Abstract: In this paper, we empirically study the climate finance needs required to decarbonize the global power sector. The power sector is the single largest source of CO2 emissions, responsible for 15.1 Gt out of 42 Gt annually, and offers the highest decarbonization potential prior to 2035 (14.7 Gt). We make use of a novel dataset by Forward Analytics giving detailed asset-level information on global power sector plants. We demonstrate a strong economic case for developed countries to provide climate finance to developing countries to replace fossil fuels with renewables. Specifically, $2.8 trillion in public climate finance ($256 billion annually) can leverage $7.7 trillion in private capital ($702 billion annually). The economic return on this investment is between 180% and 1457%, resulting in a net economic benefit of $7.9–43.8 trillion, at a fiscal cost of just 0.5% of developed countries' annual GDP. Additionally, we evaluate cost-effective strategies for phasing out fossil fuels and scaling up renewables, accounting for land-use constraints. Our findings are highly relevant for countries aiming to design, finance, and implement Paris pledges, such as Nationally Determined Contributions (NDCs).

Bio: Alissa M. Kleinnijenhuis is a visiting assistant professor of finance at the Cornell SC Johnson College of Business and is affiliated with the finance department at the Imperial College Business School of Imperial College London.Kleinnijenhuis actively collaborates with and advises governments, central banks, corporations, think tanks, and international institutions, including the European Central Bank, the Bank of England, the International Monetary Fund, the African Development Bank, and Fidelity Investments. Kleinnijenhuis’ research examines how finance can advance the public good, focusing on leveraging the financial sector for a climate change solution. Her research in her primary area of focus, climate finance, examines how financial incentives can be aligned with limiting climate risks and financing the transition to a carbon-neutral and sustainable economy.

This event is presented as part of the 2025 Perspectives on the Climate Change Challenge Seminar Series:

• Most Mondays, Spring Semester 2025, 2:55-4:10 p.m.
• Zoom Link

This university-wide seminar series is open to the public (via Zoom), and provides important views on the critical issue of climate change, drawing from many perspectives and disciplines. Experts from Cornell University and beyond present an overview of the science of climate change and climate change models, the implications for agriculture, ecosystems, and food systems, and provide important economic, ethical, and policy insights on the issue. The seminar is being organized and sponsored by the Department of Biological and Environmental Engineering and Cornell Atkinson Center for Sustainability.