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Unlocking Climate Finance: How Can Multilateral Agencies Better Leverage the Private Sector?

The Doha negotiations that just concluded earlier this month have again drawn attention to the urgent need for climate adaptation and emissions reductions. Government representatives, civil society stakeholders, development aid organizations, and corporates agree that the world must make big strides—soon—if we are to have any hope of keeping global average temperatures to 2 degrees Celsius above pre-industrial levels.

One problem, though, is how to generate enough finance to fund these activities. A new WRI working paper aims to address this challenge by examining the role multilateral agencies can play in mobilizing private sector finance for climate change adaptation and mitigation.

Leveraging the Private Sector to Bridge the Climate Finance Gap

Developing countries—those most vulnerable to climate change’s impacts—will need $300 billion annually by 2020 and $500 billion annually by 2050 for mitigation activities alone. The newly established Green Climate Fund (GCF), meant to channel $100 billion annually into climate-relevant investments starting in 2020, is a significant first step, but does not fill the gap of what’s needed.

The public sector cannot tackle this challenge alone, and indeed, the GCF already envisions funding from a mix of public and private sources. The key, then, is to mobilize the private sector to create new investment opportunities and new markets.

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Reflections on COP 18 in Doha: Negotiators Made Only Incremental Progress

This piece was written with analysis from Athena Ballesteros, Edward Cameron, Yamide Dagnet, Florence Daviet, Aarjan Dixit, Heather McGray, and Clifford Polycarp.

Expectations were low for this year’s UNFCCC climate negotiations in Doha, Qatar (COP 18), which concluded last week. It was scheduled to be a “finalize-the-rules” type of COP, rather than one focused on large, political deals that went into the early hours of the morning. Key issues on the table included finalizing the rules for the Kyoto Protocol’s second commitment period; concluding a series of decisions on transparency, finance, adaptation, and forests (REDD+); and agreeing on a work plan to negotiate a new legally binding international climate agreement by 2015. The emissions gap was also front-and-center, as the new UNEP Gap Report showed that countries are further away than even a year ago from the goal of keeping global average temperature rise below two degrees C.

In the end, countries were successful in making progress, but only incrementally. The lack of political will was breathtaking, particularly in light of recent extreme weather events.

Here’s a look at what happened across nine key issues that were on the table:

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Public Financing Instruments to Leverage Private Capital for Climate-Relevant Investment

Focus on Multilateral Agencies

This working paper is part of WRI’s Climate Finance Series, which tackles a broad range of issues relevant to public donors, intermediaries, and recipients of climate finance. A subset of this series, including this working paper, examines how public funds can leverage private sector investment...

Fast-Start Finance: Where Do We Stand at the End of 2012?

This piece was co-authored with Smita Nakhooda of the Overseas Development Institute, with inputs from Noriko Shimizu (IGES) and Sven Harmeling (Germanwatch).

Developed countries self-report that they have delivered more than $33 billion in fast-start climate finance between 2010 and 2012, exceeding the pledges they made at COP 15 in Copenhagen in 2009. But how much of this finance is new and additional? Developing countries and other observers have raised questions about the nature of this support, as well as where and how it is spent. Independent scrutiny of country contributions can shed light on the extent to which fast-start finance (FSF) has truly served as a mechanism to scale-up climate finance. Our organizations have analyzed the FSF contributions of the United Kingdom, United States, and Japan, and analysis of Germany’s effort is forthcoming.

Our analysis revealed four key insights into the FSF experience:

1) Developed Countries Have Ramped Up Climate Support

The FSF period has been a difficult one: Developed countries pledged their climate finance support at the advent of unprecedented economic difficulty brought on by the 2008 financial crisis. Nonetheless, developed countries have sustained support for climate change adaptation and mitigation in developing countries, despite fiscal austerity measures that have substantially cut back public spending. Indeed, all of the countries we reviewed appear to have significantly increased their international climate spending since 2010.

In many cases, data limitations impede a direct or accurate comparison of fast-start spending to related expenditures before 2010. But the UK appears to have increased its climate finance four-fold relative to environment-related spending before the FSF period. Germany has nearly doubled climate-related finance. Japan previously mobilized $2 billion per year in climate finance through the Cool Earth Partnership; under FSF, it reports average spending of more than $5 billion per year. Finally, through its Global Climate Change Initiative, the United States has increased core climate funding from $316 million in FY09 to an average of $886 million per year in FY10 to FY12.

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Week Two of COP 18: Moving Forward with 7 Key Issues

As we move into the second week of the UN climate talks, the desert sand is swirling around the conference center in Doha, Qatar. Countries spent the first week tying up some loose ends on several issues, but there are still many details to be worked out before the sand settles and Parties head home. It’s hard to tell whether this meeting will turn into a full sandstorm or clear up.

The uncertainty here in Doha contrasts greatly with the increasingly clear (and grim) climate picture that we’re seeing around the world. Yet another report was just published finding that global carbon emissions are at an all-time high. This publication comes on the heels of the recent UN Environment Programme report showing that the gap in emissions is growing even wider. And, recent World Bank analysis reinforced the potential catastrophic impacts of moving beyond 2 degrees Celsius of global temperature rise. The warnings are clear, but it’s hard to tell if negotiators are ready to respond with the urgency that’s needed.

The Current State of COP 18

Indeed, it is fair to say that most of the critical issues on the table at COP 18 are not yet resolved. All the questions around the Kyoto Protocol and a second commitment period are still open. Issues surrounding finance – including medium-term pledge levels, the long-term work plan, and how to track countries’ climate finance commitments – have yet to be worked out. Roundtables on the Durban Platform resulted in a good exchange of views, but it’s still unclear whether there will be a firm work plan for 2013 or whether it will remain vague. The most vulnerable countries are understandably asking for more action now – even before a new 2020 agreement kicks in – but most countries haven’t put forth specific proposals.

While it’s not surprising that so many topics are stuck after the first week, the lack of action puts additional focus on the role of Ministers. Many are already in Doha, and they have their work cut out for them if they want to make progress in the remaining week of the conference.

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The Japanese Fast-Start Finance Contribution

Japan’s fast-start finance (FSF) commitment is one of the largest amongst developed countries, but it is important to consider the contents of this commitment. Japan has played a significant role in global efforts to finance climate change activities in developing countries, and its FSF...

What Is Ambition in the Context of Climate Change?

This post was co-authored with Kate DeAngelis, an intern with WRI's Climate and Energy Program.

Ambition is a word often used in the context of United Nations Framework Convention on Climate Change (UNFCCC) negotiations. While most people think of ambition as a strong desire to achieve something, the word has a more specific meaning when it comes to international climate action.

What Does Ambition Mean and Why Is it Important?

The UNFCCC’s ultimate goal is to stabilize greenhouse gas concentrations in the atmosphere at a “level that would prevent dangerous, anthropogenic interference with the climate system.” Scientists have found that in order to avoid devastating consequences such as mass desertification, glacier loss, extreme weather, and sea level rise, the international community must limit global warming to 2°C above pre-industrial levels. In the climate negotiations, “ambition” refers to countries’ collective will—through both domestic action and international initiatives—to cut global greenhouse gas emissions enough to meet the 2°C goal. Ambition further represents the actual steps countries are taking to meet that temperature goal.

Collective ambition is deemed to be lacking when the aggregate policies and actions of all countries are deemed insufficient to meet the 2°C goal. Countries are also judged on their own individual ambition levels, which are assessed based on their commitments to reduce greenhouse gases. In recent years, effective implementation of policies has emerged as an additional method for evaluating whether individual countries are sufficiently ambitious or not.

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Experts Weigh In: How Can We Make Progress at the Doha Climate Talks?

“Two years ago at the UNFCCC conference in Cancun, negotiators agreed that the world would seek to limit global average temperature rise to 2 degrees Celsius,” Andrew Steer, WRI’s president, said during a recent press call. “We are not on track for that. We’re a long way off, and the situation is very urgent.”

That’s why the upcoming U.N. climate negotiations in Doha, Qatar (COP 18) are so critically important. As sea level rise, wildfires, and devastating droughts showcase, climate change’s impacts are already being felt across the globe. Meanwhile, extreme weather events—most recently, Hurricane Sandy—serve as powerful reminders of what will likely become more and more the norm if action is not taken. When negotiators meet in Doha at the end of this month, they’ll need to figure out a way to make progress, both to finalize the rules of past decisions and how to come to an international climate agreement by 2015.

Listen to a recording of WRI's press call on the upcoming Doha climate talks.

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