The Energy Transitions Commission (ETC), a global coalition of leaders from across the energy landscape committed to achieving net-zero emissions, published a new report that quantifies the financial need for a net-zero economy and identifies policies needed to unleash investment on the scale required.

Investments in clean energy must quadruple within the next two decades according to the ETC. In its latest report “Financing the Transition: How to make the money flow for a net-zero economy” the ETC highlights the critical importance of strong government policies relating both to the real economy and to the financial system if finance is to flow on the scale required. It also identifies “concessional/grant” payments needed to support early coal phase-out, end deforestation and finance carbon removals.

Around $3.5 trillion a year of capital investment will be needed on average between now and 2050 to build a net-zero global economy, up from $1 trillion per annum today. Of this, 70% is required for low-carbon power generation, transmission, and distribution, which underpins decarbonisation in almost all sectors of the economy.

Well-designed real-economy policies must create strong incentives for private investment in the energy transition. Examples include setting ambitious targets for renewable generation by 2030, carbon prices and product regulation to drive decarbonisation in heavy industry, aviation and shipping, and specified date bans on the sales of internal combustion engines (e.g., by 2035 at the latest).

Other key actions include various forms of financial regulation, targeted fiscal support for the development and initial deployment of new technologies, and net-zero commitments from financial institutions.