Atlantic Council GEOECONOMICS CENTER
ISSUE BRIEF
The GeoEconomics Center develops data-driven programs, publications, and thought leadership at the nexus of economics, finance, and foreign policy. The Center aims to bridge the divide between these oft-siloed sectors with the goal of helping shape a more resilient global economy. The Bretton Woods 2.0 Project examines the deep challenges facing the Bretton Woods Institutions and leverages data, research, and convening to propose new solutions for the future of the IMF, World Bank, and World Trade organization.
Financing the future: Unlocking private capital for global infrastructure and climate goals MARCH 2025
Amin Mohseni-Cheraghlou, Nisha Narayanan, Hung Tran
1. Introduction
The Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report paints a dire picture of the possibility of avoiding the 1.5 degrees Celsius (°C) rise in global surface temperature. According to this report, “global warming is more likely than not to reach 1.5°C even under the very low [greenhouse gas] emission scenario” and it will be “harder to limit warming below 2°C.” The report provides strong evidence that, based on the current trends of greenhouse gas (GHG) emissions around the world, 1.5°C will be reached before 2040, which is a bit more optimistic than a 2023 article published in the journal Nature, which estimated the world will reach 1.5°C by 2029, leaving the global community with a mere five-year runway. Yet, a recent report by the European Commission warns that we already passed the 1.5°C-mark in 2024. The IPCC report also highlights the fact that there is a massive shortfall in the level of financial flows needed to achieve climate targets in different countries and sectors. The link between social and physical infrastructure and economic growth and stability is undisputable. However, the scale of financing r equired t o meet t he Sustainable Development Goals (SDGs) and establish climate-resilient infrastructure for the future global economy is the subject of widespread estimation and debate. These projections differ significantly based on various factors, such as the target year (2030, 2040, or 2050), the specific areas of focus (whether traditional infrastructure, SDG priorities, or the energy transition), and the underlying assumptions shaping the analyses. Despite these variations, one undeniable truth emerges: the financing gap is projected to reach trillions of dollars annually over the next ten to thirty years. This gap has been growing wider with the rising population (and, hence, growing needs for new infrastructure and maintaining the existing ones) and the increasing frequency of severe climate, destroying current critical infrastructure in many countries and negatively impacting their operations in others. Hence, the world not only needs to bridge the financing gap for building and maintaining basic infrastructure—between 1–4 billion people lack dependable access to electricity, water, internet, and sanitation—but old infrastructure must be climate proofed and new infrastructure must be built with climate resiliency in mind. Without bridging this massive and growing SDG and