Low-carbon investments are necessary for driving the energy system transformation that is called for by both the Paris Agreement and Sustainable Development Goals. Improving understanding of the scale and nature of these investments under diverging technology and policy futures is therefore of great importance to decision makers. Here, using six global modelling frameworks, we show that the pronounced reallocation of the investment portfolio required to transform the energy system will not be initiated by the current suite of countries’ Nationally Determined Contributions. Charting a course toward ‘well below 2 °C’ instead sees low-carbon investments overtaking fossil investments globally by around 2025 or before and growing thereafter. Pursuing the 1.5 °C target demands a marked upscaling in low-carbon capital beyond that of a 2 °C-consistent future. Actions consistent with an energy transformation would increase the costs of achieving the goals of energy access and food security, but reduce the costs of achieving air-quality goals.
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We acknowledge funding by the World Bank and the European Union’s Horizon 2020 research and innovation programme under grant agreement no. 642147 (‘CD-LINKS’ project). S.F. is supported by the Environment Research and Technology Development Fund (2-1702) of the Environmental Restoration and Conservation Agency Japan and JSPS KAKENHI grant number JP16K18177. P. Kolp of IIASA is also recognized for his assistance with Web database development and support. The views expressed by J.D. and A.S. are purely theirs and may not in any circumstances be regarded as stating an official position of the European Commission.
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