Climate finance will be 'key to Paris success'

27 November 2015

Climate finance will be a key sticking point that could potentially determine whether the Paris climate summit will be a success.

As representatives from nearly 200 countries converge in Paris this weekend for the two-week summit, making progress on delivering a pledge to channel $100 billion a year from developed to developing countries by 2020 will need to be an "important plank" of any agreement, according to experts at law firm Norton Rose Fulbright.

The $100 billion commitment was first mentioned in the Copenhagen Accord, but current progress in delivering on the pledge is seen by many as insufficient.

The UN's Green Climate Fund will likely be a centrepiece of any efforts to raise these funds, but so far just $10 billion has been committed to it.

 

"Financing is just the fundamental in terms of making the agreement happen," said Elisa de Wit, a partner at Norton Rose Fulbright in a webinar hosted by the law firm.

She claimed the Australian ambassador said in a briefing that climate finance was critical to persuade developing nations to sign up to an agreement, but would probably be the last aspect of the agreement to be cracked at the talks.

She said there were encouraging signs about climate finance, referring to an OECD report that measured climate finance from rich to poor countries at $62 billion in 2014, although she conceded that the figure had been criticised in some quarters as too high.

Tim Baines, another partner at Norton Rose Fulbright, said: "There's no one-shot answer. Everyone is always looking for the next big idea and more innovation will be needed and we don't know yet how we will get to the magic number.

"The key is going to be getting the leverage to unlock private sector finance, which is why people have argued that carbon markets are so important."

 

"The right frameworks" could be put in place to help public finance leverage private finance by derisking investments, he added, suggesting mechanisms such as guarantees, first-loss tranches, and regulations that provide the private sector with guaranteed revenues such as feed-in tariffs.

"We are seeing countries putting more money upfront," he added, pointing to a recent announcement from the UK that it will be increasing its overseas aid budget.

The webinar also heard that, in a break from normal procedures at climate summits, national leaders are arriving at the start of the summit to try to inject some urgency to proceedings. It is hoped this will help avoid the normal late running of negotiations into the weekend following the conference.

However, de Wit speculated that this year's conference may still overrun, pointing out the Le Bourget conference centre that will host the talks has been booked by the French government until midnight on Monday.