Climate Finance Not Charity, But Investment

I arrived to Cancún only this past Saturday, entering a negotiation process well underway. After a thorough introduction to the state of the talks by Weixin Ng and Randy Caruso, Randy and I have been following progression on finance in the AWG-LCA. This work is a continuation of study I did this semester. As to be expected, we have been delving into the minutiae of the funding mechanisms and legal language, so today, when I went to a high-level meeting about climate finance with Ban Ki-Moon (it was a side event), it was like a breath of fresh air.

The event was about the release of the AGF report on possible funding sources (more on that in Sameer’s post), and in Ban Ki-Moon’s opening statement, he reminded me that…

“climate finance is not charity,” but “an investment in a safer, healthier, more prosperous world for us all.”

Exactly. Other speakers spoke in the same vain, that pricing carbon “will launch a new industrial revolution,” and that we have to move confidently into a better future. Later, in his remarks to the high-level plenary, Jairam Ramesh, India’s Minister of Environment and Forests, noted that in parallel to the original “green revolution” in the 1960s, which saved millions from famine with better seeds, there needs now to be an “evergreen revolution” that moves developing countries onto a sustainable development pathway for the long-term.

This is where the discussion needs to go. Climate change negotiations are fundamentally about how humans manage the only planet we have in the richest, most resource-intensive era in history. How should use our fossil-based energy endowment, and how can we guarantee that humanity increases standards of living for everyone in a sustainable manner. Climate finance is about creating the correct investment incentives and ensuring that resources are flowing both to ameliorate climate change impacts and build green economies for the future.

Too often the discussion on finance gets stuck in the paradigm of charity and reparations – which is turning off delegations of the developed world. But instead we should talk in terms of investment, how we actually build a low-carbon industrialized world. If the structure of the funds are intelligent, then developed country carbon pricing creates both incentives for mitigation and a stream of funding for developing country transformation. And, although there are qualms about this, if these flows are leveraged through multilateral development banks, funds can be directed toward the most promising adaptation and mitigation activities.

Climate finance is central to these negotiations, and has been moving forward slowly. This is necessary. These mechanisms will ensure that the kinds of interventions needed for a sustainable world can actually happen.