Regarding investments needs, the summary for policy makers states:
“Limiting the risks from global warming of 1.5°C in the context of sustainable development and poverty eradication implies system transitions that can be enabled by an increase of adaptation and mitigation investments, policy instruments, the acceleration of technological innovation and behaviour changes (high confidence). {2.3, 2.4, 2.5, 3.2, 4.2, 4.4, 4.5, 5.2, 5.5, 5.6}
D5.1. Directing finance towards investment in infrastructure for mitigation and adaptation could provide additional resources. This could involve the mobilization of private funds by institutional investors, asset managers and development or investment banks, as well as the provision of public funds. Government policies that lower the risk of low-emission and adaptation investments can facilitate the mobilization of private funds and enhance the effectiveness of other public policies. Studies indicate a number of challenges including access to finance and mobilisation of funds (high confidence) {2.5.2, 4.4.5}
D5.2. Adaptation finance consistent with global warming of 1.5°C is difficult to quantify and compare with 2°C. Knowledge gaps include insufficient data to calculate specific climate resilience-enhancing investments, from the provision of currently underinvested basic infrastructure. Estimates of the costs of adaptation might be lower at global warming of 1.5°C than for 2°C. Adaptation needs have typically been supported by public sector sources such as national and subnational government budgets, and in developing countries together with support from development assistance, multilateral development banks, and UNFCCC channels (medium confidence). More recently there is a growing understanding of the scale and increase in NGO and private funding in some regions (medium confidence). Barriers include the scale of adaptation financing, limited capacity and access to adaptation finance (medium confidence).{4.4.5, 4.6}
D5.3. Global model pathways limiting global warming to 1.5°C are projected to involve the annual average investment needs in the energy system of around 2.4 trillion USD2010 between 2016 and 2035 representing about 2.5% of the world GDP (medium confidence). {2.5.2, 4.4.5, Box 4.8}
D5.4. Policy tools can help mobilise incremental resources, including through shifting global investments and savings and through market and non-market based instruments as well as accompanying measures to secure the equity of the transition, acknowledging the challenges related with implementation including those of energy costs, depreciation of assets and impacts on international competition, and utilizing the opportunities to maximize co-benefits (high confidence) {1.3.3, 2.3.4, 2.3.5, 2.5.1, 2.5.2, Cross-Chapter Box 8 in Chapter 3 and 11 in Chapter 4, 4.4.5, 5.5.2}”
These elements are detailed in Chapter 4 of the report, in the section “Strengthening Policy Instruments and Enabling Climate Finance” (4.4.5):
“IPCC AR5 assessed that to enable a transition to a 2°C pathway, the volume of climate investments would need to be transformed along with changes in the pattern of general investment behaviour towards low-emissions. The report argued that, compared to 2012, annually up to a trillion dollars in additional investment in low-emission energy and energy efficiency measures may be required until 2050 (Blanco et al., 2014; IEA, 2014a). Financing of 1.5°C would present an even greater challenge, addressing financing of both existing and new assets, which would require significant transitions to the type and structure of financial institutions as well as to the method of financing (Cochran et al., 2014; Ma, 2014). Both public and private financial institutions would be needed to contribute to the large resource mobilisation needed for 1.5°C, yet, in the ordinary course of business, these transitions may not be expected. On one hand, private financial institutions could face the scale-up risk, for example the risks associated with commercialisation and scaling up of renewable technologies to accelerate mitigation (Wilson, 2012; Hartley and Medlock, 2013) and/or price risk, such as carbon price volatility that carbon markets could face. In contrast, traditional public financial institutions are limited by both structure and instruments, while concessional financing would require taxpayer support for subsidisation. Special efforts and innovative approaches would be needed to address these challenges, for example the creation of special institutions that underwrite the value of emission reductions using auctioned price floors (Bodnar et al., 2018) to deal with price volatility.”