Framing 1.5°C - Turning an Investment Challenge into a Green Growth Opportunity

In 2018, the Intergovernmental Panel on Climate Change (IPCC) produced a special report on the impacts of average global warming of 1.5°C above pre-industrial levels and related global greenhouse gas (GHG) emission pathways. It is set in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty. This paper, which differs from the classical perspective on climate policy focusing on the net costs of mitigation efforts for society, takes up this context by proposing a win-win framing: The 1.5°C scenario should be seen as an opportunity for the world to achieve a Great Transition towards green growth. Since the latter combines ecological, economic and social aspects of development, it is closely linked to and shows synergies with the idea of sustainable development as described by the Sustainable Development Goals (SDGs). With this article, the authors outline the investment needs of such a scenario and the mechanisms that can turn this challenge into a green growth opportunity, e.g. technical progress and a re-coordination of expectations. Furthermore, the article discusses investment sources for the fundamentally needed energy and SDG transition. Since interest rates are low and investment remains below pre-crisis levels, there is room for a substantial increase in investment for the Great Transition without necessarily crowding-out other types of investment.