The presentation of the Roadmap for US$100 billion goal at the recent Pre-COP in Marrakech shed light on the progresses to date and allowed a better understanding on how developed countries intend to deal with the promised target. According to the document major actions are to be implemented across various dimensions: scaling-up public resources (with an OECD estimated public finance at a level of US$67 in 2020 from current pledges alone) and increase finance for adaptation with regard to the 50:50 mitigation/adaptation balance adopted by the Green Climate Fund. On the first task, a key role is played by multilateral development banks which, alone, mobilised 30 percent of 2014 total climate finance flows.
However, a transition to a low emissions, climate resilient world cannot be achieved with public finance alone: this is why it’s necessary to also use policy interventions to effectively mobilise private finance (the projected level amounts to US$24.2 billion for 2020, if the degree of mobilisation per dollar will be the same as in 2013-2014). This can be achieved by designing domestic policies able to accelerate finance mobilisation and by strategically de-risking investments in order to attract private funding flows.
Finally, the success of the roadmap will depend also on the quality of finance. The increasing diversity of channels for climate finance often makes for a complex access landscape for applicants, who, in addition, may lack the technical expertise and capacity to design and implement coherent investment proposals. To address such barriers developed countries committed to implement ambitious, nationally determined mitigation and adaptations plans and to support countries developing a pipeline of investment-ready projects and attracting finance.
While the volume of climate finance is increasing climate change related costs are too, so it’s of paramount importance to ensure that available funds have the greatest possible impact. The adaptation finance gap and how to bridge it is among the crucial topics to be discussed at COP22 from 7th to 18th of November 2016.
Developing countries already face an adaptation finance gap, with current adaptations costs likely to be at least 2 to 3 times higher than international public finance for adaptation. In the future, according to the 2016 Adaptation Finance Gap Report the total adaptation finance should be 6 to 13 times greater than international public finance today. On the basis of UNEP evaluations “adaptation costs in the period around 2030 are likely to be in the range of US$140-300 billion per annum, whereas international public finance for adaptation in 2014 was around US$22.5 billion”. However these numbers should not be taken for granted since cost estimates may differ depending on factors such as coverage, objectives and quantification methods, uncertainty and limits of adaptation. Moreover, no consistent figures are available documenting financing adaptation actions for both public and private sector.
Tracking adaptation finance is essential to monitor the effectiveness of current spending and to understand where to intervene to increase financial flows’ performance. To increase data comparability and accessibility and to expand the knowledge between public and private finance (which would led to a simpler investment identification and classifications) are among the key efforts under progress. On this subject the Bloomberg’s Task Force on Climate-related Financial Disclosures is currently one of the major actors.
According to the Adaptation Gap Report, private sector financing should be mobilised through financial and non-financial intervention such as public-private partnerships, public lending for private expenditure, introduction of conducive policies and improvement of institutional arrangements. But most of all the key action to address the adaptation finance gap effectively is reducing adaptation needs. The Report confirms that adaptation costs are emission dependent so enhancing mitigation ambitions and supporting the shift toward a more resilient development climate will reduce future vulnerabilities and the associated costs will decrease as well.
(Image: Dillon Wind Power Project. Photo credit: Tony Webster/Flickr)