The coming decades are crucial for addressing climate change, with significant urbanization trends as millions migrate to cities.
According to Sadek Wahba, founder and chairman of I Squared Capital, this intersection of climate challenges and urban growth presents vast opportunities for investors, which manages around $40 billion in infrastructure investments across 50 countries.
Wahba highlights that investing in climate-related infrastructure and technology is key for the future. As urban populations, currently at 4.4 billion, are projected to reach 70% of the global population by 2050, particularly in India and Asia, cities will need extensive development.
Urban areas will demand substantial infrastructure, including concrete, steel, air conditioning, heating, electricity, and broadband. This growth will have significant climate impacts.
Accelerating innovation and federal funding is crucial for effective climate change mitigation.Architecture 2030 predicts that by 2060, 2.6 trillion square feet of new building space will be added annually, equivalent to an entire New York City of new buildings each month for 40 years. This unprecedented construction surge will introduce new decarbonization challenges.
For instance, while electric vehicles (EVs) reduce reliance on fossil fuels, their infrastructure, such as roads made from oil derivatives and the lithium batteries used, still pose environmental concerns. The entire supply chain for these batteries—from mining to transport—can contribute to climate problems.
Wahba emphasizes that decarbonization must involve affordable solutions, especially for developing countries facing food insecurity. Accelerated innovation, backed by political and cultural will, is essential. He draws a parallel to the rapid development of COVID-19 vaccines, which was achieved through concentrated resources and efforts.
Although Wahba commends the Biden administration’s climate initiatives, he believes more federal funding for research and development is needed.
Investment in energy transition technologies reached $1.3 trillion in 2022, but this must increase to over $5 trillion annually to meet climate goals. He notes that while some climate investments carry risks, there are also promising opportunities, such as technology for home electricity generation and grid sales.