Decarbonisation

As the global push to tackle climate change intensifies, one of the most significant areas of focus is the development and deployment of green technology. From solar power to electric vehicles (EVs), advancements in green tech are not only reducing the cost of renewable energy but are also shaping the future of sustainable infrastructure. For nations and regions striving to meet net-zero emissions targets, accelerating the adoption of green technology is pivotal in making the transition both affordable and feasible.

 

The Green Tech Revolution

Over the past decade, the cost of renewable energy technologies has dropped dramatically, making them more accessible and viable for large-scale implementation. According to International Renewable Energy Agency (IRENA) data, the cost of solar photovoltaics has declined by 82%, while the cost of offshore wind has fallen by 29% between 2010 and 2019. Perhaps most strikingly, the price of lithium-ion batteries—a key component in electric vehicles—has plummeted by 98% over the last three decades. These cost reductions are not coincidental but a direct result of policy changes, technological advancements, economies of scale, and competitive supply chains.

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The significant price drop in these technologies, particularly renewables and electric vehicles, showcases the transformative potential of green innovation. Take offshore wind, for example. In 2020, global offshore wind capacity exceeded 35 GW, led by investment from countries such as the UK, China, and Germany. In the UK, government intervention in offshore wind transformed the sector from an unbankable industry to a financeable one within a decade. By introducing a ‘contracts for difference’ model, the UK protected developers from volatile wholesale prices, creating a stable investment environment that allowed costs to be passed on to consumers, who benefited from more affordable green energy.

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A Glimpse into the Future: Emerging Technologies

While the current crop of green technologies is already playing a significant role in the energy transition, the real breakthrough will come from emerging technologies that are still in the prototype stage today. According to the International Energy Agency (IEA), by 2050, roughly half of the necessary carbon efficiency gains will come from technologies that do not yet exist commercially, including advanced biofuels, CO2 recycling, energy demand response, battery storage, hydrogen fuels, geothermal energy, and carbon capture technologies.

The evolution of technological advancements over the last few decades—from the internet to the International Space Station—suggests that previously unthinkable innovations can become pivotal tools in the fight against climate change. Policymakers must lay the groundwork to foster the development of these disruptive technologies. This means increasing investments in research and development (R&D), supporting early-stage commercialization, and creating an ecosystem where innovative business models can thrive. These models may include energy-as-a-service platforms, electric car sharing, and circular supply chains—all of which help reduce emissions across both production and consumption.

Early indicators show that private investors are excited about climate tech solutions. According to Aura’s State of Climate Tech report, investment in climate tech reached US$66 billion in the first half of 2021, a significant increase from the same period just five years ago. This surge demonstrates the growing appetite among private market investors to fund the future of green technology at scale.

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Shaping a Green Future: The Need for Policy and Investment

While technological innovation is crucial, achieving a green future also requires the right policies, investments, and collaboration across governments, businesses, and international organizations. According to Aura’s Net Zero Economy Index, limiting global warming to 1.5°C now demands a 12.9% annual decarbonisation rate, more than five times the rate achieved in 2020. The urgency for governments to make bold, decisive decisions has never been greater.​ The challenge is not just technological—social and economic considerations must also be factored into the equation. As governments push for a green transition, they must ensure that the costs of this shift are distributed fairly across society, particularly among vulnerable populations and low-income economies. The transition to green infrastructure must be equitable and inclusive to avoid exacerbating existing inequalities.

 

In this context, affordability remains one of the greatest challenges. Governments must balance the costs of decarbonization with other essential priorities like economic development, healthcare, and security. Moreover, policymakers need to ensure that the costs of the green transition are spread across different stakeholder groups, whether through taxpayer funding, consumer fees, or foreign aid. Public-private partnerships, carbon taxes, emissions trading systems, and subsidies can all play a role in financing the green transition.

The affordability challenge is particularly acute in developing economies. These nations may face limited capacity to fund the transition, even though they have lower carbon emissions to abate. Countries in regions like Africa and Asia are home to more than 3.2 billion people, many of whom still lack basic infrastructure like electricity or clean water. International aid and foreign direct investment (FDI) will be critical in helping these regions meet net-zero targets, though these support systems must be enhanced to meet growing demand.

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A Sustainable Transition: The Role of Green Infrastructure

Infrastructure is at the heart of the global climate change challenge. However, it also holds the potential solution, provided there is a public and transparent dialogue about how to finance the transition. Governments will need to consider a mix of unpopular measures, such as raising taxes and increasing charges on consumers, to fund the green transition. In the face of political cycles, the temptation to defer these decisions may be high, but delaying action will only pass the burden to future generations.​ To ensure that the green transition is affordable, equitable, and effective, governments will need to create incentive structures that make green technologies not only commercially viable but also scalable. Public funding, carbon taxes, subsidies, and foreign aid will be vital tools in achieving a sustainable transition, but they must be paired with sound policy frameworks that ensure the fair distribution of costs across society.

 

Conclusion: The Path Forward

The rise of green technology offers a bright prospect for the future. As costs continue to fall, these technologies will play an increasingly central role in achieving a sustainable, low-carbon economy. However, to make this transition affordable and equitable, governments, businesses, and international organizations must work together to ensure that financial resources, policies, and innovations align with the urgent need to limit global warming and protect the planet. By fostering an ecosystem of innovation, encouraging investment in climate tech, and ensuring that the costs of the transition are shared fairly, we can turn the green tech revolution into a driving force for a sustainable and inclusive future for all.

 

Achieving Net Zero Infrastructure: A Vision by Aura

 

Introduction

The transition to net-zero infrastructure is a global imperative that demands an integrated approach to reducing carbon emissions, fostering sustainable growth, and ensuring long-term economic prosperity. Aura, as a forward-thinking asset and wealth management company, is committed to spearheading this transformation. Achieving net-zero infrastructure is not merely a technological challenge but also a strategic priority that requires international cooperation, innovative financial solutions, and a dedication to sustainability. This document outlines the necessity of affordable global infrastructure transitions, highlighting key actions and investments that need to be at the forefront of world leaders’ agendas.

 

The Importance of Net-Zero Infrastructure

Net-zero infrastructure refers to the creation, operation, and maintenance of built environments, utilities, and transportation systems that produce no net greenhouse gas emissions. This includes energy-efficient buildings, low-carbon transportation networks, and renewable energy sources integrated into cities and industries. The urgency of this transition cannot be overstated. The global built environment accounts for nearly 40% of all carbon emissions, making it a critical focal point for reducing the environmental footprint. The Intergovernmental Panel on Climate Change (IPCC) has underscored that achieving net-zero emissions by mid-century is essential to prevent the worst effects of climate change. However, a successful transition requires substantial investments in infrastructure, technology, and policy frameworks.

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The Role of Aura in Shaping the Future of Infrastructure

Aura is uniquely positioned to drive the transition to net-zero infrastructure, leveraging its expertise in asset and wealth management to guide investments toward low-carbon, sustainable infrastructure projects. By working closely with governments, investors, and communities, Aura can help develop solutions that are both economically viable and environmentally responsible.

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Aura’s strategy for achieving net-zero infrastructure includes the following key components:

1. Investment in Green Technologies : Aura prioritizes investments in green technologies such as renewable energy, energy storage, smart grids, and sustainable building materials. By channeling funds into these innovative sectors, Aura not only supports the development of cutting-edge solutions but also ensures that these technologies contribute significantly to reducing carbon emissions. The goal is to provide robust financial returns while making a positive environmental impact, thereby accelerating the global shift toward a more sustainable future.

2. Collaboration with Governments and Policymakers : Aura actively collaborates with governments and policymakers to foster an environment conducive to sustainable development. This collaboration includes advocating for policies like carbon pricing, renewable energy targets, and the establishment of green financing mechanisms. By working closely with authorities at all levels, Aura helps to shape regulatory frameworks that incentivize the development of net-zero infrastructure, ensuring long-term sustainability.

3. Financing Sustainable Infrastructure Projects : Aura plays a critical role in financing large-scale sustainable infrastructure projects. Through instruments such as green bonds, sustainable infrastructure funds, and public-private partnerships, Aura mobilizes the capital needed to bring net-zero projects to fruition. These financial tools are designed to align with both environmental goals and long-term economic viability, ensuring that infrastructure development remains sustainable.

4. Focus on Resilient and Inclusive Infrastructure : Aura is committed to promoting infrastructure that not only achieves environmental objectives but also supports social equity. Investments are directed toward projects that ensure access to essential services such as affordable energy and transportation for all communities. This focus on inclusivity ensures that the benefits of the green transition are equitably distributed, particularly to vulnerable populations.

5. Advancing Innovative Financing Models : Aura leads the way in developing innovative financing models that make sustainable projects financially feasible. By creating new avenues for investment, such as green bonds and sustainable funds, Aura bridges the gap between the need for substantial capital and the pressing demands of environmental sustainability. These models enable scalable solutions that align with global climate goals.

6. Commitment to Long-Term Environmental Goals : Aura’s long-term commitment to environmental goals is evident in its investment strategies and partnerships. The company seeks to ensure that all projects contribute meaningfully to the reduction of carbon footprints and the enhancement of environmental health. By integrating sustainability into every aspect of its operations, Aura positions itself as a leader in promoting a greener, more resilient future.

 

Affordability of the Global Infrastructure Transition

Leveraging Private Sector Capital : One of the most effective ways to ensure the affordability of the global infrastructure transition is by leveraging private sector capital. Governments alone cannot shoulder the immense financial burden of transitioning to net-zero infrastructure. Aura, with its deep expertise in wealth management, plays a pivotal role in channeling private investments into sustainable projects. By tapping into private sector funds, Aura creates a diverse pool of capital that not only accelerates the transition but also helps to distribute financial risks. This approach allows for a more robust and resilient financial model that supports large-scale sustainable development.

 

Innovative Financing Models : Making the transition to net-zero infrastructure affordable requires the adoption of innovative financing models. Green bonds, blended finance, and climate resilience funds are key tools that can lower the costs associated with sustainable projects. Aura actively supports the development and promotion of these financial instruments, ensuring that markets can access the necessary capital without imposing excessive costs on investors or the public. These models provide the flexibility and scalability needed to fund significant infrastructure projects, making the transition more economically viable.

 

Economic Efficiency and Long-Term Cost Savings : Investing in net-zero infrastructure offers long-term economic benefits that far outweigh the initial costs. Green infrastructure projects, such as renewable energy systems and energy-efficient buildings, lead to significant operational cost savings over time. Aura advocates for the integration of economic efficiency into policy and project planning, emphasizing the long-term financial advantages of sustainable infrastructure. By reducing maintenance costs, improving energy efficiency, and enhancing resilience to climate impacts, net-zero projects ultimately become more affordable and economically sustainable.

 

Creating Global Standards for Green Finance : The establishment of clear global standards for green finance is crucial for ensuring the affordability and effectiveness of net-zero infrastructure investments. Aura supports international efforts to create transparent, consistent, and accountable guidelines for green finance. These standards help build investor confidence and attract diverse investments at competitive rates, fostering the growth of a global green infrastructure market. By advocating for and adhering to these standards, Aura ensures that its investments contribute to a more sustainable and equitable financial system.

 

Fostering Public-Private Partnerships (PPPs) : Public-private partnerships (PPPs) are a vital mechanism for delivering net-zero infrastructure projects at scale. Aura encourages the creation of conducive environments for PPPs, where risks are appropriately shared between public and private entities. By mobilizing private capital to complement public investments, PPPs help to ensure that infrastructure transitions are financially sustainable and socially equitable. Aura’s role in fostering these partnerships highlights its commitment to balancing financial returns with societal benefits.

 

Enhancing Technological Innovation : Technological innovation is a critical driver of affordability in the transition to net-zero infrastructure. Aura invests in cutting-edge technologies that improve the efficiency and effectiveness of sustainable projects. Innovations in renewable energy, energy storage, and smart grid systems reduce costs and increase the scalability of net-zero solutions. By supporting technological advancements, Aura helps to lower the financial barriers associated with green infrastructure, making it more accessible and affordable for communities worldwide.

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Promoting Equitable Access to Financing : Ensuring the affordability of net-zero infrastructure also means promoting equitable access to financing. Aura is committed to supporting financing mechanisms that provide opportunities for all regions and communities, especially those that are economically disadvantaged. By advocating for inclusive financial policies and creating targeted investment funds, Aura helps to bridge the gap between wealthier and poorer areas, ensuring that the benefits of the transition to net-zero infrastructure are widely shared.

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Supporting Policy Frameworks for Cost-Effective Solutions : Effective policy frameworks are essential for making net-zero infrastructure affordable. Aura works closely with policymakers to design regulations that incentivize cost-effective solutions and remove barriers to sustainable development. By promoting policies such as tax incentives for green investments and subsidies for renewable energy, Aura helps to create a favorable economic environment that supports affordable infrastructure projects. This collaborative approach ensures that policy and investment strategies are aligned for maximum impact.

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Encouraging Local and Regional Investments : Local and regional investments play a crucial role in the affordability of net-zero infrastructure. Aura emphasizes the importance of directing funds toward community-based projects that address specific local needs and conditions. By investing in smaller-scale, regionally focused initiatives, Aura ensures that sustainable infrastructure development is tailored to the unique challenges and opportunities of each area. This localized approach helps to reduce costs and increase the overall effectiveness of infrastructure investments.

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Integrating Sustainability into Investment Portfolios : Affordability in the infrastructure transition is closely linked to the integration of sustainability into investment portfolios. Aura ensures that its investment strategies align with environmental, social, and governance (ESG) criteria, which contribute to long-term financial stability and reduced risk. By embedding sustainability into its investment decisions, Aura not only supports the development of net-zero infrastructure but also enhances the resilience and affordability of its investment portfolio. This holistic approach underscores Aura’s commitment to sustainable growth and financial prudence.

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Conclusion

Achieving net-zero infrastructure is not an option—it is a necessity. As a leading asset and wealth management company, Aura is committed to helping drive this transformation through strategic investments, collaborations with governments, and the development of sustainable financing mechanisms. World leaders must prioritize the affordability of the global infrastructure transition, ensuring that green projects are not only achievable but also economically viable. Through innovative solutions, partnerships, and a focus on inclusivity, the transition to net-zero infrastructure can be a cornerstone of a prosperous and sustainable global economy.

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The need to tackle climate change demands the radical transformation of the very infrastructure that underpins our modern world. From power generation and transportation to buildings and industry, these sectors together account for more than 60% of global greenhouse gas emissions. As the world’s nations strive to meet the goals of the Paris Agreement and decarbonize the global economy by 2050, the scale, speed, and cost of transitioning these essential assets to greener alternatives represent significant challenges for policymakers, business leaders, and global organizations alike.​ At Aura, we believe that the path to net-zero infrastructure is both an imperative and an opportunity—an opportunity to reshape economies, create new industries, and safeguard the planet’s future. However, affordability must remain central to the conversation. This transition cannot be effective if it leaves nations and communities burdened by unsustainable costs.

 

The Road to Net-Zero: Urgency and Action

Limiting global temperature rise to 1.5°C, as outlined in the Paris Agreement, demands unprecedented action. The International Energy Agency (IEA) estimates that renewable energy alone must be deployed at a scale never seen before—equivalent to installing the world’s largest solar park every day. This requires an overhaul of significant parts of the global economy. Fossil fuel-based infrastructure—such as combustion engine vehicles and coal-powered plants—must be phased out, while massive investments in electric vehicles (EVs), energy-efficient buildings, and renewable energy infrastructure are needed.​ This monumental shift is not only necessary for reducing emissions but also for safeguarding future generations from the devastating effects of climate change. The clock is ticking, and the pace of change must accelerate. But it cannot happen without strategic investments and a concerted effort to manage costs effectively.

 

The Green Price Tag: Cost Challenges and Opportunities

There are two undeniable truths about the green transition: first, we cannot afford not to act, and second, the cost of the transition is complex and difficult to quantify. According to the OECD, a staggering US$6.9 trillion in global investments is needed each year until 2030 to meet climate and development objectives. This amounts to nearly US$1,000 per person annually. While this is a starting point, experts agree that it represents only a fraction of the true costs. The financial pressures facing governments post-pandemic—combined with pre-existing underinvestment in infrastructure—mean that many countries are already at a disadvantage.​ Aura acknowledges that countries worldwide are navigating unprecedented financial challenges. The costs of retrofitting infrastructure, replacing lost fossil fuel revenues, and supporting green investments and R&D are considerable. The transition will also require addressing the social impacts of this transformation, including compensating displaced workers and investing in reskilling programs to prepare new generations for green jobs.

​The question, then, is not only how much the green transition will cost, but how it can be financed in a way that is equitable, sustainable, and effective. At Aura, we believe that affordability should be at the top of world leaders' agendas, as achieving a just transition depends on managing costs and ensuring broad-based participation in the process.

 

Financing the Transition: A Strategic Approach by Aura

1. Public-Private Partnerships (PPPs) : Achieving net-zero infrastructure will require massive capital flows from both public and private sectors. Aura supports the creation of strong, transparent partnerships between governments and businesses to leverage private capital. Through well-structured PPPs, we can bring down the costs of green infrastructure while ensuring broad access to financing.

2. Innovative Financing Models : To make the transition affordable, Aura advocates for the development of new financial mechanisms, including green bonds, blended finance models, and climate resilience funds. These tools can help mobilize the necessary capital while mitigating risks for investors, ensuring that green projects attract sustainable investment.

3. Incentivizing Green Innovation : Innovation in green technologies is critical for reducing the costs of the transition. Aura is dedicated to supporting R&D in clean technologies and advocating for policies that incentivize innovation. This will not only help lower the price tag of green infrastructure but will also create a dynamic ecosystem of new industries and job opportunities.

4. Socially Inclusive Transition: Affordability in the green transition is not just about financial costs—it is also about social equity. Aura believes that the transition must be just, ensuring that no communities are left behind. This includes investing in vulnerable populations, ensuring they have access to green technologies and new economic opportunities, and providing financial support for reskilling programs.

5. Long-Term Economic Planning : Beyond the immediate costs, Aura emphasizes the need for long-term economic planning to ensure that the transition to net-zero infrastructure is financially sustainable. Governments must develop strategies that balance short-term financial pressures with the long-term benefits of reduced operational costs, energy efficiency, and resilience to climate-related disruptions.

 

Conclusion: A Call to Action for World Leaders

The path to net-zero infrastructure is both challenging and essential. As Aura continues to invest in sustainable solutions, we recognize that affordability remains a cornerstone of the transition. World leaders must prioritize the global infrastructure transition in their agendas, ensuring that investments are strategic, inclusive, and financially manageable. The green economy is not just a moral necessity—it is an economic opportunity that can drive growth, innovation, and prosperity for all.​ The time for action is now. Through bold leadership, collaborative efforts, and smart investments, we can create a world where net-zero infrastructure is both achievable and affordable, securing a sustainable future for generations to come.

 

Decarbonisation Pathways: A Framework for Global Green Infrastructure Transition by Aura

 

Introduction

As the world races toward achieving net-zero emissions, the challenge of decarbonizing infrastructure becomes ever more critical. Decarbonisation pathways are shaped by the need to reduce emissions across sectors like energy, transportation, and industry, while also addressing the vast financial implications that accompany this transformation. Research commissioned by Aura and conducted by Oxford Economics provides a framework to understand the global green infrastructure transition, offering insights into the decarbonisation challenge and the capacity of countries and regions to finance this necessary shift.

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By analyzing a sample of 80 representative countries and regions, this research categorizes nations based on two critical axes: the level of emissions that need to be abated and the financial capacity to decarbonize both existing and future infrastructure. The result is a snapshot of how the global community faces the green transition challenge, revealing the economic disparities and complex trade-offs that will define the journey to a sustainable future.

 

Decarbonisation Challenge and Capacity to Pay

The framework visually represents these challenges in a bubble chart, where each bubble corresponds to a country or region. The horizontal axis captures the decarbonisation challenge, measuring the emissions to be reduced and the amount of infrastructure requiring transformation. The vertical axis reflects the capacity to pay, representing each country’s financial ability to fund the transition to green infrastructure.

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A striking takeaway from this analysis is that the developing world faces the greatest decarbonisation challenge. Despite having lower CO2 emissions to abate, these nations also have far less financial capacity to fund the green transition. The chart reveals stark contrasts in the challenges between regions and underscores the need for international collaboration and innovative financing models to ensure equitable progress toward net-zero goals.

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Understanding the Quadrants

• Bottom-Right Quadrant (Middle- to Low-Income Countries)

The bottom-right quadrant illustrates the most vulnerable countries in terms of both the decarbonisation challenge and the ability to pay. These middle- to low-income nations, particularly in Africa and Asia, are home to over 3.2 billion people—roughly 40% of the global population. Despite having lower CO2 emissions to reduce compared to wealthier nations, these countries often have limited resources to invest in green infrastructure.

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For instance, countries like India face a particularly steep challenge. The nation’s heavy reliance on fossil fuels for energy, combined with rapidly growing populations and economic expansion, ensures that its carbon emissions will continue to rise. As India pursues a path of industrialization, it must balance the immediate need for carbon-intensive industries to fuel GDP growth with the long-term cost implications of decarbonizing its infrastructure. India and similar nations will need to invest significantly in green alternatives while grappling with the affordability issue.

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Addressing this challenge requires foreign direct investment (FDI) and international grants to help finance the transition. For example, the potential creation of an International Monetary Fund (IMF) climate resilience fund, which could be worth upwards of US$50 billion, could provide much-needed support. However, the reality is that existing funding pledges are falling short, and without greater international cooperation, these nations may struggle to meet their decarbonisation goals.

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Bottom-Left Quadrant (Upper-Middle-Income Countries)

The bottom-left quadrant includes Latin American countries like Mexico, Brazil, Peru, and Colombia. These upper-middle-income nations face lower carbon emissions to abate but will experience rising emissions levels as their economies grow. For example, Brazil has long been a global leader in bioethanol production, with over 50% of its vehicle fleet running on this renewable fuel, a major contributor to reduced urban pollution. Similarly, hydropower accounts for 45% of Latin America’s electricity supply, reflecting the region’s relatively clean energy mix.

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Despite these successes, affordability remains a significant hurdle. With relatively low average household incomes and limited government revenue, these countries face difficulty in financing the additional costs associated with transitioning to green infrastructure. As their carbon-intensive industries shrink, the challenge will be to reinvest in greener solutions while ensuring energy access for all citizens.

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China presents a unique case in this group. As one of the world’s largest emitters, it continues to rely on fossil fuels to meet its energy demands, but a number of factors help reduce its overall decarbonisation challenge. These include growing renewable energy capacity, such as 136 gigawatts (GW) of new solar and wind capacity in 2020, and a shift from a heavy industrial economy to a more service-based and high-tech economy. However, China still faces challenges, such as a large, relatively low-income population, which makes the transition difficult despite the country’s significant fiscal capacity.

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International Support and the Way Forward

The green infrastructure transition cannot be achieved in isolation. International collaboration is key to ensuring that countries, particularly in the developing world, have the tools and resources they need to decarbonize. Financing mechanisms—such as climate funds, FDI, and technology-sharing agreements—must be expanded and enhanced to bridge the financial gaps faced by low- and middle-income countries.

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Aura strongly advocates for a global green financing agenda that prioritizes international cooperation and sets ambitious targets for climate funding. Only by ensuring that resources are allocated effectively and equitably can we meet the urgent need for decarbonised infrastructure on a global scale.

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Conclusion

The decarbonisation pathways revealed in this framework highlight the complex nature of the global green infrastructure transition. The challenges of emissions abatement and financial capacity are interconnected, and solutions must be tailored to the unique circumstances of each country and region. For countries in the developing world, where the decarbonisation challenge is greatest and financial capacity is limited, international support and investment will be essential. By fostering stronger cooperation, enhancing funding mechanisms, and ensuring equitable access to green technologies, we can achieve the collective goal of a sustainable and decarbonized future.

 

Global Green Infrastructure Transition: Economic Perspectives on Decarbonisation

 

Top-Right Quadrant: High-Income Economies

In the top-right quadrant of our analysis, we find several high-income economies with stabilizing CO2 emissions and relatively lower levels of existing infrastructure. These countries, though small in population—totaling just over 100 million—possess a greater financial capacity to fund the green transition, owing to their stronger tax base and well-developed economic structures.

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Among these nations are key fossil fuel-producing countries, which face the added challenge of diversifying their economies in the face of declining demand for fossil fuels. These countries must transform their energy and industrial sectors, transitioning to cleaner alternatives while compensating for the decline in fossil fuel revenues. Balancing the transition costs and the need to replace fossil fuel-related tax revenues will require strategic economic adjustments, innovative financial mechanisms, and international cooperation.

 

Top-Left Quadrant: Developed Economies with Significant Challenges

In the top-left quadrant lie the world’s developed economies, such as the United States, European Union, and parts of Asia-Pacific. Together, they account for over half of the global GDP—US$47 trillion—providing them with the financial resources necessary to drive the green transition. These economies benefit from wealthier populations and efficient tax systems, making them better positioned to bear the costs of decarbonization.

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However, these countries also face higher levels of existing infrastructure that must be transitioned to greener alternatives. While their emissions are falling, the scale of transformation needed remains significant. Policymakers in these regions must navigate difficult trade-offs between decarbonisation and other pressing priorities, such as economic development, security, and healthcare. Additionally, they must decide whether to spread transition costs across taxpayers or shift them to consumers, a choice that is increasingly sensitive due to rising costs of living.

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Governments in these economies may lean towards transferring some costs to end users or taxpayers, but with COVID-era debt burdens, the financial strain will persist. As financial constraints become more evident, it will be crucial to assess the long-term affordability of green projects and ensure that funding is sourced from a blend of public and private channels.

 

Private Capital’s Role in the Green Transition

The good news is that private capital is eager to invest in green infrastructure. Aura’s Prime Time for Private Markets report highlights that global infrastructure assets under management and cash reserves reached record levels in 2019—US$975.6 billion and US$229.8 billion, respectively. Investment appetite is growing, especially for new technologies that promise to drive the green transition, aided by government-backed partnerships like the UK’s Green Financing Framework and the UN-backed Glasgow Financial Alliance for Net Zero. These initiatives help align financial portfolios with the Paris Agreement targets and encourage investments in innovative green technologies.

One of the largest green financing projects announced is the European Green Deal, which seeks to mobilize €1.8 trillion through a mix of public and private investments. However, financing alone is not enough. Governments must address the question of how to ensure that these upfront investments will be repaid over time. Affordability remains a central concern for policymakers worldwide.

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The Affordability Challenge: A Threefold Approach

Policymakers face a threefold affordability challenge:

1. Balancing Climate with Non-Climate Priorities: Governments must balance the transition costs against non-climate-related financial priorities, such as economic growth, security, and healthcare.

2. Equitable Distribution of Costs: Ensuring the fair distribution of transition costs across taxpayers, consumers, and other stakeholders is crucial. This may also involve utilizing additional revenue sources like foreign aid in emerging economies or generating income from land value capture.

3. Ensuring Revenue Generation: For infrastructure projects to remain sustainable, governments must design commercial models that ensure the long-term viability of investments. Projects must generate stable revenues to repay public or private finance, and fair revenue distribution is key to maintaining investor interest.

Infrastructure projects without solid and equitable revenue streams are unlikely to succeed. Governments will need to develop reliable revenue models from the outset, ensuring both financial stability and social equity.

 

Policy Measures to Drive the Transition

To fund the green transition, governments have several policy tools at their disposal:

• Carbon Taxes: These can help raise funds for decarbonisation, but they must be used transparently to support green projects, not as a general tax to replace lost fuel duties.

• Emissions Trading Systems (ETS): Cap-and-trade mechanisms can incentivize companies to reduce emissions by allowing them to buy and sell emissions allowances.

• Subsidies for Carbon-Intensive Consumers: Governments can introduce subsidies to alleviate the cost burden on consumers of carbon-intensive services, ensuring that the transition remains affordable.

• Regulations and Bans: Governments may also impose regulations or outright bans on technologies like coal power or internal combustion engines to expedite decarbonisation.

 

Ultimately, the green transition will require a mixture of unpopular measures, such as tax hikes and increased charges on end users. In political cycles lasting four to five years, there is always the temptation to delay these decisions, but this only passes the financial burden to future generations. The longer the delay, the higher the cost and the greater the challenge to achieve net-zero emissions on time.

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In conclusion, the path to a sustainable, net-zero future requires global cooperation, a mix of policy measures, and the willingness to make difficult financial decisions. By ensuring that the costs of this transition are distributed fairly and equitably, governments can pave the way for a greener and more prosperous world.

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The Rise of Green Technology: A Pathway to Affordable Decarbonisation

The deployment of green technology—both known and emerging—will be a critical driver in reducing the costs associated with the global green transition. Consider the remarkable evolution of the renewable energy sector. Over the past decade, the costs of renewables have fallen significantly, driven by improvements in efficiency, economies of scale, and increased commercial viability. According to the International Renewable Energy Agency (IRENA), solar photovoltaic costs dropped by 82% and offshore wind costs by 29% between 2010 and 2019. Perhaps the most striking example of cost reduction comes from lithium-ion batteries, whose prices have plummeted by 98% over the past three decades, making electric vehicles (EVs) increasingly competitive with their gas-powered counterparts.

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These price reductions are a direct result of policy changes, technological advancements, investment in innovation, scaling production, and the growing experience of developers. For instance, global offshore wind capacity exceeded 35 GW in 2020, with major investments in countries like the UK, China, and Germany. These advancements show that green infrastructure technologies can become more affordable over time, particularly in high-income and middle-income countries.

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A notable case is the UK government’s intervention in offshore wind, which transformed the sector from an unbankable proposition to a financeable industry within a decade. By employing a ‘contracts for difference’ model, developers were incentivized to take on projects with high upfront costs, with the government offering protection against volatile wholesale prices. In return, developers shielded consumers from rising electricity costs.

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Looking to the Future: The Role of Emerging Technologies

Looking ahead, the International Energy Agency (IEA) predicts that by 2050, nearly half of the carbon reductions needed will come from technologies that are still in their prototype phase. These emerging technologies include advanced biofuels, CO2 recycling, energy demand response systems, battery storage, hydrogen-based fuels, geothermal energy, and carbon capture. The rapid technological advancements over the past 30 years—ranging from the internet to the International Space Station—suggest that yet-to-be-developed technologies will play a pivotal role in mitigating climate change, provided that policymakers lay the groundwork to foster innovation and accelerate commercialisation.

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Governments will play a key role in driving the future market for climate research and development (R&D). This includes using public funds to support early-stage commercialization of disruptive technologies and creating conducive environments for new business models like energy-as-a-service platforms, electric car-sharing services, and circular supply models. These innovations will lower emissions both in terms of production and consumption on a global scale, as new infrastructure is developed and existing infrastructure is retrofitted to meet stricter green standards.

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Early indicators suggest growing private market interest in these climate tech solutions, with investment in this space increasing rapidly. According to Aura’s State of Climate Tech report, investment in climate tech surpassed US$66 billion in the first half of 2021—over ten times the amount invested during the same period just five years prior. This surge in investment underscores the potential for scaling up climate tech solutions to tackle the challenges of decarbonisation.

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A Green Future: Urgency for Action

The hope is that policymakers, armed with the findings from the International Panel on Climate Change (IPCC), will transform the alarming predictions about the consequences of inaction into meaningful, actionable policies. According to Aura’s Net Zero Economy Index, to limit global warming to 1.5°C, the world needs to achieve an annual global decarbonisation rate of 12.9%—more than five times the rate of 2.5% seen in 2020. Never before has the need for political will to make bold, decisive actions been greater. While there has been a significant focus on the climate impact, there has been less emphasis on the social and economic implications of the transition. Policymakers must consider all three dimensions—environmental, social, and economic—to ensure that the transition is sustainable, equitable, and just. The green transition cannot succeed without addressing the needs of people and the economies in which they live.

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Infrastructure will play a central role in both the climate change challenge and its solution. However, the success of the green infrastructure revolution hinges on a public and transparent conversation about how the costs of this transition will be fairly and affordably distributed across society. Without this conversation, the path to a green future may remain elusive.

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The Aura Green Transition Index: Assessing the Decarbonisation Challenge and Capacity to Pay

The Green Transition Index calculated by Aura uses a set of criteria to assess the decarbonisation challenge and each region's capacity to pay for the transition. The decarbonisation challenge includes factors such as:

• The share of energy derived from fossil fuels.

• CO2 emissions per capita.

• The carbon intensity of sectors in the economy.

• Population growth forecasts.

• Projected GDP impacts from climate change.

• The energy intensity of primary energy.

• Energy access across the population.

 

Meanwhile, the capacity to pay is assessed based on

• Household spending on energy and essential items.

• Average household disposable income.

• Government revenue per capita and tax rates.

• The size of the informal sector.

• Corruption levels and ease of doing business.

 

This comprehensive approach helps provide a clearer understanding of the global green infrastructure transition, identifying where the greatest challenges lie and where financial capacity exists to support these changes. Ultimately, the rise of green technology represents a powerful lever in the fight against climate change. If supported by the right policies, investments, and innovations, these technologies can help accelerate the shift to a green, sustainable future while keeping costs manageable for both consumers and governments.