pack prices have fallen almost 90 percent over the past decade.
- Renewables have seen exponential growth and are now the technologies of choice in many places.
- Electric vehicle (EV) sales have accelerated, supported by governmental phaseouts of internal combustion engines, subsidies, and EV fleet targets from car companies.
- Technological carbon removal: mid-century needs estimated at 8–10 gigatons of carbon dioxide (GtCO2) removed annually.
  - Natural approaches, such as landscape restoration, may remove 5–6 GtCO2 with significantly renewed efforts.
  - Engineered approaches, such as direct air capture and storage, will be needed in addition to natural approaches.
- Many technological approaches remain at early stages and require drastic cost reductions and enabling infrastructure (integrated grids, battery storage, carbon transport and storage).
- Cement decarbonization: energy intensity of cement production must drop 40 percent in the next decade for a 1.5°C compatible pathway; novel cements and carbon capture and storage are not fully mature.

### Financing, policy, and institutional needs
- The IEA estimates that $90 billion in public financing is needed as soon as possible to support demonstration projects for the energy transition before 2030, though only $25 billion is budgeted over the next decade.
- Policy support required includes tax credits, greater market demand, public and private investment, low-carbon performance standards, updated industry standards, and public procurement incentives and mandates.
- Policy and regulatory frameworks tailored to an innovation agenda and additional reduction of risk are needed to attract more private investment and leverage private capital.
- Developing economies need significant support in the form of financing, technology transfer, and capacity building to benefit from innovation and move to a low-carbon future.

### Systems change, equity, and implementation considerations
- Incremental change that doesn’t quickly lock in a different trajectory will not deliver the change needed—systemic change is required.
- Scaling technologies will depend not only on technological R&D but also on supporting enabling infrastructure and coordinated policy drivers.
- The transformation could create new jobs, whole new industries, and significant health benefits (for example, through air quality improvements).
- Government measures must ensure that transitions are just and equitable, especially for workers and industries tied to a carbon-intensive future.
- The COVID-19 recovery presents a near-term opportunity to reshape systems and advance solutions rather than locking in fossil-fuel-intensive infrastructure.

*KELLY LEVIN is chief of Science, Data, and Systems Change at the Bezos Earth Fund, where ANDREW STEER is president and chief executive officer.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2021/september/bezos-earth-fund-climate-change-innovation-levin.pdf_