International investment projects addressing the climate crisis have dipped in the wake of global economic headwinds, stalling years of growing momentum according to the UN Conference on Trade and Development (UNCTAD).

Cross-border investment in climate change mitigation and adaptation is projected to decline in 2022 with a bleak outlook for global foreign direct investment (FDI) in 2022, the report notes in the lead-up to the UN climate change conference COP27, showing the number of new investment projects falling across most industries, notably those tackling climate change.

According to another report published by UNCTAD, FDI flows in the second quarter of 2022 reached an estimated $357bn, a 31 per cent decrease from the first three months.

Between January and September 2022, climate mitigation and adaptation sectors had, respectively, 7 per cent and 12 per cent fewer new projects announced, in contrast to the previous year’s strong acceleration. Mitigation projects accounted for 94 per cent of international climate investments, whereas adaptation ones continued to lag far behind.

“The shift from fossil-fuel to green investments to support the energy transition risks a setback, due to the loss of momentum in renewables and high oil and gas prices,” the report said.

The report also warns that high profits, combined with the current energy crisis, could lead to a renewed push for investments in fossil-fuel based energy, whose production exacerbates climate change, citing an early indication of that is being the value of cross-border mergers and acquisitions in the extractive industry, which rose sixfold between January and September 2022.

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