Citi Global Wealth UNSToPPABLe TreNDS | | 62 Investments completely efficient combustion-based heater. Experimental designs may FiGUre 2. CLiMATe FiNANCe GAP $1.7 TriLLioN Per boost this to one fifth before long. YeAr (2021-25) The potential here is substantial. A complete transition to next-generation heat pumps would reduce total energy use 40%, all else equal.3 ($ TNS) Admittedly, this would take a very long time, as it would require replacing heating  Africa  Asia Pacific  Central and systems in every building globally. However, with governments subsidizing South America adoption of these devices, uptake could increase rapidly.  Eurasia  Europe 6  Middle East  North America  Global Despite such encouraging progress, there is a very long way to go indeed in the quest for cleaner and more secure energy. Over the next thirty years, $125 trillion may be required to achieve net zero emissions. To get on track, 5 Citi GPS estimates that $2.6 trillion a year annually needs to be mobilized between 2021 and 2025, $1.7 trillion a year more than of late – FIGURE 2. Aside from the amount of capital required, there are many risks along 4 the way. Trade wars and other supply chain disruptions, technological Investment disappointments and policy reversals driven by populist skeptics represent gap just some of the potential challenges. But if these or other factors were to 3 $1.7 trillion frustrate the transition, the resulting insecurities would be far worse than anything we have so far seen. 2 1 0 2016-2020 2021-2025 2026-2030 2031-2040 2041-2050 Source: UNFCCC Race to Zero campaign with support and analysis from Vivid Economics, Citi GPS. From Citi GPS: Global Perspectives & Solutions – Climate Finance, November 2022. Chart shows the required climate finance by global region for periods out to 2050. Note: Current annual climate flows are estimated on average at between $600 billion and $900 billion depending on the data source used. CPI estimates climate finance flows in 2020 amounted to $640 billion, including both mitigation and adaptation. BNEF estimates total investment in Energy Transition was $611 billion in 2020 and increased to $798 billion in 2021. Vivid Economics estimates total investment averaged $900 billion annually between 2016 and 2020. 3 According to the IEA World Energy Outlook 2022, heat accounted for 50% of global final energy consumption in 2018, and 40% of global carbon dioxide emissions.