THERE IS GLOBAL AGREEMENT THAT DEVELOPED COUNTRIES WILL ASSIST DEVELOPING COUNTRIES TO FINANCE CLIMATE CHANGE MITIGATION
• Given the global concern about the climate crisis:
• The Paris Agreement (Art.9.) stipulates developed countries are to:
• provide financial assistance, and
• lead the mobilisation of finance from a wide variety of sources to support developing countries to mitigate and adapt to climate change.
• It sets a collective goal of USD$100bn in climate finance assistance per year by 2020 (to be revised upwards in 2025)
• This is largely concessionary finance, whose efficacy is assessed according to $/tCO2e mitigated
LATTERLY, THE NEED FOR ‘TRANSITION FINANCE’ MODELS AS CATEGORY OF MITIGATION-RELATED CLIMATE FINANCE HAS EMERGED
• For instance, divestment can happen much faster than power systems can be reconfigured to clean energy – Even for most aggressive renewable rollout scenarios
• Existing generation (often coal-based) is required for power system adequacy during (even an accelerated) transition – Capital is required to keep this required capacity going. Under indiscriminate divestment, who will fund this? – Mitigation of transition related negative economic, employment and social impacts also has to be funded.
• For a transition to be just, incumbents cannot just be pushed to collapse. This will trigger significant negative economic and social impacts. Transition support is required.
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