W. STERK, H.-J. LUHMANN, F. MERSMANN| HOW MUCH IS 100 BILLION US DOLLARS 3.2 Estimates of Financing Needs In what follows we synthesise a number of studies on financing needs in developing countries published in re­cent years. As already noted, the World Energy Outlook 2010 pro­jects that cumulative investments of 33 trillion US dollars will be needed globally over the period 2010-2035, even without increased mitigation actions. Of this, about 17 trillion US dollars are projected for Asia, the Middle East, Africa and Latin America. Shifting to a pathway that would allow stabilisation of GHG concentrations at 450 ppm CO 2 -eq., which gives roughly a 50:50 chance of meeting the 2° C target, would require an incremental investment of 13.5 trillion over the same time period glo­bally(that is, total global investment would rise to 46.5 trillion US dollars). Approximately half of this incremental investment – about 8 trillion US dollars – would have to be made in developing countries. Projected incremental investment in 2020 amounts to about 400 billion US dollars, with a share of around one­third in developing countries. However, the 450 ppm scenario’s projection until 2020 is based on the Copen­hagen pledges. These are too weak for achieving a cost­effective 450 ppm stabilisation pathway. A cost-effective 450 ppm pathway would involve higher investments up to 2020 and lower investments thereafter. The IEA estimates that the difference between its Copenhagen­based scenario and a cost-effective 450 ppm scenario(as calculated in their pre-Copenhagen World Energy Out­look) amounts to cumulatively 1 trillion US dollars over the period 2010-2030. It should also be noted that these estimates concern only energy-related emissions: other emission sources such as waste, agriculture and defores­tation are not included. Based on an analysis by McKinsey, Project Catalyst(2010) estimates that total investments of about 290 billion US dollars per annum by 2020 will be needed for low carbon energy infrastructure in developing countries to move to a 450 ppm pathway. Project Catalyst estimates the incremental costs of actions in developing countries at 60 billion US dollars per year in 2020. The World Bank’s 2010 World Development Report syn­thesises about a dozen studies, including additional data obtained from the respective authors. The World Bank puts incremental costs in developing countries at bet­ween 140 billion and 175 billion US dollars annually by 2030, with associated incremental investments of 265 to 565 billion a year. Figures for incremental investments by 2020 range between 63 billion and 300 billion US dollars a year, while no figures for incremental costs are given. The 2010 World Development Report also synthesises figures for adaptation costs but the World Bank notes that these were mostly derived from rules of thumb and are dominated by the cost of climate-proofing future in­frastructure. They do not take into account the diversity of the likely adaptation responses, such as changes in behaviour, innovation, operational practices or locations of economic activity. They also usually do not include non-market impacts, such as those on health systems and natural ecosystems. While some of these factors could reduce adaptation costs – for example, by redu­cing the need for costly infrastructure – others would increase them. With this caveat, the cited figures range between 5 billion and 105 billion US dollars of incre­mental investments annually in the period 2010-2015, or 15 billion and 100 billion US dollars annually by 2030 (World Bank 2010). A similar criticism of the available studies on the costs of adaptation was made by Parry et al.(2009). They al­lege that the available studies do not include all relevant sectors; that some of the included sectors have been only partially covered; and that the additional costs of adaptation have sometimes been calculated simply as a »climate mark-up« of low levels of baseline investment. On the last point, they argue that underinvestment is precisely what is leading to adaptation deficits, and that this deficit will need to be compensated by full funding of development, without which the funding for adapta­tion will be insufficient. While these estimates of adaptation and mitigation costs cover a broad range, one point emerges clearly: the total needed investments for adaptation and miti­gation in 2020 are many multiples of 100 billion and the needed incremental investments are also likely to be several multiples of 100 billion. The median value of the estimates for incremental mitigation investments in 2020 is about 200 billion US dollars and the median of incremental adaptation investments is about 50 billion US dollars. 8