A new report prepared by CICERO and Climate Policy Initiative for the G7 summit identifies major trends and sources of international climate finance. G7 leaders thanked Germany for the report.
In 2009, developed countries committed to jointly raise 100 billion USD annually by 2020 for developing countries. Despite the financial and economic crisis, international climate finance is increasing. However, strong political will is needed to reach the target.
Public climate finance increases despite low carbon prices
Public finance has scaled up and remain the key driver of domestic and international climate finance.
“It is a hopeful sign that public climate finance increased while countries were facing a financial and economic crisis and even though revenues from carbon pricing remain far below expectations,” said Kristin Halvorsen, former Norwegian minister of finance and today director at the Center for International Climate and Environmental Research in Oslo.
In 2010 the UN Secretary General’s High-level Advisory Group on Climate Change Financing (AGF) assumed a global carbon price of USD 20–25 per tonne of CO2 in 2020. The CICERO-CPI report shows that carbon pricing is unlikely to become a major source of international climate finance.
“The bad news is that countries are still putting more than twice as much public money in “brown" or fossil fuel-based investments,” added Halvorsen.
Private capital goes green
“It is in particular promising to see that private and institutional investors show more appetite for low-carbon and climate resilient investments, and welcome clearer signals from governments," said Harald Francke Lund, climate finance advisor at CICERO and author of the report.
Private capital is the largest and a growing source of global climate finance. Most of private investments are made domestically. Since there are no precise estimates of global private climate flows. we need better data. The decreasing costs of low-carbon technologies and low interest rates provide important opportunities to further spur the growth of green investments.
"The emergence of new green investment products, such as green bonds, are making it easier for investors to put their money in climate projects and can facilitate a major green shift," Halvorsen added.
To unlock the full potential of private capital, governments are recommended to use all tools at their disposal to reduce the costs and risks related to climate investments.
Harald Francke Lund, climate finance advisor, CICERO:
telephone +47 99 64 53 24
Monica Bjermeland, press officer, CICERO:
telephone +47 98 68 49 16