How Much Money is Actually Needed to Solve Climate Change?

From investing in innovative technologies to spearheading new initiatives, solving climate change requires a multifaceted, global approach. Above all our individual, daily efforts, this approach ultimately comes down to money.

So, can we put a price on the health of our planet? How much money is needed to solve climate change? It helps to grasp how much money is spent on climate change mitigation currently—and how much more might be needed to advance our efforts to make a meaningful difference.

We’ll answer those questions and more by doing a financial deep-dive into current climate change policies. We’ll also detail what you can do to help sustain a cleaner, greener planet.

The Current State of Climate Change Spending

To solve climate change, we need more than just the change in our pockets. That’s why it’s elemental to understand the costs on a worldwide scale.

To understand how much we currently spend to counter climate change (sometimes known as climate finance), let’s break down the costs based on spending in the United States and across the globe.

Worldwide Contributions

Between 2019 and 2020, the world spent $632 billion on global warming and climate change mitigation investments and initiatives. 

While this sounds like a lot of cash, it’s only a fraction of the estimated $90 trillion we need to spend by 2030, according to World Bank data from October 2019. 

Here’s a breakdown of where that $632 billion came from:

  • The public sector – Global governments and institutions have been the primary sources of climate change mitigation funding since the enactment of the 2015 Paris Agreement. During the 2019–2020 fiscal year, the global public sector contributed $321 billion to righting the climate change ship.
  • The private sector – In recent years, corporations have pledged more resources to help bolster global climate change initiatives. That said, the global private sector’s contribution of $124 billion from 2019–2020 was lower than its 2018 contribution of $183 billion.
  • Banking institutions – From 2019–2020, international banks provided $121 billion in loans to jumpstart renewable energy initiatives. However, large banks have also contributed mightily to continued fossil fuel extraction—$1 trillion, to be exact.
  • Global funds – Private investment funds such as venture capital and private equity hedge funds contributed $8 billion from 2019–2020.
  • Individual households – Worldwide, individual households contributed $55 billion from 2019–2020.

While $90 trillion is certainly a significant investment, the World Bank says these investments to combat climate change can be recouped, with a climate investment of $1 yielding, on average, $4 in benefits. 

The United States’ Contribution to Climate Change Spend

Now, let’s take a look at U.S. spending on the climate crisis.

Tracking the United States’ contribution to fighting climate change can be a monumental task—not in the least because climate change funding varies greatly depending on the current administration.

That said, according to the Office of Management and Budget, the U.S. spent $13.2 billion across several agencies in 2017. In addition, the United States government has spent close to $154 billion on climate-related activities since 1993.

The government has funneled the bulk of this funding into three climate change-related categories:

  • Technology
  • Science
  • International assistance

While U.S. climate change spending lagged during previous administrations, it’s clear that climate-minded administrations can make a difference. For instance, the Biden administration pledged $555 billion in 2021 for programs to fight climate change.

The Human Impact on the Climate

Another facet of determining how much money is needed to stop (at this point, mitigate) climate change is to understand our current impact on the planet’s health—and how we can do better.

In general, we can measure our impact on the climate across several metrics, including:

  • Carbon dioxide levels – Since 1958, carbon dioxide levels have risen by 25%. Since the Industrial Revolution, carbon emissions have risen by 40%. The primary reason for this rise is our continued use of fossil fuels.
  • Global temperatures – Global temperature fluctuations occur naturally over millions of years. However, sharp increases (or decreases) over a relatively short period of time indicate negative climate change. From 1901 to 2020, the Earth’s temperature increased by 1.8 degrees Fahrenheit.
  • Glaciers and sea ice – By looking at glacier melt and sea ice change, climate scientists can paint a clearer picture of the negative climate impacts. According to NOAA, 30 well-studied glaciers have shrunk by an average of 60 feet since 1980. Additionally, Arctic sea ice has shrunk by 40% since 1979.
  • Rising sea levels – When glaciers and sea ice melt, global ocean levels tend to rise. Since 1993, the sea has risen by 3.2 mm/year.

In addition to the above metrics, scientists are paying attention to the increase in frequency, duration, and severity of natural disasters. An increase in natural disasters reflects continued negative climate change.

The Importance of Investing in Climate Change Action

Reversing the damages brought on by climate change will require significant collective efforts, but it’s not impossible. It’s going to take a concerted global endeavor—and a lot of money. To be exact, $4.31 trillion of it.

But how can money help climate change?

For some scientists and economists, climate action starts with funding clean energy infrastructures that reduce greenhouse gas emissions. For both individuals and institutions, it also means switching from big banks that finance the fossil fuel industry to more sustainable financial services.

Individuals can also invest in climate change initiatives in the following ways:

  • Reduce plastic consumption
  • Reduce food waste
  • Switch to electric cars and other carbon-neutral transportation
  • Commit to clean money
  • Support carbon capture projects
  • Learn how to invest in carbon credits

By investing in climate change action on the individual, corporate, and governmental levels, we aren’t just funding climate change initiatives today. We’re writing a check for a better tomorrow.

Changing the Planet One Swipe at a Time

Let’s face it: we can’t solve global warming and climate change alone. It will take a concerted effort from governments, corporations, and, most importantly, people like you.

Fortunately, Aspiration gives new meaning to the phrase “spend & save.” That’s because Aspiration lets you plant a tree every time you swipe your green credit card or eco-friendly debit card. Planting trees remains one of the most impactful ways of reducing the effects of climate change through the capture of carbon emissions.

You can also rest easy knowing your deposits will never fund fossil fuel industry projects. Talk about clean money.

Get started with Aspiration today and positively change the planet one purchase at a time.

 

Sources:

FiveThirtyEight. How Much Is The Government Spending On Climate Change? We Don’t Know, And Neither Do They. https://fivethirtyeight.com/features/how-much-is-the-government-spending-on-climate-change-we-dont-know-and-neither-do-they/

Means & Matters. Who Funds the FIGHT Against CLIMATE CHANGE? https://meansandmatters.bankofthewest.com/article/sustainable-living/taking-action/who-funds-the-fight-against-climate-change/

National Oceanic and Atmospheric Administration. Climate change impacts. https://www.noaa.gov/education/resource-collections/climate/climate-change-impacts

The New York Times. House Passes the Largest Expenditure on Climate in U.S. History. https://www.nytimes.com/2021/11/19/climate/climate-change-bill.html

 U.S. Government Accountability Office. Climate Change: Analysis of Reported Federal Funding. https://www.gao.gov/products/gao-18-223

Yale Insights. Why We Need Finance to Fight Climate Change. https://insights.som.yale.edu/insights/why-we-need-finance-to-fight-climate-change

The United Nations. Financing Climate Action. https://www.un.org/en/climatechange/raising-ambition/climate-finance 

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