Opening the door to Climate finance
Following the ratification of the Paris Agreement in November 2016, the focus has shifted to how to maximize countries’ chances of achieving their climate commitments. Now the Climate Finance Accelerator initiative delivered by Ricardo and a consortium of climate experts aims to support this process by helping countries overcome the biggest hurdle to turning their ambitions into reality – unlocking and accelerating the financing needed to deliver their climate plans.
The 21st Conference of the Parties (COP21) in Paris produced an international agreement on climate change that committed almost every country on earth to the collective effort to limit global temperature increase to 2 degrees Celsius above pre-industrial levels. In under a year, the agreement was ratified, with each participating nation pledging to deliver country-specific commitments, known as Nationally Determined Contributions (NDCs). For most countries, the actions needed to deliver their NDCs are inextricably linked to national development and economic growth priorities – such as improving energy access, tackling water scarcity, developing climate-resilient agriculture and making growing cities more liveable and sustainable. As a result, in addition to the sincere environmental and humanitarian motivations that underpinned the Paris Agreement, there are strong local economic and social drivers for national and regional governments to deliver on their commitments.
“NDCs go beyond countries’ environmental ambitions, they chart a path to low-carbon, climate-resilient growth and prosperity,” says Emelia Holdaway, Ricardo’s Manager for International Climate Change Policy. “Many countries began the process of implementing their NDC ambitions even before the Paris Agreement, and with its ratification in 2016, many more started planning their implementation strategies.” For many years, Ricardo’s international climate team has supported nations to develop national and sectoral plans and roadmaps to achieve their climate commitments. Now with the spotlight on the real-life implementation of these commitments, Ricardo is helping to answer a fundamental question that underpins all countries’ NDC plans: where to find the necessarily large flows of cash needed to support implementation.
“Countries have many challenges in implementing their NDCs,” says Emelia Holdaway. “They face many barriers and have different starting points, but a common challenge is how they will finance the effort that will be needed to implement the full extent of their ambitions.” Over recent years, Holdaway and her team have played a crucial role supporting several signatories to the Paris Agreement to strengthen their climate finance readiness.
Climate Finance Accelerator: breaking down the barriers to funding
The Climate Finance Accelerator (CFA) is an innovative approach for countries to develop plans to finance the implementation of their NDCs. It brings together government, finance and capital market players from countries looking to finance their NDCs with project and green finance experts from the City of London. This allows governments to get practical, real-world support on how to develop effective financing propositions for the projects in their NDC pipelines. The CFA consortium delivering the workshop brings together the combined finance and climate policy expertise of Ricardo, PwC, and the concept’s originators, climate finance specialists Ian Callaghan and Tessa Tennant.
“It’s an exciting approach and a unique opportunity for countries to make real progress on understanding how they can finance their NDCs,” explains Holdaway. “Countries will be provided with expert, hands-on support to develop concrete funding proposals for climate development projects that will ultimately improve the lives of their populations.”
In preparing for the CFA, workshops have been convened in the selected countries bringing together all the relevant players involved in financing of NDCs, in some cases for the first time. In Nigeria, for example, delegates reported that, as a result of the CFA, the public and private sectors were working together on climate action like never before.
“Countries are typically looking at projects of a reasonable size, perhaps $15 to 25 million,” says Holdaway. “These will be the larger infrastructural or technology-based projects that deliver a sizeable share of the NDC commitments, and some countries have already started to develop project concepts or even a greening of their infrastructure pipeline. A flagship project might be the starting point for what they might bring to a Climate Finance Accelerator workshop.”
Read the full article in RQ Q3 2017