Mostafa Monira Firdouse. Green Finance Advisor, Friends of the Earth (HK)
We all know a huge amount of financing is needed to tackle climate change. By now, we already have some of the technology to facilitate climate change combating investments and some level of understanding of the requirement of financing needed.
Global landscape of climate finance and climate tech innovation
The past decade saw growing momentum, where public and private climate finance almost doubled between 2011 and 2020. climatepolicyinitiative.org
Climate tech also gained its momentum. Innovations include solar, wind, and nuclear energy as well as novel energy storage systems and clean grid applications. The agriculture sector is optimizing resource utilization through precision farming, agricultural robotics, and vertical farms. Sustainable mobility is also gaining popularity to mitigate dependence on fossil fuels. To decarbonize the mobility sector, companies are transitioning to electric vehicles (EVs) and micromobility. Circular economy and low-carbon manufacturing follow sustainable mobility and maximize material usage. Sustainable land and water management, carbon data and analytics, carbon capture, utilization, and storage (CCUS), and green construction are the other trends in the climate innovation ecosystem. Climate Techs
Despite all this, we keep failing to achieve job targets, scale-up climate change innovation and tackle temperature rise and the food crisis. Our defeat in these areas will ultimately generate socioeconomic catastrophe.
As Mia Mottley said during her interview in Tianjin; “The problem is that there is a serious disparity in the pricing of capital between the global north and the global south… We therefore have to start where we can make meaningful progress, and we believe that it is in the area of finance.” weforum.org-on-the-climate-crisis
- Financing need: How much financing is needed to tackle climate change? According to IMF, financing needed to meet adaptation and mitigation goals are estimated at trillions of US dollars annually until 2050. imf.org
- Missed target: In 2009, high-income countries pledged to deliver $100 billion a year by 2020 to help poorer countries reduce emissions and prepare for the effects of global warming. How much has been disbursed so far? (Explained in graph). politico.eu/article/oecd
- Climate Action: Not all human populations are equal in the face of the climate challenge. Paradoxically, the poorest countries are often those most affected by uncontrolled global warming. unesco.org
Despite 30 years of global climate advocacy and diplomacy, the international system has struggled to make the required progress on climate change. A failure to mitigate climate change is ranked as one of the most severe threats in the short term but is the global risk we are seen to be the least prepared for. GlobalRisksReport2023
The impacts of climate change will not be borne equally or fairly, between rich and poor, women and men, and older and younger generations. However, “Climate change is happening now and to all of us. No country or community is immune,” said UN Secretary-General António Guterres. “And, as is always the case, the poor and vulnerable are the first to suffer and the worst hit.”
The transformation needed to limit global warming to 1.5°C needed enabling conditions that reflect links, synergies, and trade-offs among mitigation, adaptation, and sustainable development. imf.org/en/Publications
Beyond climate-related externalities, there are others, these include
- Information asymmetries related to taxonomies and large data gaps,
- Absence of common taxonomies,
- Inadequate classifications for sustainable investment, home bias considerations, and an overlay of other risk factors and externalities.
- Among data gaps, developing weather monitoring and forecasting systems is important especially for LICs, which are heavily reliant on agriculture. Such externalities create significant barriers for private sector climate investment and effective capital reallocation.
- The introduction of carbon border adjustments in some countries can boost other countries’ incentives to adopt similar policies and tax carbon domestically, which could accelerate the transition.