Escalation of Eurozone crisis could lead to $45b climate change funding gap – Ernst & Young

A large climate change funding gap is emerging because governments can no longer afford previous levels of investment under current austerity measures, a new report by accountancy firm Ernst & Young has revealed.

Ernst &Young predicts that the aggregate funding gap among ten of the world’s major economies could reach up to $45 billion by 2015.

“Current austerity measures across these economies, including Germany, UK, US, Japan, and South Africa, already mean a climate change funding gap of $22.5 billion will open up by 2015 – but this funding gap could rise to $45 billion if the Eurozone crisis escalates,” said the report titled “Durban Dynamics: navigating for progress on climate change”.

Given details, Ernst & Young said the study shows that under current austerity measures, the climate change funding gap is set to be most pronounced in Spain, the UK, and France.

“Spain is forecast to spend $5.1 billion less on climate change by 2015, relative to a scenario in which government spending grows at an average historical rate, with the UK spending $4.2 billion less, and France $2.9 billion less. In the event the Eurozone crisis escalates and leads to a new banking crisis, Germany would face the biggest climate change funding gap in absolute terms of $8.3 billion, Spain, Japan and the US would face a gap of more than $6 billion, and the UK and France would face a gap of over $5 billion,” it said.

The report quantifies the impact of austerity plans on climate change investment and finds less than a quarter of business leaders expect a deal at Durban during the COP 17.

According to Ernst & Young, the report shows that the prospect of fiscal constraint is allied with the expectation from the business community around the world that the COP17 summit will not secure an effective global deal on climate change.

“In a global survey conducted for the report of over 300 business leaders from large multinational corporations in over 50 countries, an overwhelming 83% think that a multilateral agreement is required to tackle climate change but, at the same time, only 18% of senior executives said they thought a deal was likely to emerge,” said the UK-based company with a global organization of member firms in more than 140 countries.

This could have implications for economic growth because more than half (54%) of those questioned said that addressing climate change was an opportunity for their business, it added.

Juan Costa Climent, Global Climate Change and Sustainability Services Leader at Ernst & Young said in a statement that “Without a global agreement, rather than working out how to live in a carbon-constrained economy, the emphasis will be on living in a climate-constrained world. This will have enormous consequences for businesses and makes adaptation a key priority in addition to mitigation.”

By Ekow Quandzie

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