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UN Climate Summit: Financing expectations

UN Climate Summit: Financing expectations

Sep 23, 2014

From United Nations Framework Convention on Climate Change

A large and rapid scaling up of public and private financing to meet the growing challenge of climate change will be a major focus of the UN Climate Summit in New York, which began on 23 September 2014.

UNFCCC said that shifting the global economy onto a low-carbon and climate resilient development pathway requires additional investments of many tens of billions of dollars a year from both the public and private sector.

In the view of the Intergovernmental Panel on Climate Change (IPCC), the world needs to mobilise US$100 billion per year by 2020 from various sources to assist in emissions mitigation and climate adaptation in developing countries. It’s challenging but entirely achievable.

The Green Climate Fund  has already been established by the international UN climate change process as a prime global channel to deliver public funds and to leverage private sector finance for climate action in developing countries. Public finance is required to meet an initial US$10 billion capitalisation target. In July this year, Germany made a pledge of €750 million and UN Secretary-General Ban Ki-moon is encouraging Governments to announce further contributions to the initial capitalisation of the Fund.

The increasing private capital flows into low-carbon and climate-resilient infrastructure are finding secure and profitable investment opportunities that have the additional benefit of reducing risk exposure to climate change. Regulators and financial institutions are expected to announce initiatives at the summit to work towards regulations that recognise the true cost of capital and climate risks.

The UN further expects public and private sector actors to make declarations and commitments to green their financial portfolios and expand the availability of financing through instruments such as climate bonds.

Why mobilising climate finance is crucial

Urgent action is needed to further reduce greenhouse gas emissions and also to help countries build resilience and prepare for a world of dramatic climate and weather extremes.

A robust price on carbon is one of the most effective strategies to unlock private investment to fund climate action. A strong price signal in all major economies – in the form of emissions trading systems, carbon taxes or other mechanisms – will direct financial flows away from fossil fuels and other sources of pollution and advance the growing global market for energy efficiency and clean energy.

About 40 countries and more than 20 cities, states and provinces use carbon pricing mechanisms such as emissions trading systems and carbon taxes or are preparing to implement them.

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