Insights from COP29: Where do we go from here on Scaling Climate Finance?

Description

Join us for an engaging one-hour session as we delve into the key outcomes of COP29, focusing on the landmark decision to increase global climate financing from $100 billion to $300 billion annually. Despite this significant step forward, a recent report by Amar Bhattacharya, Vera Songwe, and Nicholas Stern highlights that external financing needs—including international public, private, and other sources—are projected to reach $1.3 trillion annually by 2035. What does this new commitment mean in the context of the broader financing gap? And what innovative solutions or mechanisms are required to scale up investments to meet global climate goals? Don’t miss this critical discussion on the future of climate finance.

Summary

Introduction: Timed to capture decisions and reflections from the recently concluded COP29 in Baku, the Climate Change Working Group of the Scaling Community of Practice hosted a webinar on scaling climate finance in line with global commitments and ambition.
Climate Finance Goals: Karin Kemper, the host and Working Group co-chair, introduced the webinar by referencing global climate finance goals. The previous climate finance goal of $100 billion/year (in public and private finance from wealthy countries to developing countries) was achieved in 2022 and has been replaced by a new goal of $300 billion/year by 2035. This new goal was agreed at COP 29 along with a commitment to scale up all forms of financing to $1.3 trillion/year by 2035 (which will be articulated in the Baku to Belem Roadmap).
IHLEG Report on Climate Finance: Amar Bhattacharya, member of the Independent High-Level Expert Group on Climate Finance, presented conclusions from the IHLEG’s latest report, which highlights the significant climate and nature finance gap, which the new goal falls far short of.
- Investment Needs: Significant increases in investment in clean energy, resilience, and natural capital are required, especially in developing countries.
- Natural Capital: Amar pointed out that 90% of the world’s natural capital is in developing countries, but 80% of the spending is in the rich world, underscoring the need for more investment in natural capital in developing regions.
- Clean energy: Amar projected that 60% of the increase in clean energy investment over the next 10 years must occur in emerging markets and developing countries, excluding China. There was agreement at COP 28 (2023) to triple renewables by 2030, with emerging markets and developing countries needing a five to tenfold increase in renewable energy investment by 2035.
- Cost Benefits: Transitioning to clean energy offers direct savings from reduced fossil fuel use and indirect benefits like improved health and environmental outcomes.
- Financing Sources: By 2030, $1.4 trillion could come from domestic sources and $1 trillion from external finance. By 2035, $3.2 trillion will be needed, split between domestic ($1.9 trillion) and external ($1.3 trillion) sources.
- Scaling Up: Policy reforms, private finance mobilization, and effective multilateral development banks (MDBs) are crucial to meeting climate finance goals.
Expert Reactions:
- Jonathan Beynon (Center for Global Development): Expressed disapintment in the climate finance goal and highlighted the gap between commitments and needs. Jonathan emphasized the importance of more public finance and better burden-sharing principles.
- Matt Eldridge (Gates Foundation): Called for improving the efficiency and effectiveness existing finance flows given limited outlook for new finance. He also emphasized opportunity to better integrate climate into country and company growth strategies and ensure prioritization of highest-impact investments.
Optimism for the Future: Amar expressed optimism about technological advances and private sector involvement, emphasizing breakthroughs in finance structures and country platforms.

Karin Kemper

Karin Kemper, a seasoned professional with over 25 years of experience, has significantly contributed to global environmental and natural resources management. Formerly the Global Director for Environment, Natural Resources and Blue Economy at the World Bank, she oversaw a portfolio exceeding US $12 billion, comprising investments, analytical work and international collaboration.

Currently, she engages as a Senior Advisor focusing on climate finance and biodiversity. She also serves as a Special Advisor to the Chair of the International Standards and Sustainability Board (ISSB) and is a director on the board of IUCN-US. Kemper’s extensive background includes high-level roles within the World Bank, such as Senior Director of Environment and Natural Resources and Director of Climate Policy and Finance. An institutional economist by training, she has authored numerous publications on natural resource economics and managed comprehensive studies on environmental management globally. Kemper, a German national, possesses an educational background from Linkӧping University in Sweden and Maryland University of Integrative Health, holding a Ph.D. in Water and Environmental Studies, alongside M.Sc. degrees in Nutrition and Integrative Health and Herbal Medicine.

Matthew Eldridge

Matthew Eldridge is a Senior Program Officer in the Development Policy and Finance team at the Bill & Melinda Gates Foundation. He focuses primarily on climate finance and policy, including the macroeconomic implications of climate change for developing countries. Prior to joining the foundation, Matt worked at the Urban Institute, a nonprofit research organization, researching and providing technical assistance on results-based financing approaches. Before that, he consulted on US banking and asset management regulation and held roles at the World Bank, working on aid effectiveness as well as the Bank’s Central Asia portfolio. He holds a BA from Virginia Tech and an MSc from LSE.

Amar Bhattacharya

Amar Bhattacharya is a senior fellow in the Center for Sustainable Development, housed in the Global Economy and Development program at Brookings. His focus areas are the global economy, development finance, global governance, and the links between climate and development.

From April 2007 until September 2014 he was Director of the Group of 24, an intergovernmental group of developing country Finance Ministers and Central Bank Governors. In that capacity he led the work program of the Group, supported the deliberations of the Ministers, and was the principal point of interface with other organizations including the G20. He has therefore been an active participant in the global economic discussions and a key representative of the views of developing countries. Prior to taking up his position with the G24, Mr. Bhattacharya had a long-standing career in the World Bank. His last position was as Senior Advisor and Head of the International Policy and Partnership Group. In this capacity, he was the focal point for the Bank’s engagement with key international groupings and institutions such as the G7/G8, G20, IMF, OECD and the Commonwealth Secretariat.

Through these different positions Mr. Bhattacharya has had a long standing engagement in research and policy discussions on the global economy and spillovers, international financial architecture, development financing and the global governance agenda including on the role and reform of the international financial institutions. He completed his undergraduate studies at the University of Delhi and Brandeis University and his graduate education at Princeton University.

Jonathan Beynon

Jonathan Beynon joined CGD in 2023 as a senior policy associate in CGD’s Europe programme, focusing on climate finance and development. He previously spent 26 years with DFID/FCDO, the last 7 as senior economist in the Energy, Climate and Environment Directorate working on the economics of climate change, climate smart development, climate finance and COP26/7. He also worked in a variety of DFID policy and operational roles covering budget support, aid effectiveness, macroeconomic analysis, debt, public financial management, trade, resource allocation, country strategy development, and donor coordination. This included six years seconded to the European Commission working on budget support (2006-12), and country postings to South Africa (1997-1999), Uganda (2002-2006) and Zimbabwe (2012-2014). Prior to that he was a research economist at FSG (Oxford University) and ODI Fellow in Botswana. Jonathan holds a BA in Economics from Cambridge University, and an MSc in Agricultural Economics from Reading University.