Posted on 08 December 2010
Leaders from the finance industry, the UNEP Finance Initiative and WWF joined forces today to remind climate negotiators of the urgent need to scale up the levels of both public and private financing to halt the devastating effects of climate change and enable low-carbon development in emerging and vulnerable economies.
- Leaders from the finance industry, the UNEP Finance Initiative and WWF joined forces today to remind climate negotiators of the urgent need to scale up the levels of both public and private financing to halt the devastating effects of climate change and enable low-carbon development in emerging and vulnerable economies.
The leaders and organisations said that the specific need was to scaled up public finance and building up the financial mechanism under the UNFCCC to leverage much greater amounts of private finance to meet climate change mitigation goals.
Last month 259 global investors representing USD15 trillion in investments issued a statement on climate change urging international action.
The joint event in Cancun was presented with a shared vision for financing action on climate change which outlined a role for international public financing in leveraging private finance through de-risking instruments such as guarantees, first loss equity vehicles and hedging instruments.
Public finance was also needed to build developing country capacity and create the policy frameworks needed to accelerate private sector shifts to the low carbon economy, the meeting was told.
In the tight current budgetary situation of many countries not all of the public finance will be able to be sourced from domestic budgets, the meeting was told, raising the need for innovative sources of public finance to reach the scale of resources required.
"The negotiations are at a crucial stage with ministers arriving to support negotiators and sort through the different options on the table," said Yolanda Kakabadse, President of WWF International. "It is essential that negotiators move decisively to strengthen the financial mechanism of the UNFCCC, and establish a robust process to identify innovative sources of scaled up public finance.
"One area where progress can be made on both mitigation and finance is by addressing emissions from the maritime and aviation industries.
“Public funds are critical to speed up the development of new technologies, as well as for adaptation, resilience building, and preparedness and capacity building measures. Public funds are also critical in leveraging private sector finance, which needs to contribute the great majority of the investments needed in clean energy technologies. Our experience is that public investment and initiatives play key roles in leveraging and directing private investment."
“Private finance for low-carbon endeavors in developing countries can and will only flow at the needed scale, if firstly, the risk-return profile of such investments is competitive with that of conventional investments and, secondly, if domestic policy frameworks on the ground display transparency, longevity and certainty," said Mark Fulton, Co-chair of the UNEP Finance Initiative Climate Change Working Group and global head of Climate Change Investment Research at Deutsche Bank Asset Management.
"Public finance from international sources will be needed to manage risks for investors and create the capacity in developing countries to attract and channel private finance into the green, low carbon economy.”