Editing IPCC:AR6/WGIII/Chapter-3 (section)

==== 3.6.1.3 Investments in Mitigation Pathways ====

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Figures 3.36 and 3.37 show increased investment needs in the energy sector in lower temperature categories, and a major shift away from fossil fuel generation and extraction towards electricity, including for system enhancements for electricity transmission, distribution and storage, and low-carbon technologies. Investment needs in the electricity sector are 2.3 trillion USD2015 yr –1 over 2023–2050 on average for C1 pathways, 2 trillion USD for C2 pathways, 1.7 trillion USD for C3, 1.2 trillion USD for C4 and 0.9–1.1 billion USD for C5/C6/C7 (mean values for pathways in each temperature category). The regional pattern of power sector investments broadly mirrors the global picture. However, the bulk of investment requirements are in medium- and low-income regions. These results from the AR6 scenarios database corroborate the findings from [[#McCollum--2018a|McCollum et al. (2018a)]] , [[#Zhou--2019|Zhou et al. (2019)]] and [[#Bertram--2021|Bertram et al. (2021)]] .

In the context of the COVID-19 pandemic recovery, [[#Kikstra--2021a|Kikstra et al. (2021a)]] show that a low-energy-demand recovery scenario reduces energy investments required until 2030 for a 1.5°C consistent pathway by 9% (corresponding to reducing total required energy investment by USD1.8 trillion) compared to a scenario with energy demand trends restored to pre-pandemic levels.

Few studies extend the scope of the investment needs quantification beyond the energy sector. [[#Fisch-Romito--2019|Fisch-Romito and Guivarch (2019)]] and [[#Ó%20Broin--2017|Ó Broin and Guivarch (2017)]] assess investment needs for transportation infrastructures and find lower investment needs in low-carbon pathways, due to a reduction in transport activity and a shift towards less road construction, compared to high-carbon pathways. [[#Rozenberg--2019|Rozenberg and Fay (2019)]] estimate the funding needs to close the service gaps in water and sanitation, transportation, electricity, irrigation, and flood protection in thousands of scenarios, showing that infrastructure investment paths compatible with full decarbonisation in the second half of the century need not cost more than more-polluting alternatives. Investment needs are estimated between 2% to 8% of GDP, depending on the quality and quantity of services targeted, the timing of investments, construction costs, and complementary policies.

[[IPCC:Wg3:Chapter:Chapter-15|Chapter 15]] also reports investment requirements in global mitigation pathways in the near term, compares them to recent investment trends, and assesses financing issues.

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'''Figure 3.36''' '''| Global average yearly investments from 2023–2052 for''' '''nine electricity supply subcomponents and for extraction of fossil fuels (in''' '''billion''' '''USD2015), in pathways by temperature categories.''' T&amp;D: transmission and distribution of electricity. Bars show the median values (number of pathways at the bottom), and whiskers show the interquartile ranges.

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'''Figure 3.37 | Average yearly investments from 2023–2052 for the four subcomponents of the energy system representing the larger amounts (in''' '''billion''' '''USD2015), by aggregate regions, in pathways by temperature categories.''' T&amp;D: transmissions and distribution of electricity. Extr.: extraction of fossil fuels. Bars show the median values (number of pathways at the bottom), and whiskers show the interquartile ranges. For definition of regional classifications used see Annex II Table 1.

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