There has been a lot at stake as Ministers and their negotiators pored over new iterations of the text that is to become the basis for a global agreement on climate change here in Paris. One of the thorniest issues has been how to finance the transition to low emission and climate resilient economies in all countries.
Much attention has focused on the importance of ensuring that developed countries follow through on their commitments to support developing countries to mitigate and adapt to climate change, recognising that developing countries have done much less to cause the problem of climate change. Developing countries are highly vulnerable to its impacts –especially since they are still grappling with enduring development challenges. But these efforts must be part of a wider effort to green all investment flows, and reduce high carbon investment, or investment that may leave people and their assets even more exposed and vulnerable to the impacts of climate change. There has been growing recognition of the need to address these intertwined dimensions of the challenge of mobilising finance for ambitious climate action.
Developed countries need to be clearer about the steps they will take to help all developing countries scale up their mitigation efforts, and strengthen their resilience to climate change. There is a clear need for concessional and risk tolerant finance targeted to address barriers to scaling up clean energy, energy efficiency, better forest and land use management, including in middle income countries where large numbers of poor people still live, whose per capita emissions are very low. But continued investment in business as usual dooms us all.
While volumes of public and private finance for climate action have grown rapidly as the costs of low carbon options drop and the business case for action becomes clearer, most countries continue to invest in high carbon energy at an alarming pace, and provide huge subsidies for fossil fuel production. A Paris agreement must help us green all investment flows and scale back high carbon investments. This imperative is presently recognised in the overarching goal of the draft agreement, which makes reference to the need for action to “make finance flows consistent with a pathway towards low-emission and climate-resilient development”, in the context of sustainable development priorities and efforts to eradicate poverty.
Over time, we will need to scale back high carbon and maladaptive investment. In a plenary discussion of the first draft of the agreement text, India’s Minister of Environment rightly noted that meeting the goal of keeping global warming to 1.5 degrees could be enabled by greater ambition on mitigation, and developed countries scaling up financial support to developing countries. But scaling back investment in business as usual, and making climate change a material consideration in all investment, will also be imperative if we are to achieve this goal.