We’re in a Race.
A race against time and against ourselves. Against the dangerous idea that we can’t do this, that there is no way.
Unlike most races, it won’t have one winner. In this race we all win, or we all lose. Winning it requires a radical, unprecedented level of collaboration, from all corners of our world. From our cities, businesses, regions and investors. From people everywhere.
Together we’re racing for a better world. A zero carbon and resilient world. A healthier, safer, fairer world. A world of wellbeing, abundance and joy, where the air is fresher, our jobs are well-paid and dignified, and our future is clear.
To get there we need to run fast, and get faster. We need more and more people to join the race, and right now. This is not about 2050, it’s about today.
The third of the ‘Regional Finance Forums’ – convened by the United Nations Economic and Social Commission for Latin America and the Caribbean (ECLAC), the incoming Egyptian Presidency of COP27 and the UN Climate Change High-Level Champions for COP26 and COP27 —concluded in Santiago, Chile, on Friday.
The Forum took place from 1-2 September and continued a series of meetings launched in July which focus on implementation and accelerating progress to catalyse forward-looking opportunities – against a backdrop of climate breakdown, COVID-19 and Russia’s invasion of Ukraine.
The theme of the two days focused on financing sectors that helped facilitate the energy transition as well as climate resilience. On day one, COP26 Climate Champion, Nigel Topping, said: “What we’re trying to do here is very difficult. We’re trying to finance the transition of the whole foundation of our economic system in an inclusive and just way. But let’s not assume [the region] is doing the transition slower. Chile has been more ambitious than Japan, and it’s taking advantage of the transition.”
Jose Luis Samaniego, Director of the Sustainable Development and Human Settlements Division, ECLAC, highlighted the importance of encouraging the work between the public and private sectors and creating enabling conditions for the private sector to help us advance in the development of the region. “Encouraging the production of the parts that make up the transition value chain would bring growth and reduce our vulnerability,” he said.
“It is more important than ever to bridge the gap between government leaders and non-state actors, and drive the radical collaboration needed for increasing ambition and delivering on our climate goals,” said COP27 Climate Champion, Mahmoud Mohieldin.
Private finance – and the need to explore different financing mechanisms – is integral to strengthening human capital, creating green jobs, addressing inequalities, and building resilient economies. On day one, delegates discussed pathways to a resilient energy transition centred on energy integration in the region, green hydrogen development, zero emission vehicles (ZEV), and energy access.
One of the challenges, it was noted, is the current elevated cost of energy infrastructure, which is delaying regions’ transitions to net zero. More investment in electric storage and transmission is needed, agreed delegates. Legal certainty and regulatory frameworks are also essential to increase investment, as well as improve interest rates and reduce risk by using innovative financing mechanisms between the public sector, private sector and multilateral banks.
A compendium of projects – from solar arrays to electric tucs tucs – in need of funding was presented on day one. Among the projects discussed were the Andes II Photovoltaic Park, which would have an installed capacity of 180MW and has a financing requirement of US$245 million. Financial institutions were interested in investing in some of the projects of the compendium, but it was clear that most of them were not in an investment phase, so they were not yet bankable. This is something that will be worked on in time for COP27, to ensure more projects are bankable.
Electromobility was also a major focus. LAC countries, it was said, have managed to increase the renewable energy share of their energy matrix, but transport systems are the most difficult to abate. This is because LAC has abundant resources for the energy transition (from lithium to copper; from hydro to solar) but lacks R&D and human capital.
In the region, the retrofit of buses appears as a feasible option for the cities’ transition to ZEV. There are already successful regional experiences involving local technology companies and part producers. The escalation of this solution would be cheaper than buying new ZEVs and aroused much interest among companies, governments and multilateral institutions. Some of the mentioned challenges were charging systems, insurance, certifications, financing and operation models.
An informal meeting was also held to explain the scope and the objective of GFANZ. But it was agreed that using the levers of finance and investment to support the world’s transition to a net zero economy and achieve the goals of the Paris Agreement could not be done without including financial institutions from Latin America and the Caribbean. With that in mind, it was announced that a GFANZ network in Latin America will be launched.
On day two there was a consensus around the need for the region to stop being just exporters of raw materials and move towards developing productive and technological capacities that improve the growth and wellbeing of LAC. Specific projects regarding value creation from copper and lithium were presented. Projects associated with waste recovery and the creation of new circular economy models were also mentioned.
Key actors that work in the Caribbean, from ECLAC and partner centres, presented their challenges and progress to accelerate financing and improve the resilience of the Caribbean. Mainly because of the reality that they face in terms of their amounts of the public debt due to natural disasters. Many countries in the region are in over 60% of debt of GDP, leaving little fiscal space for greening the economic sector, financing energy transition and building adaptation and resilience.
With that in mind, the Climate Resilience Fund (CRF) said it intends to leverage long-term affordable development financing for the Caribbean by moving ahead with sustainable resilience building (energy security, insurance, food and water security) and debt restructuring and liquidity enhancement (bonds, debt and insurance).
The forum shone a spotlight on the need for governments and multilateral institutions to create enabling conditions to promote innovation and investment. Financing adaptation projects and nature-based solutions were also perceived as a challenge, as they are deemed less profitable and attractive to investors.
Next steps, it was agreed, should be to:
The next two Forums will take place in:
Beirut, Lebanon (15 September) – A one-day regional forum on climate finance needs and investment opportunities in Arab States.
Geneva, Switzerland (17 September) – High-Level Roundtable on ‘enhancing sustainable management and financing for the critical raw materials required for low-carbon transitions’
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GFANZ, a practitioner-led, global coalition of financial sector institutions working to accelerate the world’s transition to net-zero greenhouse gas emissions by 2050, has announced the formation of its Africa Network and the creation of an Advisory Board to bolster transition finance opportunities on the continent.
UN Climate Change High-Level Champions for COP26 and COP27, Nigel Topping and Dr. Mahmoud Mohieldin, will attend the 2nd edition of Egypt-International Cooperation Forum (ICF) and the Meeting of African Ministers of Finance, Economy and Environment for COP27 on 7-9 September.
The third of five Regional Finance Forums will take place in Santiago, Chile from 1-2 September with the theme of highlighting critical opportunities for investment in clean technologies.
The 2022 edition of Africa Climate Week commenced on Monday 29 August, and will run until Friday 2 September in Libreville, Gabon.
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