Green infrastructure policies and investment an important focus for 2021


The environment is an important focus for 2021 and is already being positioned as an opportunity for accelerating the business and policy transition to net-zero, according to a new report released by consulting firm PwC.

PwC’s Global Economic Outlook 2021 states that significant investment and policy shifts related to the Paris Climate Agreement will be made in 2021 in the major trading blocks including the US, China and the EU. 

With the global economy having shrunk in 2020 due to COVID-19, a key theme in 2020 will be how the push for recovery and growth can synchronise green infrastructure investment, creating a turning point in the fight against climate change.

Globally, the call for countries to expand their portfolio of renewable energy resources will gather momentum. Solar photovoltaic capacity is to grow at rapid rates on the back of growing capacity in the EU, India and China.

If current trends continue, solar PV capacity is on course to surpass natural gas in 2023 and coal in 2024 in the global electricity sector, according to PwC.

Green bonds, which are used to directly finance environmental projects, currently make up less than 5% of the global fixed income market.

In 2021, total green bond issuance will increase by over 40% to top half a trillion US dollars for the first time.

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This trend is further likely to be helped by the EU Green Bond Standard, which is expected to bring a level of standardisation to these financial instruments.

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In addition, investor appetite for Environmental, Social and Governance (ESG) funds will continue to increase and could account for up to 57% of total European mutual funds by 2025. 

Barret Kupelian, senior economist at PwC, said: “While it’s good news that the global economy in aggregate is likely to be back to its pre-crisis levels of output by the end of 2021 or early 2022, a distinguishing feature of the Great Rebound is that it will be uneven across different countries, sectors and income levels. For example, the Chinese economy is already bigger than its pre-pandemic size, but other advanced economies ‒‒ particularly heavily service based economies like the UK, France and Spain or those focused on exporting capital goods, such as Germany and Japan ‒‒ are unlikely to recover to their pre-crisis levels by the end of 2021.”

Learn more about the Global Economic Outlook 2021.