High interest rates poses a threat to the green economy

High interest rates poses a threat to the green economy

According to a recent study by Wood Mackenzie, the persistence of high interest rates poses a threat to the transition towards a net-zero economy, making it more challenging and costly. The report highlights that renewable energy developers and emerging technologies like carbon capture, storage, and hydrogen face significant pressure due to these high interest rates. These industries require substantial capital investments, which become more expensive due to increased borrowing costs. In contrast, well-established industries such as oil and gas are less affected by these rates.

Wood Mackenzie suggests that governments should counteract the impact of high interest rates by providing clear and consistent incentives to promote the adoption of low-carbon energy and green technologies. The consultancy estimates that achieving net-zero greenhouse gas emissions by 2050 would necessitate approximately US$75 trillion in investments globally.