All countries – developed and developing countries alike – need to act now on climate change if we are to reduce emissions to relatively safe levels, of 2 degrees Celsius with an aspiration of 1.5 degrees Celsius.
Looking back, 2015 was a momentous year. The most notable milestones on the climate change and development front last year were the International Conference on Financing for Development in Addis Ababa; the Sustainable Development Summit in New York and the COP21 Climate Change Conference in Paris.
The Paris summit was a political triumph in that it put the international climate process back on track. Last week’s Kigali Amendment to the Montreal Protocol that phases out HFCs is another significant climate mitigation step the world has taken to deliver on the Paris Agreement and the Sustainable Development Goals.
Moving forward, mobilizing investment for green growth, of which climate change is a cross cutting theme, is crucial but challenging to address. Although financial resources may be available, according to the New Climate Economy’s 2014 report, Better Growth, Better Climate; only 3% of the 60 trillion dollar investment made in 2013 by institutional investors was put into long-term investment in infrastructure.
Profit considerations will remain the main driving force behind private investment. Investors need to be convinced about the bankability of projects in an increasingly volatile geo-political environment.
An action plan for financing sustainable infrastructure needs to be drawn up to address investment barriers. More money alone won’t do the job.
NCE’s Sustainable Infrastructure Imperative Report notes there are four ways to build sustainable infrastructure and overcome obstacles. First, collective action must be taken to deal with fundamental price distortion to enhance incentives for investment and innovation.
This unified effort will contribute significantly to reducing pollution and congestion and ultimately generate profit that can be redirected to help the poor.
Second, strong policy frameworks and institutional capacities must be reinforced to generate enabling conditions for investment to build pipelines of sustainable projects.
Third, the financial system must be transformed to deliver the scale and quality of investment needed in order to increase financing from all sources, including private investors.
Last, mobilizing finance and scaling up investments in clean technology R&D and deployment are pivotal to reducing the costs and enhancing the accessibility of more sustainable technologies.
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