An interesting discussion was brewing at the side event hosted by CAN Europe ‘ Private Sector Finance and its role in enhancing climate action’ amongst the presenters and respondents (representatives from the European Investment Bank, European Commission, kfW, Government of Pakistan as well as CAN Europe & Eurodad).
There was agreement that private finance has potential, but it’s not a silver bullet for the 100US$ billion by 2020. Concerns were raised by Eurodad about the leveraging, accountability and monitoring of funds. Both the EIB and OECD urged that further clarification is required on what constitutes ‘leveraging’ – is it co-financing or really mobilising or maybe just reducing risk for foreign investment?
A reoccurring point through all discussions was ‘how do you make adaptation attractive to private investors?’. A representative from Samoa (a SIDS and LCDS) raised the point that in their case, as a small island, no private investor is interested due to the economy of scale and risk. A UNFCCC member outlined that private sector is familiar with risk, but they don’t understand ‘adaptation’ as a concept.
The issue of ‘eligibility’ came up. Which funds are ‘eligible’ to be counted towards the 100$billion? If the UAE is investing heavily in the London wind array, does this count? Mark Storey of the Swedish Government insisted not to get caught up in eligibility issues as the urgency of getting the funds is the priority. He also explained that in Sweden foreign finance is mainly channelled through ODA systems, therefore mainly goes to LDCs & not necessarily the countries with the largest mitigation potential. But then that is different from the money needed for the mitigation needed to meet the 2degC….
The Government of Pakistan representative concluded that successful financial flows rely on the necessary enabling environment in the developing country & that necessary incentives need to be put in place for foreign investment from developed countries.
For more information the following reports were presented:
* A recipe for transparent climate finance in the EU (CAN Europe)
* Cashing in on Climate Change (Eurodad)