Atlantic Council GLOBAL ENERGY CENTER
ISSUE BRIEF
Scaling up private capital for climate investment in emerging markets JUNE 2025
AMIN MOHSENI-CHERAGHLOU AND FRANK WILLEY Contributing editors: Ken Berlin and George Frampton
Introduction
The Sixth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC) delivers a stark warning about the challenges of avoiding a two-degree Celsius (°C) increase in global surface temperature from preindustrialization levels and cautions that meeting this target will be very difficult.1 Meanwhile, a recent European Commission report asserts that the world already passed the 1.5°C mark in 2024, a threshold that was initially thought to be at least a decade away.2 The IPCC report also underscores a critical shortfall in the funding required to meet global climate targets across various sectors and countries. Estimates of the financing gap needed to achieve the Sustainable Development Goals (SDGs) and build climate-resilient infrastructure vary widely, depending on factors such as the time horizon (2030, 2040, or 2050), the focus (traditional infrastructure, SDGs, or the energy transition), and other underlying assumptions and projections about population, economic and energy demand growth, geopolitics and supply chains, the policy and regulatory landscape, and technological innovation. Nonetheless, one consensus is clear: the financing gap is projected to reach tens of trillions of dollars over the next ten to thirty years. This presents a monumental challenge for the global economy in funding the SDGs and building climate-resilient infrastructure. The International Energy Agency (IEA) estimates that about $90 billion per year in concessional funding over the next ten years will be necessary to catalyze private investment in clean energy initiatives.3 However, achieving this scale of mobilization requires concessional financing to be highly leveraged.
The Atlantic Council Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.
1
Hoesung Lee, et al., “Climate Change 2023 Synthesis Report: Summary for Policymakers,” Intergovernmental Panel on Climate Change, 2023, https://www.ipcc.ch/report/ar6/syr/downloads/ report/IPCC_AR6_SYR_SPM.pdf.
2
“Copernicus: Summer 2024—Hottest on Record Globally and for Europe,” European Commission, September 6, 2024, https://climate.copernicus.eu/copernicus-summer-2024-hottest-recordglobally-and-europe.
3
Stéphanie Bouckaert, et al., “Net Zero by 2050 - A Roadmap for the Global Energy Sector,” International Energy Agency, October 2021, https://www.iea.org/reports/net-zero-by-2050.