Magdalena A K Muir, Coastal and Marine Union (EUCC) and IEELS Ltd.
Global estimates of the climate finance needed are dictated by the scope of the ambition for climate mitigation and adaptation. Annual investment estimates are US$400 to $1,200 billion for climate mitigation and US$50 to $170 billion for adaptation. Sustainable energy finance is included in these climate finance estimates, with annual estimates of US$250 to $400 billion to meet the UN’s 2030 energy efficiency goal and US$200 to $700 billion for renewable energy.
Climate financing needs complementary public and private flows. It requires appropriate communications platforms, financial and business models, and products or tools by which the climate finance will be delivered. The most successful approaches to financing will combine all of these elements.
Climate finance consists of either public finance from governments and international organisations; combined public and private finance; and private financing for international and national climate programmes. Public contributions include UN and global funds, grants and guarantees for blended loans from development finance institutions, structured grants, risk-based instruments, concessional loan and finance, and equity participation. Private finance can include for-profit and non-governmental organisations, philanthropic foundations, and public and individual charities.
For climate finance, existing UN and global funds could include global and regional carbon cap and auction systems, emission trading schemes, public finance mechanisms to mobilise investment for climate change mitigation, matching relief, and challenge funds for adaptation finance and funding. Examples of products or tools to deliver climate finance include allocating funds raised from a cap and auction scheme for CO2 emissions among wealthy nations to developing nations, or World Bank administered trust funds and programmes from public and private donors to support disaster risk reduction.
The energy sector also provides excellent examples for innovative platforms and finance. This includes the UN’s Sustainable Energy for All initiative, which encourages the growth of global networks, public-private finance and multi-stakeholder partnerships. The dominant role of local authorities is supported by programmes and platforms for renewable energy and energy efficiency initiatives such as the SCI Energy Lab, which creates innovative sustainable energy solutions through the coordinated and collaborative efforts of ten cities in nine countries in Africa, Europe and North America. Another municipality-oriented approach is illustrated by development of sustainable business clusters, expertise and platforms in South Africa under the KwaZulu-Natal Sustainable Energy Forum.
The Climate Technology Initiative (CTI) Private Financing Advisory Network (PFAN) is a business plan and incubator approach implemented with the United Nations Framework Convention on Climate Change (UNFCCC) Expert Group on Technology Transfer. PFAN’s advisory network bridges the gap between investments and clean energy businesses. CTI PFAN identifies early stage clean energy projects in various regions of the world, and provides mentoring for the development of business plans, investment pitches, and growth strategies. This unified approach increases the likelihood of successful implementation of projects.
Finally, crowd sourcing and web-based approaches to climate finance are illustrated by initiatives such as Homestrings, which offers a for-profit interactive web portal that aggregates investors and projects, and provides targeted access to an investment portfolio with vetted opportunities with consistent track records in Africa, Asia and Latin America. The platform offers projects, funds, bonds and public-private partnership opportunities. These investment opportunities are described in fact sheets which provide the necessary due diligence for investment decisions, and ongoing monitoring of investments that are delivered routinely to investor’s dashboards.