Effective Financial Instruments, Post Paris

The CEADIR Series welcomed three financing experts to forecast financing options for a potential new universal climate agreement at the crucial Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 21) starting November 2015. As recent surrounding developments indicate, COP 21 is likely to have an unprecedented focus on finance and engagement with private investors. Consider:

* In its just-submitted INDC (Intended Nationally Determined Contribution), India estimated that scaling up its climate action plans would require at least $2.5 trillion from outside sources. A new United Nations Environment Programme (UNEP) report concluded that a “quiet revolution” is underway as financial policymakers and regulators take steps to integrate sustainable development considerations into financial systems. Marc Carney, head of the Bank of England, stated in September 2015 that fossil fuel investments could impose “potentially huge” losses to investors as carbon assets are depreciated in response to climate change.

* Meanwhile, the Green Climate Fund (GCF) is expected to soon solicit proposals for ways its funds can most effectively leverage private investment, and the Global Innovation Lab—a consortium of donors, banks, and financial organizations—issued a request for proposals of financial instruments “to drive billions of dollars of private investment into climate change mitigation and adaptation in developing countries.”

* CEADIR’s Alan Miller, former Principal Climate Change Specialist for the International Finance Corporation (IFC), presented an overview of donor funding trends and link discussions in Paris with financing issues discussed earlier this month at the LEDS GP Regional Workshop for Latin America. Stacy Swann, former Head of the IFC’s Blended Finance Unit, discussed potential roles within the COP of the GCF and evolving private sector financing mechanisms. Maria Netto, Financial Institutions Lead Specialist for the Inter-American Development Bank, explained new ways that donors are collaborating with private financing, as potential avenues for consideration at the COP.

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