Catalysing climate investments in developing countries in the context of COVID-19

Distinguished guests,
We are not on track to achieve the Paris Agreement’s goals.

UNEP’s latest Emissions Gap Report finds that NDCs to reduce emissions as they stood just before COP26 opened are not enough to achieve the Paris Agreement goals. We are currently on track to drive up the average global temperature to at least 3°C this century. If we continue this dangerous trend, we risk locking ourselves into generations of climate destruction and dislocation.

The latest World Meteorological Organization report shows that carbon dioxide levels in the atmosphere surged in 2020, rising more than the average rate over the last decade despite a temporary dip in new emissions during COVID-19 lockdowns. And according to the UNEP report, they may even continue to rise in the years up to 2030.

Avoiding catastrophic climate change will require dramatically accelerating the widespread adoption of existing climate technologies and the development of new technological solutions.

Climate innovation holds the promise to break these trends and put us back on track to achieve the Paris Agreement’s goals.

But we need to deploy dramatic increases in finance to realise the potential of innovation, and to deliver it – equally – around the world.

The opportunities are there in developing countries. But the funding is not yet following.

GCF is now the world’s largest dedicated climate fund. We now have a portfolio of USD 10 billion, representing USD 37.2 billion in assets including co-financing. We are funding 190 climate action initiatives spanning 127 developing countries.

Prime Minister, Ministers, I would like to give a brief overview of how GCF is using its resources to overcome barriers and encourage innovation – an approach set out in more detail in a new Working Paper we are publishing today.

GCF’s approach is based on four complementary pathways.

We are helping nurture a supportive regulatory environment and public support in developing countries. In response to the COVID-19 economic shock, we are leveraging our Readiness resources to assist developing countries design green, climate resilient economic stimulus measures and explore innovative financing instruments to finance them without increasing their debt burden.

GCF’s investments are also accelerating innovation. We support accelerators and incubators; provide early-stage financing to climate innovators to pilot new climate solution. For example, we are working with the private sector in our USD 279 million investment in

the Amazon Bioeconomy Fund to support new bio-businesses across six Latin American countries to reduce emissions and enhancing climate resilience.

And we are working to de-risking first mover investment to deploy new climate solutions at commercial scale. GCF is investing USD 150 million of first-loss equity into the Global Sub- national Climate Fund, which will de-risk private sector climate investments at the critical sub-national levels. Almost half of the 42 participating countries are LDCs and SIDS.

And finally, we are strengthening domestic financial institutions to support the widespread adoption of commercially proven new climate solutions. We are working with Jamaica to establish the first Caribbean exchange for green bonds to finance net zero, climate resilient infrastructure in the Caribbean region.

We have made great strides. But we know there is much more to do. Prime Minister Mottley, I look forward to hearing your views on how these challenges should be addressed. And Ministers, I hope we can then discuss what more GCF can do to foster innovation and catalyse climate investments in the context of COVID-19.

See the GCF news report for this event here.