INTRODUCTION: ACHIEVING ADEQUATE, AMBITIOUS CLIMATE FINANCE
1.1
Countering the greatest crisis of our time
Time is running out if we are to constrain global temper- ature rises in line with the Paris Agreement. We urgently need to mobilise finance – from both public and private actors.
Reaching the limit There is no time to lose. The world’s lead- ers at the meeting of the Conferences of the Parties to the United Nations Frame- work Convention on Climate Change in Paris in 2015 agreed – based on the com- pelling science then – that our planet’s post-industrial temperature increase must be limited to 2°C and ideally 1.5°C. But we are already approaching those limits, and in places exceeding them, in ways that are often difficult or even impossible to reverse. The last 12 months have been the warmest on record. The greenhouse gas emissions that humans continue to produce to pollute the atmosphere relentlessly add to the historically high concentrations already there. Thus, at the COP29 meeting in Baku on 11–22 November this year, global leaders and stakeholders must take bold, broad actions to mobilise much more badly needed climate finance before it is too late. That is why COP29 host Azerbai- jan has made climate finance the top priority and asked countries to submit updated, stronger nationally deter- mined contributions specifying what they will do to contain a crisis that afflicts all. The finance gap The size of the climate finance chal- lenge is compellingly clear. Recent economic and political headwinds have caused the climate finance gap to widen in terms of volume, quality and the cost of capital. This includes the fund- ing shortfall for climate mitigation,
adaptation and clean infrastructure in the Global South, as well as the associ- ated capital costs – stemming from the gap between the high returns or interest rates demanded in emerging markets and the borrowers’ capacity to pay. To remain within the Paris Agree- ment’s warming targets, trillions of dollars are needed for carbon mitiga- tion, adaptation and resilience. Specific estimates of climate financing needs vary, but current levels are without doubt critically insufficient – and are rising as new, incoming data show global heating, extreme weather events and their resulting damage increase. The Independent High-Level Expert Group on Climate Finance estimates that emerging markets and developing countries (excluding China) need more than $1 trillion in climate finance each year by 2030, the majority of which is required for mitigation. The Interna- tional Energy Agency estimates that annual renewable energy investment in emerging and developing economies must increase by more than seven times – from less than $150 billion in 2020 to over $1 trillion by 2030 – to reach net- zero emissions by 2050. Many intergovernmental institutions have started to promise and provide new funds to help meet the need. The major global governance bodies – the UNFCCC COPs, the United Nations Development Programme, the International Mone- tary Fund, the World Bank, the G20 and the G7 – have done so. So have several national governments from the devel- oped world. Together they have begun
John Kirton, director, Global Governance Program
C limate change is by far the greatest crisis and challenge of our time. The unprece- dented heat and extreme weather events around the world this year are causing significant deaths and damage to people and other living things. They are certain to get worse. Countering this crisis requires mobi- lising vast amounts of climate finance for a just transition to a liveable planet for our shared future. It must be done by the public and private sectors working individually and together to raise the ambitious but achievable sums needed to do the job.
8
Financing a Just Transition
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