The Green Climate Fund (GCF) has launched a new report on how global finance can be aligned with sustainable development in order to achieve the goals of the Paris Agreement and deliver a COVID-19 economic recovery.
GCF Executive Director Yannick Glemarec introduced the report, “Scaling up climate finance in the context of COVID-19,” on Tuesday night during the “Green New Deal: Clean Transition to Green Economy” event organised jointly with South Korea’s Ministry of Economy and Finance as part of the 2021 P4G Seoul Summit.
The 105-page report, based on close collaboration between Intergovernmental Panel on Climate Change (IPCC) and GCF experts, sets out a pathway for financial decision-makers to align finance with the conclusions of the IPCC’s special report on Global Warming of 1.5° C. Based on the latest scientific findings and policy developments, the report calls for a scaling up of climate finance, and the incorporation of climate change in the valuation of all financial assets.
The report analyses how various approaches to ‘market fixing’ and ‘market shaping’, including the use of policy tools and financial instruments, can put the world on a pathway to the carbon reductions and adaptation action required by the goals of the Paris Agreement.
“Financing a rapid transition to a net-zero emission, climate-resilient economy will require significantly more investment, investment in a different set of assets, and investment that addresses the humanitarian imperative of social inclusion and poverty alleviation,” said Glemarec while releasing the new report.
“The good news is that we can still just remain within the 1.5 degree threshold if we act now,” he said. “But to do so will require us to dramatically scale up climate innovation and climate investment.”
Also emphasising the crucial role of climate finance during the P4G event, COP26 President Alok Sharma said the task ahead of “keeping 1.5 degrees alive”, according to the Paris Agreement’s stipulation to stay within a safe global temperature rise, is “near impossible” without finance.
“Donor countries must honour our commitment to mobilise 100 billion dollars a year to support developing countries,” said UK cabinet member Sharma. While urging development banks to set ambitious climate finance targets, he said “we are also working to increase private finance and to make climate a consideration in each and every financial decision.”
Former UN Secretary General and President of the Korea-based Global Green Growth Institute Ban Ki-Moon pressed the need for an accelerated transition to a green economy as the world emerges from the COVID-19 pandemic.
“If we work together to seize this opportunity, we may be able to look back years from now and see that—from a big-picture perspective—we heeded the final warning and turned the pandemic into a blessing in disguise,” said Ban.
Ban cited signs of positive momentum including the European Green Deal announced in 2019, various national carbon neutrality commitments, renewed US climate leadership and corporate interest in green investments.
South Korea’s Deputy PM Hong Ham-ki said his country, the host of this year’s P4G forum, is currently planning to update its Nationally Determined Contribution under the Paris Agreement to align with its commitment of carbon neutrality by 2050.
“As for the concrete means, we plan to invest 3.8 percent of our GDP by 2025 in Green New Deal projects, including green infrastructure, renewable energy, and green mobility,” said Hong.
Also taking part in the panel discussion were OECD Deputy Secretary General Masamichi Kono, European Bank for Reconstruction and Development senior economist Beata Zabochik, South African Development Bank CEO Patrick Dalmini, XacBank CEO Sebekjab Gumenjab, and Kyunghee University professor Oh Hyung-na.
P4G, shorthand for “Partnering for Green Growth and the Global Goals 2030,” is a global platform comprising 12 national governments generating collaboration and funding for public-private partnerships supporting sustainable development.
The 2021 P4G Seoul Summit is scheduled to wind up on 31 May with the adoption of the Seoul Declaration promoting sustainable development in water, food and agriculture, energy, cities and the circular economy.
GCF is leveraging its climate finance portfolio, currently valued at over USD 30 billion including USD 8.4 billion in GCF resources, in alignment with many of the recommendations of the newly released “Scaling up climate finance” report.
The report prescribes four solutions to aid the financial transition to zero emission, resilient economies by:
- supporting integrated policies on climate action, sustainable development, and COVID-19 stimulus.
- alleviating debt burden so that developing countries have the fiscal space to finance their green, climate-resilient recovery plans.
- leveraging sovereign and multi-country guarantee funds to reduce investment risk and catalyse private finance.
- increasing developing countries’ access to the green bond market.
You can read the full report here.