Climate finance: what was actually agreed in Paris?
The head of the Bank of England Mark Carney said, in his keynote speech during COP21, that climate change was the issue for the future of the financial sector.
Financial institutions and private investors finally seem to be getting the message; they’ve tumbled over each other to launch new initiatives on climate action in the run up to and during the UN negotiations.
Here’s our take on the big hitters at Paris:
New financial offers from lenders
Big banks have pledged to scale up their investments in renewable and clean energy, green bonds, low-emission transport and agriculture.
26 public and private financial institutions from developed and developing countries with $11 trillion in assets adopted the voluntary climate mainstreaming principles. Proposed steps include developing climate strategies, assessing climate risk, and accounting for their greenhouse gas emissions.
New energy innovation partnerships
20 countries, including both the US and Saudi Arabia, launched Mission Innovation to support clean energy innovation and double investment in energy research and development from current levels of about $10 billion.
The programme's implementation will also be supported by partners in aBreakthrough Energy Coalition backed by high-profile philanthropists such as Bill Gates (who has committed $2 billion), Mark Zuckerberg, Richard Branson, and India’s industrialist Mukesh Ambani.
These commitments recognise both the need for a clean energy revolution and the business opportunities that addressing climate change can offer. Forward-looking business heads are showing they understand that the cost of inaction on climate change will be devastating.
Countries are scaling up climate funding
Governments pledged new climate finance in the run up to COP21, putting their cards on the table early to press for an ambitious deal.
New pledges to climate funds, including the Adaptation Fund, Least Developed Countries Fund, and the Green Climate Fund (GCF), added up to more than $1.5bn (including pledges of $1m from the city of Paris, and funding from the state government of Quebec).
The need to green all investments in all forms around the world has permeated the UN climate negotiations. The goal in the draft agreement states that finance flows should be consistent with a pathway towards low emission and climate resilient development, in the context of sustainable development priorities and efforts to eradicate poverty.
At least $100 billion per year will be mobilised from public and private sources to help developing countries mitigate and adapt to climate change by 2020, and a new bigger goal is to be agreed by 2025.
Over the next five years we must begin to unlock the investments needed to deliver on the promises all countries made this year on both climate and development.