Climate Finance Objectives

It is great to see the new UK White Paper on International Development. To me, the most interesting three words in the document are “and biodiversity loss”. These are included in the highest-level vision. More widely, the WP captures a lot of collective learning to meet the current context and different challenges ahead.   The new UK top-line objective is: “The goal of UK international development is to end extreme poverty and tackle climate change and biodiversity loss.” Many organizations link poverty reduction, conflict, economic growth and climate change. The explicit UK link to nature or biodiversity is new and significant.   Minister of State Mitchell and the amazing team of officials deserve huge credit. I need to declare an interest: they are my former colleagues -- and we still have common cause.   The important first step is setting the direction. The ultimate measure of success will be progress on the ground and these will require shifts in policy, programmes, partnerships and finance.   On climate and nature finance, I have copied the main commitments below. It is a terrific and powerful list that reflects the scale of the challenge and the $700 billion financing gap for biodiversity. Nature is essential to limiting warming to 1.5C and provides the source of life for many. But is severely underfunded.    Of the UK commitment to provide £11.6 billion in international climate finance between 2021 to 2022 and 2025 to 2026, there will be “at least £3 billion to protect and restore nature”. Private finance is even more important and the City of London will be key as a leader in green finance.   On partnerships: good to see focus on indigenous communities who are custodians of 80% of the planet’s biodiversity.   On Policy: many say it is time to move faster on ‘nature positive’ ODA.   The UK’s commitments on climate change and nature finance: 5.19. We will champion launching a Centre for Access to Climate Finance, at COP28, and implementing country-led trials to test what works. 5.20. We will work with other countries to deliver the 10 Point Plan for Financing Biodiversity and co-lead the development of biodiversity credits, an innovative finance mechanism, to incentivise investment in biodiversity. 5.22. We will support the growth of high-integrity carbon and nature markets to unlock a global estimated potential of $40 billion per year of private finance for low- and middle income countries by 2030, developing trusted integrity standards and capitalising on digital innovation. 5.23. We will champion global efforts to agree definitions, principles and reporting of ‘nature positive’ Overseas Development Assistance with the OECD, MDBs and partner countries, and deliver on our commitment to ensure UK ODA is nature positive in line with these.   For a wider set of comments: Responses to the FCDO White Paper on international development — Development Studies Association (devstud.org.uk).  

Is the climate tech investment space backing the most impactful sectors? See below a snapshot of our research on this question, from the Oxford Climate Tech Initiative, Saïd Business School, University of Oxford, and the Skoll Centre for Social Entrepreneurship, using data from Climate Policy Initiative and PwC. TLDR: A large amount of climate tech funding (3rd bar) so far has gone towards only a few sectors - e.g.. transportation and energy - leaving other high emitting sectors like agriculture, built environment largely untouched. This leaves out a lot of adaptation-relevant sectors (e.g. water, health, weather forecasting, etc.), and there's a similar story around overall climate finance (second bar). Would love to hear people's thoughts on if/how they've seen this gap, and also any thoughts on the strategies to fill it.

🎓 I spoke at Harvard Climate Action Week about scaling investment in climate finance. This was a (very) abridged version of the first lecture in my course at the Kennedy School. 🌎 "Scaling climate finance" means increasing private sector investment in low-risk, low-return technologies such as grids, utility-scale renewables, and batteries. 🏦 The "climate finance gap" is $4.5 trillion. But the problem isn't a lack of funds; there's enough money in the world. Instead, the issue is the high cost of capital for green projects. When cost of capital is higher than a project's returns, the private sector won't invest. 🏛 To address this gap, we need standard development finance and industrial policy strategies. This includes lowering the cost of capital through blended finance and easy credit or enhancing returns via increased utilization or subsidies. Watch the full talk: https://lnkd.in/dy_jVhcp (39:54) #ClimateAction #Finance #Investment #Policy #Harvard #ClimateFinance