The world’s nations have committed themselves to the reduce carbon emissions. To do so, sustainable infrastructure is needed. To allow for more private investments, McKinsey says that some barriers have to be lifted.
On the UN Climate Change Conference in Paris at the end of 2015, all countries agreed to reduce the emission of greenhouse gases and restrict global warming to less than two degrees Celsius. McKinsey believes that ensuring transportation networks, energy networks as well as waste and water facilities across the globe plays a major role to achieve the set climate goals.
From 2015 to 2030, the global demand for new infrastructure could amount to $90 trillion. According to McKinsey, sustainable projects could add another $14 trillion to the costs of infrastructure within the same time frame. While some of the costs will be offset, McKinsey estimates that up-front capital requirements will increase by about 6 percent.
Private investors must contribute to those investments as we literally have to rebuild our whole world within the next 15 years. While public budgets are tight, corporate and institutional investors could provide $1 to $1.5 trillion for sustainable projects. But, so says McKinsey in the report “The next generation of infrastructure”, this will only happen if some structural barriers are removed. Those inefficiencies include poor transparency of infrastructure pipelines, a lack of economies of scale for projects, shaky operating models, corruption as well as taxes and regulation.