The Potsdam Institute for Climate Impact Research (PIK) and KfW Research have released a joint discussion paper addressing the challenges posed by limited greenhouse gas emission budgets and increasing geoeconomic fragmentation. The paper highlights the need for a significant increase in global climate investments to meet the Paris Agreement's goal of limiting global warming to 1.5 degrees Celsius.
According to the discussion paper, current climate investments must be tripled to achieve these targets. The situation is particularly pressing in low- and middle-income countries, where access to capital remains limited. The authors suggest that mechanisms ensuring reciprocity and efficient allocation of funds are essential for progress.
The report points out several benefits of international climate protection efforts, including prevention of climate-related damages, encouragement of innovation and growth in green technologies, and reduced reliance on fossil fuels.
To address these challenges, the paper proposes measures such as implementing a carbon border adjustment mechanism for CO2 emissions and forming "minilateral" alliances to coordinate climate investments across nations.