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Finance for climate action rising, but still ‘far to go’

Megan Rowling / Thomson Reuters Foundation No Comments Share:
An electric delivery vehicle of Deppon Logistics drives past a banner with a government slogan in Beijing. Reuters

BARCELONA (Thomson Reuters Foundation) – Investment to tackle climate change is increasing around the world but remains far too low to limit global warming and avoid its most harmful consequences, as governments have committed to do, analysts said on Tuesday.

A report from the Climate Policy Initiative (CPI), an international think tank, said initial estimates for global flows of climate finance in 2017 ranged from about $510 billion to $530 billion, a 12 to 16 percent increase from 2016.

Updated figures for 2015 and 2016, based on new data becoming available, showed an annual average flow of $463 billion, which was 27 percent higher than in 2013-2014.

CPI said the early figures for 2017 reflected rising investment in electric vehicles and funding from development banks. Renewable energy investment held steady after dropping 16 percent in 2016 on falling costs and fewer projects.

But climate finance is still only a small share of what will be needed to decarbonise economies in the coming decades, as governments vowed to do in the 2015 Paris Agreement, it noted.

Governments will meet in Poland from December 2 – 14 to work out rules for putting that accord into practice.

“Unfortunately, we still have far to go,” said Barbara Buchner, CPI’s executive director for climate finance.

“Leaders need to urgently continue and ramp up the progress toward the economy-wide transition needed to address climate change,” she added in a statement.

The CPI report noted the particularly sparse resources allocated for adapting to wilder weather and rising seas as the planet heats up.

Total adaptation finance – all from government sources – was only $22 billion per year in 2015-2016, it said.

With the world already struggling with more destructive wildfires, storms, droughts and floods, that spending is “extremely low compared to the need”, which UN Environment has estimated at $56 billion-$73 billion per year.

Private-sector investment in adaptation is hard to track, but if included the overall amount for adaptation could be much higher, the CPI report noted.

Lead author Padraig Oliver said corporations and investors were under growing pressure to manage climate change risks.

“The impacts are happening now, and it is an issue that is far more front and centre for businesses and their bottom line than three to four years ago,” he told the Thomson Reuters Foundation.

Ahead of the annual UN climate conference, UN figures published last Friday showed rich countries were on track to meet a goal of raising $100 billion a year by 2020 to help poor nations go green and cope with climate shifts, analysts said.

That report said total climate finance increased 17 percent between 2013-2014 and 2015-2016, reaching $681 billion in 2016.

The CPI figures feed into the UN assessment, but do not include International Energy Agency estimates of investment in energy efficiency, which is why they are lower, Mr Oliver said.

The CPI report highlighted a jump in investment in electric vehicles around the world. Between 2011 and 2017, that rose 54 percent each year, on average, to reach $43 billion in 2017.

Policies to promote sustainable transport are propelling investment, and it will likely continue rising, Mr Oliver said.

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