It’s one of the major bottlenecks to a global pact to cut emissions. We asked six experts what’s in store
(Pic: Flickr/Johan Douma)
UN climate talks are a knotty exercise. An international pact has eluded negotiators for over two decades for a reason. As negotiators attempt to strike a deal in Paris, the issue of climate finance will be pivotal.
The rich world has vowed to mobilise $100 billion a year from 2020 for poor countries. That might fund solar farms or build sea defences as climate impacts ramp up. Indeed, trillions are likely needed to usher in an era of low-carbon global development.
To date, developed countries – and a few developing ones – have stumped up US$10 bn for the Green Climate Fund. It’s due to start distributing cash by the end of the year.
That is still some way from the scale of support promised. Many poor nations are counting on that money to deliver emissions cuts – their investment needs are already stacking up.
With climate finance at the forefront of many minds, what will a decent package in Paris look like?
Julie-Anne Richards, international policy manager at the Climate Justice Programme
A credible finance package is a precursor to a deal in Paris. The gap between the finance needed for mitigation, adaptation and loss and damage and that on the table looks almost insurmountable. But there is a key ingredient that could play a role in closing the gap – innovative sources.
Some innovative sources fall in the “low hanging fruit” category and could be unlocked with clear direction from Paris – bunkers, a financial transaction tax and ETS revenues.
Some new sources have real potential – such as a fossil fuel extraction levy that could easily raise more than US$50bn a year.
Paris needs to unlock this potential with a clear process that commits to making innovative sources flow.
Amal-Lee Amin, head of the climate and sustainability division at the Inter-American Development Bank
Paris must result in a legal agreement that provides investors with the signal that all flows of finance must be consistent with a net zero emissions pathway to 2050.
Clarity on exactly how the Copenhagen commitment to collectively mobilise $100bn/year by 2020, including the rules for evaluating this, is key to securing an ambitious Paris outcome.
Finally, international agreement on how concessional climate finance is used for greatest transformational impact is necessary to deliver the scale of investment required. Processes such as the Sustainable Development Goals Summit, the G20 and Climate Finance Ministerial in Lima could support such an agreement.
Paul Simpson, CEO at the Carbon Disclosure Project
The primary financial mechanism expected to be part of the COP21 agreement is the Green Climate Fund (GCF).
The GCF has committed to raise $100bn a year by 2020 for both mitigation and adaptation and it is realistic to expect that it will need to take private capital to achieve this figure.
However, there should be a reasonable balance in how this money is raised – perhaps a 50/50 split between public and private funds.
With this mix of capital the fund could then operate both as a multilateral funding institution giving grants but also similar to a green investment bank which would be looking for both carbon and financial returns from its investment.
Timmons Roberts, professor of environmental studies and sociology at Brown University
Really to meet the expectations of the developing world, at least $30 billion a year needs to flow through the Green Climate Fund, which was part of the promises made in Copenhagen that set expectations.
There needs to be more honesty and transparency in what is being claimed by the wealthier nations when they say they are providing X dollars or Euros in climate finance.
A Paris agreement needs to have clear definitions of what can be counted, and it needs to set up a mechanism to track that the funding is actually being delivered and used for its intended purpose.
It’s hard to see how trust will be rebuilt around finance unless there is an independent board that reviews what is being claimed by the contributor countries.
A “can do” approach to climate finance could lead to a breakthrough in Paris
Alix Mazounie, international policy coordinator at Climate Action Network France (RAC-F)
The Paris agreement must learn from the 100 billion dollar fiasco: vague accounting, mixing apples (public) and oranges (private) and relying namely on private finance will not address the growing adaptation and mitigation needs nor avoid loss and damage in the poorest communities.
This is why we believe the core agreement in Paris should establish PUBLIC finance targets for adaptation and mitigation.
These targets should be reviewed every 5 years in accordance with adaptation and mitigation needs and it’s goes without saying a large share of this finance should be allocated to the Green Climate Fund.
Beyond these public finance commitments, the core agreement should include a broader commitment to shift every billion, million and cent away from fossil fuels.
Joe Thwaites, research analyst at World Resources Institute
The climate finance package at Paris must make it clear that all investments need to be aligned with a 2 degree pathway.
Adaptation finance is a key concern of the most vulnerable countries, and it has historically lagged behind funding for mitigation.
A commitment that future allocation of public climate finance be balanced between mitigation and adaptation could help address this disparity.
If the Paris Agreement is to be long-lasting, it should establish regular cycles where countries set out their finance needs and provision, aligned with commitments on mitigation and adaptation, which would ensure that support is responsive and scaled-up over time.
Some responses have been edited for brevity