 Okay, welcome back everyone over here to good lunch We're going to now have the third keynote and the closing session of this conference is very exciting conference We heard lots of great presentations and discussion I'm really pleased to To welcome the keynote speaker for this session. I'm Kunal Sen the director be any wider The third keynote the title is climate finance within the UN climate convention can and will it be fixed? We need to have the answer to the other at the end of the session So let me introduce the speaker Sarah Colin brander who is the director of the overseas depth Institute ODI's Climate Assessability Program She's an environmental economist who supported low policy makers across Asia Africa Latin America to develop low-carbon development strategies Before joining ODI Sarah was the head of global programs for the Coalition for Urban Transitions a network of 35 Organizations including ODI that supports national governments as identify and implement the deep structural shifts needed to foster productive Inclusive and sustainable cities She was the lead author of climate evidence see urban opportunity The report that underpinned the infrastructure cities and local action track of the 2019 UN climate summit Sarah's author to wide range of academic papers as well as reports for the global Commission on the economy and climate Intergovernmental panel on climate change the UN environment and the World Bank She's also an associate of the ASRC center of climate change economics and policy and a guest lecture at the University of Oxford University College London and the University of Manchester so we have about 10 days to COP 27 I think and Clearly this particular question that Sarah is going to try and address is absolutely central the discussion will happen in In in the COP 27 very shortly. So Sarah be expecting a clear answer But it's great to have you here and and look forward to your to your presentation over to you Thank you so much Kunal. It's a real pleasure to be here and a great privilege to be at this first conference by the Bank of Finland And you are new wider. I have learned so much from the discussion over the last couple of days You might have heard in The unnecessarily long bio that Kunal just shared not much mention of finance So it's been a very steep learning curve and thank you for that crash course on debt and innovative finance When I sent over the original title to this presentation, I did think it was provocative, but I as a cop 27 has approached I think we need to be a bit more provocative again And I'm rebranding this conversation why cop 27 is going to fail So hopefully that's an answer to will the climate finance system be fixed So let me start off by talking to by explaining that I recognize that today I'm going to be talking about what is in your terms an incredibly small amount of money a hundred billion dollars I Know that is obviously a huge amount for some of the climate vulnerable nations or for individual countries in terms of their debt but in the global scheme of the amount of Finance that we need to raise and stare to have a low carbon and climate resilient world. It's obviously a drop in the ocean Where we currently stand is that in the Paris Agreement on climate change from 2015 There is a little clause tucked away article 2.1c which was negotiated maybe three hours before the end of the Paris Agreement So unlike most of the Paris Agreement, it doesn't have a huge amount of thought behind it And we don't really know what it looks like to operationalize it and That clause of the Paris Agreement article 2.1c pledges that all finance flows must increasingly be Consistent with low carbon and climate resilient development pathways So that big circle there and this is not to scale that big circle there represents the aspiration in practice Worldwide domestically and internationally the most authoritative source on the topic estimates There was about six hundred thirty two billion dollars a year currently spent very clearly on on reducing emissions or on adapting to climate change The hundred billion goal that was promised is a small part of that but a significant part of that for reasons I'll go into in a moment and Of course, I think most of you will know that we missed the hundred billion a year target in 2020 We missed the hundred billion year target in 2021 and I assure you we are going to miss it again in 2022 So I am speaking very narrowly about that small amount and why does that small amount matter so much? There's There's three main reasons at the hundred billion a year matters The first one is it is a very important symbol of which countries are historically responsible for climate change and therefore their Responsibility that they have to support other countries with the transition It is about relations It is part of a broad effort to demonstrate international solidarity and cooperation on climate change and often conversations about finance are very critical to cross-border cooperation and Of course, it's instrumental and that's been a big focus of the conversation of the last 18 months a very small amount of concessional finance plays a really cataclytic role in the provision of public goods In the creation of new low-carbon and climate resilient markets such as insurance or renewable energy And that instrumental aspect matters much more for some countries these developed countries small nations like the small island developing states and so on The symbolic and relational aspects are much more important when you're talking about a China and India of Brazil and so on Who see themselves as being deprived of development opportunities by the choices made by high-income countries in the past? So I just want to take you to the exact language in the Copenhagen Accord where the hundred billion goal was agreed So the hundred billion dollar goal was set in 2009 and there's two things that I want to articulate about about this So the first one is and we have a lot of we've had a lot of talk over the last couple of days about Contracts for green bonds and how they're not reliable and contracts for debt restructuring in the importance of detailed Language and and how little investors often know about what they're buying in its conditions And I think it's this is the entire text around the hundred billion I think you'll agree that the terms and conditions are not very detailed and explicit And that has left a problem for the next 11 years to 2020 about how you measure report claim attribute that hundred billion dollar goal It's also very striking because the Overtons window is shifted dramatically in that period the so-called political sense of what this hundred billion dollar goal might involve When this was crafted there was a very strong sense that most of this would be private finance and most of it would be loans and Now for those of you who follow the climate finance community says very strong pressure for grant-based finance Exclusively up to this hundred billion dollar goal And we've had a bit of a discussion about the role that different financing instruments play in in driving change The other thing I wanted to share about this is I thought you might be interested in the politics of how we landed on a hundred billion Which is quite clearly a figure pulled out of the wind with no connection to any reality anywhere The US basically showed up and said they were willing to provide 30 to 40 billion dollars and India China Brazil and South Africa showed up and said we will maybe accept 300 to 400 billion, but don't count on it And that was the conversation between 2005 and 2008 Not very constructive. I've had that conversation in three seconds and it basically stayed like that for four years The the key situation that broke this forward was actually that a developed country broke ranks and specifically Gordon Brown from the UK broke ranks It was just after the first wave of the financial crisis when he personally had a huge amount of credibility in the international system And he stepped forward and said I can come up with a compromise number and the compromise number was based on two things First it obviously had to be between the 30 to 40 billion proposed by the US and the 300 to 400 proposed by the basic countries Though Gordon Brown strongly preferred it was closer to the US figure as it is And the second factor was that they basically did some back of the envelope calculations in the Treasury about what the UK could plausibly see itself providing going forward and That led him to put forward this number of a hundred billion and at the time No one involved in the negotiations thought this was not possible. They thought we would hit a hundred billion comfortably by 2016 and then thereafter that would hugely facilitate international cooperation and solidarity because of this gesture of good trust and in fact, of course Last year's Glasgow climate climate discussions and this year's conversations in sham have in fact been poisoned by the very significant shortfall Not least since the 80 billion is as reported by developed countries often with some very dubious counting, especially by Japan But to reach even the 79 80 billion dollar figure So that's some of the context for the hundred billion goal So this is what these are the key moments in the climate accords over the last 11 years since that was negotiated in terms of climate finance So Copenhagen is when the hundred billion dollar goal was agreed was reaffirmed in Paris alongside some confirmation of the financial mechanisms of the UN climate convention in In Katowice Coincidentally a climate conversation held at the same time as a coal trade show in Poland. So that was fun The decision was made there that the 100 billion a year by 2020 goal would apply between 2020 and 2025 and Also, there was a decision made that in 2025 a new goal would kick in which would be negotiated from COP26 held in Glasgow up through to COP 29 Which is Australia is currently the only country that has put its name forward to to host that We have a strong run of climate villains by the way going forward We have Egypt this year the UAE next year and Australia the year after that so Again why COP 27 is going to fail but I think I think The important thing is that developed countries and particularly the US think about the climate finance Conversation happening specifically against this 10-year backdrop and the the perceived triumph in Copenhagen of coming up with a figure that north and south agreed on and What I actually want to do is take you back to the place We were in 1997 with a Kyoto protocol because there there's a much longer term politics around the climate of course It's largely been written off by by the West And by high-income countries and that has profoundly shaped the very very bitter place We are in in the climate finance negotiations today So the Kyoto protocol and the UN climate convention, which was developed five years earlier 1992 Proposed three categories of countries Firstly there were annex one countries annex one countries comprises only then OECD members European Commission members and so-called economies in transition obviously Eastern Europe Central Asia former USSR nations Next to comprise those countries under the climate accords were expected to reduce emissions And they were expected to reduce emissions in quite a top-down way You know X country had a responsibility to cut emissions by Y amount and and so on There was a subset of those countries annex two countries which comprised the OECD and European Commission members as they were then Those countries had additional responsibilities. They were seen as both high emitters like the economies in transition But also with an ability to pay and to support developing countries with that transition and So they had financial and technological and capacity responsibilities as well under the climate accords and Then there was any everyone else non annexed to non annex one, sorry and So you walked out of 1997 with a bunch of countries that had promised to cut emissions and a bunch of countries that had no Responsibility within the climate accords to cut emissions and that was immediately problematic Because maybe in 1992 you did have that distinction between annex one and the rest But it was already obvious that there would be a couple of countries It would be different that there was an emerging economies coming up and by 1997 with the rapid growth of China it was already becoming very stark And so you already started to see annex two countries raising an eyebrow about why they had emission reduction responsibilities and financial responsibilities in China didn't and that becomes a stumbling block for the next 15 years of climate negotiations So fast forward to 2009, which was another failed cop just like the one in two weeks Let's have a look at why developed countries are frustrated Here we have a bunch of the bigger annex two countries Annex one countries as well Russia is annex one and What you'll see is that these are all countries that have promised to cut emissions by maybe 20 to 25 percent varying by the individual country Relative to 1990 levels and you'll see that we have not done a very good job Quite frankly The US is still above emissions levels where it was in 1990 as is Australia Canada Japan Russia saw a sharp shock but induced by economic conditions not by policy And the European Union has certainly started to show emission reductions And should be commended for that But they are perhaps not of the scale that one would believe if you heard a lot of the EU Messaging around their relative climate leadership and that's partially because that is slightly concealed by the inclusion of the of the Economies in transition who only later came to these obligations, but it's certainly not a very very stark start production So developing countries show up at Copenhagen and under Paris and they're showing up in Egypt Mad by frankly and I and I see why For those of you who can't pick my accent. I know most people are here in their second language I'm Australian and we have been a real villain In the whole process. There's at least one Canadian in the room And I think an American as well and you are hanging out right with me So just we'll come to this in more detail in a moment A Dutchman in Canada On the other hand why are developed countries concerned and why are they showing up in Copenhagen and in Paris Expecting other responsibilities And it's mostly a story of China a little bit of India But mostly a story of China and you'll see that China's emissions have just soared in the last Particularly in the last 20 years And that's why you have that situation combined with broader geopolitics of particularly the US Congress and Senate being unable to pass Meaningful climate legislation unless the international system requires that China is also a part of the deal and why you have so much in transigence Again, particularly but not exclusively in the US about the idea of climate finance transfers Given that China does not have that obligation and has become an economic powerhouse and consequently a source of significant carbon emissions I think personally that the most valuable way to look at this is to look at historical emissions And I think that for the two interrelated reasons The first is that carbon dioxide emissions produced over the last 100 years remain in the atmosphere and continue to have a warming effect Long after the year in which they're produced And so we need to look at how much countries have produced over time to fully understand their impact on current rises in temperature So that's your scientific reason The second is your economic and social reason, which is that the construction of infrastructure Requires entails embedded emissions. There are emissions involved in the construction of buildings of roads and so on So quite apart from the emissions implied by the ongoing operating of say cars and power plants There is a need in lower and lower middle income countries in particular as you try as they try to provide shelter and infrastructure for their population To have a certain quantity of emissions produced in that process And so there's there's a there's a there's an equity reason as well to think about emissions in the long term because countries that have A long history of emissions have had a lot of time and a lot of atmospheric space to construct that infrastructure stock And so when we think about historical emissions, I think this figure is really helpful, especially when we factor it with population So the one that stands out the three that stand out here are the us the eu and china very obviously This is historical emissions since the industrial era The us you'll see up there accounts for 25 percent of historical emissions since the industrial era For context the us accounts for four percent of the global population So this is primarily a story about Americans and of course not all Americans It's a highly unequal society, but a relatively small proportion of Americans Gobbling up the carbon budget The eu is almost as bad. It's a slightly larger share of emissions of population Forgive me and a slightly smaller share of emissions But it is certainly a share of the global carbon budget that is consumed is definitely vastly larger than a share of global population And there is no doubt that china is is very much present there and we can see why the us Has a bugbear about china in the global climate accords but China is 12.7 percent Of historical anthropogenic emissions and it's 17 percent of the world's population today So if we were to assign the remaining carbon budget on the basis of population We would have to say that china is entitled to more atmospheric space than it has used so far Obviously, there are other countries that may need it more urgently But I think it is very clear why some countries are held responsible for climate change when you factor in historical emissions and population And that is the context against which climate finance is so symbolically important Even if it is a relatively small amount of money So going on from the bigger picture of the hundred billion goal. I want to take a couple of minutes to talk about the practical realities of what climate finance looks like There's a couple of people in the room. I know who have actually been involved in managing climate finance in the past So really looking forward to your comments and questions afterwards But the main feature of climate finance architecture is that it has learned absolutely nothing from decades of development cooperation And we collectively apologize for our gross ineptness in handling the funds It looks fairly straightforward. You have developed countries responsible for providing a hundred billion And they disperse it through broadly four channels bilateral EU as a regional major regional force and it is a very very generous provider of climate finance The mdb is in the multilateral climate funds so far so good, but let's unpack it a bit further And of course what you've got is you've got 30 30 odd countries that individually have Any number of individual windows avenues for funding themselves very very terms and conditions giz is the absolute worst You have again the EU you have the world bank and eight regional multilateral development banks And you have at least 20 multilateral climate funds of various types Although the three that really matter are the the jeff the sif and the gcf at the bottom there And so let's say that you're Samoa or Mozambique And you are facing horrific cyclones and salination of your drinking water and rising sea levels And what you want is support for a real really coherent plan to say climate proof your agriculture Or your Bangladesh or india or south africa and you're looking for A holistic approach to decarbonize your power system. What you're in fact faced with is this All of whom profess to talk to each other but very rarely align as very very limited for example coordinated donor reporting Nothing on the scale of what we see from for example the paris club in terms of coordination of a response So again developing countries are extremely frustrated with this system So I want to i'm just going to follow up on something that my colleague Shakira presented yesterday Which is just to underscore why the south africa just energy transition partnership announced at cop26 was seen as such a breakthrough Because you know the promise of 8.5 billion by a handful of g7 countries to south africa might not seem like that bigger deal in the scheme of things But the reason it's such a big deal is is twofold Firstly The deal does a very exceptional job of aligning national development priorities south africa's industry is collapsing in the absence of a reliable affordable power system Uh It's also going to lose its competitiveness due to the extreme coal in carbon intensity of its power system as for example The eu and now the us think about introducing carbon border adjustment mechanisms So south africa urgently to create jobs to ameliorate poverty to provide services Needs a way to change its energy system and it needs to do so managing its coal miners It's degraded environmental areas decommissioning its coal plants On the global side, this is the first time you've had a number of bilateral donors come together with relatively flexible funding Responding to south africa's proposed investment plan in a way that tackles multiple points in the energy transition at once So that alignment of international and development in a very much country led effort is seen as potentially a huge breakthrough But at this point it's just a political declaration and a contentious investment plan So we're hanging a lot of hope on something reasonably small I'm going to skip those because uh Shakira covered them and i'm happy to share more of people interested So I've got two things left to cover today One is why we fell short on the hundred billion or where we fell short on the hundred billion And one the second is what is going to follow the hundred billion beyond possibly additional just energy transition partnerships Like the one in south africa and and keep your eyes peeled for one being announced with vietnam at cop 27 So we basically as you saw before the hundred billion goal is a collective goal All developed countries are collectively held to account for delivering it or not delivering it And that obviously creates a horrific free riders Effect whereby some countries have stepped up magnificently and some have not and yet all have been Regarded as falling short collectively And so a couple of years ago in response to that challenge ODI published a paper which for the first time publicly I think a number of countries behind the scenes have done their own analysis of what their fair share might look like But we published the first public Assessment of how much each country should be providing of that hundred billion dollar goal And we put forward three metrics None of them are perfect. I'll be very upfront about that, but they're all relevant to the conversation The first one is share of GDP out of the out of the countries that are responsible for climate finance Uh indicating that so apologies that should be ability to pay. It's got absolutely no correlation to willingness to pay The second one cumulative emissions and I've already outlined why we think that's important And that speaks to historical responsibility And we added in population Just because one one measure of our equity that is often used in a site in measuring the carbon budget and other things Is assuming that every person living currently has to Gets to receive an equal amount of the remaining carbon budget and we said well, let's say the same thing for climate finance Let's say once you've Graduated as a developed country all citizens in that category have an equal responsibility So all of them up for debate and you can use any one of those metrics But we put an equal weighting on the three of them And here is your ranking of the 23 countries Uh, so I think the first thing to say is that most Scandinavian countries did really well Unfortunately, not so one so well the one we are in but a big credit to Sweden, Norway Denmark, uh, and then and then a little bit lower down as Finland Iceland did worse again if that's any comfort Uh, but the the key point here I think Is that you've got sort of six northern european five northern european and and japan Nations that really showed up to the hundred billion with with style and with generosity And then you've got a number of countries that come reasonably close And and the reason i'm trying to be quite generous to the the yellow countries here Is that our estimates on the amount of climate finance provided are conservative There is appalling data appalling data on climate finance provision So what we've used here in terms of the the billions that have been provided Uh, which in 2020 Is based on climate finance reported to the OECD DAC And of course a number of countries firstly Provided funding through the multilateral development banks who then leveraged it and the outflows of climate finance that you could attribute back Were larger, but we haven't yet done that that step in our analysis And secondly, we haven't counted private finance mobilized because the latest data is 2018 and because Again, particularly japan very dubious reporting, but those are both developments. We hope to do next year But it does mean that the countries in yellow If they went through a lot of the multilateral institutions with their climate finance If they were very effective in leveraging private finance, they might make it into their fair share But if you're orange or red you almost certainly did not And what the the thing that I want you to focus on here the share is very important Of course, but we all know that you know the greases the portugals Are the luxemburgs and not the ones that are going to break the bank or otherwise This is overwhelmingly a story about the us according to our calculations The us which accounts for over 50 percent of the emissions of developed countries very close to 50 percent of the GDP of the developed countries and about 30 percent of the population You average those should be providing about 43 and a half billion dollars out of the hundred billion a year It did not I provided 2.3 billion So five percent of its fair share You would not necessarily know this from the media coverage in the lead up to cop Where uh, there was a lot of coverage about biden's bold new pledge Where by 2025 america would be providing 11 billion which brings them up to 26 percent of their fair share And is therefore not at all worth all the hype The 11.6 billion number was chosen because the second biggest commitment is japan at 11.5 billion Japan's economy is a quarter the size of the us's so The us is about being the biggest but not at all about being the fairest and I think no one is surprised by that The other the other few that are really notable to mention are australia in canada Both of which fell short by about 2 to 3 billion a very substantial share when you consider that the shortfall Was 20 billion Also worth noting that all three of those economies are highly carbon intensive The us is the biggest producer of oil and gas in the world Which explains why the last cop was a coal cop and not an oil and gas cop And then from the eu you also of italy and spain falling significantly short And I think there's an interesting conversation to be had there about how the treatment of the eu collectively in these figures because uh, the eu is the eu negotiators that we work with on this topic Are not interested in whether italy and spain for short They want to know eu totals and how the eu compares with the us And so you have a very clear willingness from some countries to subsidize others so that the eu collectively reaches what it perceives to be its fair share And that is a very pretty version of this really hammering home that the us is is evil on climate uh, so As of 2020 the us provided less climate finance than any of those four countries But that is a a quick comparison of its economic size relative to those four four nations So some really are very Very shocking figures there The other thing that we put forward was we wanted to look at which additional countries should be providing climate finance And the reason for this is that the list of countries that should be providing climate finance Has not formally been updated in the climate accords We basically I talked before about this list of annex one annex two and non annex one countries We have no updates on those figures What you have seen instead is that from copenhagen The climate accords stopped using the language of annexes and they start talking about the language of developed versus developing countries with their respective responsibilities But it's not defined which countries are developed and which countries are developing. There's no clear list like there is for the annexes And so what that has meant is that a number of countries Particularly south korea and eastern european countries have nominated themselves as developed They have stepped up on climate finance and technology transfer and they have taken on bolder emission reduction targets and a number of countries That arguably should have not chosen to do so and we wanted to lay this quite bare And so what we what we did we basically used a metric the same two metrics I've talked about cumulative emissions and per capita gross national income as proxies of historical Responsibility and ability to pay and rather than set a hard limit We just benchmarked against the countries that are required under the climate accords to pay climate finance And I find it really interesting because seven countries show up as very clear candidates for doing so Singapore Qatar and israel to my mind are just no-brainers They all have incomes and emissions per person higher than at least five other annex so-called annex two countries And then perhaps you can also argue that Brunei Kuwait south korea and the UAE should also be a part of that list Not quite as wealthy but equally carbon intensive And in this row across the bottom, you've got lots of small island states oil exporters and former USSR countries, which for various reasons location colonial history Relatively low cost of energy at home have all got very high emissions, but relatively low ability to pay And so there's a story, you know, there's a real story there about what it means equitably to both the take on responsibility for emission reductions and to provide climate finance The countries in blue by the way are ones that are already providing climate finance either bilaterally through the multi-lateral climate funds Or through the european their contributions to the european union budget They're often very small amounts of climate finance Qatar provided five hundred thousand dollars last year to the adaptation fund Which is not its fair share, but it still was the first non annex two country to provide finance that fund so very welcome I'm over time Kunal. Can I go through one or two more things? So I just wanted to mainly I wanted to talk about two things that I think are coming next So the first is ODI is in the very privileged position of supporting two separate blocks in negotiations about the new collective quantified goal Which will replace the hundred billion dollar target from 2025 some of my colleagues support Support the alliance of small island states in the negotiations and my team of the privilege of supporting germany and therefore the EU in the negotiations And the main aspiration in both of those two groups is to have a goal that has much more potential for accountability and transparency than the hundred billion dollar currently has hundred billion dollar goal currently has But different groups advocating for lots of different things The main point that I wanted to make which picks up on again a lot of the conversations we had yesterday Is about this fundamental tension between financing adaptation and financing mitigation Adaptation is mostly a story of local public goods and serving the poorest who are also the most vulnerable Are in for the most part is obviously also a factor of exposure to risks You can be an upper middle income country But if you're a SIDS there's a chance you're getting a pretty severe cyclone every few years But mostly poverty corresponds to vulnerability But then with mitigation that's a different story Mitigation is an arena where grants are not necessarily the most effective way To drive the changes in the real economy that we need to see for emission reductions And I think there's a need for much more creative use of a wide range of instruments so that what remains relatively Small amounts of concessional finance can be used to drive that change And so there's a role for concessional loans Mediated by the consideration of the high indebtedness that we've talked about so much of the last day and a half There's a role to think about guarantees and a role to think about equity and so on so that we can really drive those systemic changes And you don't hear much of that from civil society At the moment around the COP you basically hear that we need and and also for that matter from most of the G77 There it's a story about grants And I think there's a a nuanced narrative that needs to be landed there about having reporting on climate finance That reflects the true fiscal value from the countries providing it But then recognizing that that money should be used creatively to maximize the real world impact at least on the mitigation side The second thing I wanted to do just because I didn't want to only have men in my presentation Is I wanted to talk about a very briefly about a new initiative that I think some of you may be already aware of the Bridgetown initiative And the Bridgetown initiative is a relatively new movement that really kicked off in july at a meeting in Bridgetown in Barbados Are hosted by Mia Mia Mothley, which is basically Looking at the finances that her country faced as an upper middle income country But also one in high high debt distress and very high climate vulnerability And looking at the impossibility of a robust fiscal system under those conditions And thinking through some of the reforms that had to happen to the international financial architecture To adjust to a post pandemic climate changed world And she co-hosted it with Amina Muhammad from the UN the UN deputy secretary general And there's been a you you might have seen some coverage of it. I know many of you at the annual IMF World Bank meetings Uh, so you might have seen some coverage there But there's basically a push to think through what are a the immediate reforms to the MDBs and the IMF that can Provide emergency relief to countries and I think a lot of you are a part of those conversations Even if it's not always done with the kind of hat of the Bridgetown initiative The interesting part about the Bridgetown initiative is it's trying to have a conversation over three or three to five years Which really brings your community and my community together much more systematically To think about how a three degree world is going to impact on the financial system and the types of support we have Very early days a lot of sort of very preliminary conversations about for example the IMF sustainability and resilience trust Or the role of the MDB capital adequacy frameworks And how they can be adjusted But I think a really exciting place for us to bring the collective firepower in this room over the next little while And this will start to come up in the new in the climate finance arena much more strongly Because in the end a hundred billion is really nothing and and this is the space where the conversations about climate smart development are going to have to happen Thank you for letting me go over time And I look forward to your questions Thank you Sarah. I was really fascinating lecture I thought there were three key takeaways from my point of view and there must be for others two other takeaways The first is the take away the politics of the hundred billion that it service fascinating really how the number was arrived at The second takeaway is the fact that there's such an unequal distribution of who's going to be to climate finance Especially the low share of the us in an actual competitive It's fair share that was quite striking And I think that's the number that you that you have in that your work should really be out in the in the In the media much more clearly, especially if you go to corporate a seven And the third takeaway is the fragmented nature of climate finance exactly as you've seen with development cooperation in the in the past Or maybe even in the in currently so that's also what I'm thinking about what's striking to me So I think let's have some time. We have actually bought 20 25 minutes for q&a Let's have probably two questions And at one go and then is that okay? Yeah, and then we can see if we can have more so Go ahead. I mean who's going to provide the first couple of questions Are you on first? Yeah But no, well, I think I saw your and go up first. Yeah go ahead But happy to try to get us started. Thank you. Thank you so much. This is uh, I Hate the fact that I'm afraid that I agree with you on cop that this is not not not working the the two questions I I have are are on the What the first is on that fragmentation for me there's also and I I really like that That the way you you presented that but At the same time, I think like when this was announced I This was always clear to me or what do you now see and I'm not not defending my colleagues sitting in in in in In canadian what used to be cedar But but but but but what they need to do is integrate that new commitment into current programming It would have been so maybe environment canada could play a bigger role And I think they do but that would be even worse for the fragmentation I think we we we we know we know that so so I don't actually see an alternative to that and and in a way is like Like we I I never to be honest never quite understood how you can have that global climate Independent of the ODA commitment that had to be connected and now we see how that happens and and part of that It become not traceable anymore because we can't you can't actually it's so hard to figure out what the new commitments commitments are so so Climate has to be part of development I think that's the only thing I think I'm but it needs to be Climate needs to be integrated in development. Anyway, if you can comment on that the second one is 100% agree that that that the symbolic value of having This if it has to have any value, then it needs to be some form of a grant, right? And you say the hundred billion should be primary grant and should be primarily ldc adaptation Right, that'd be very clear at the same time that that wouldn't that then undermine the need to leverage the other what is the total numbers like 90, you know, like like Multiple times more than that, right? And I still say like the idea that that that money would need to leverage private money But but for that you need to have some form of blended blended finance I'm not looking at the specificities of how you define that, right? So those are like you perhaps comment a little bit more on on why you you apart from the symbolic value How do you think that that the emphasis on grants how that that works in that broader context? Thank you. Great presentation. Thanks. Thanks, Aryan. More questions? Anthony and then I'll meet later. I'll come back to you later. I just got done to add one more level of fragmentation Because you described the 15 players in a way I will take it one step further and say below that we have the actual players So when it comes to who is investing Who is selecting projects? There is a huge fragmentation problem and overlapping a duplication for example Standards due diligence Probability or default you can name it a whole list of things that people keep repeating one after the other So I would say that you know for practical reasons this level of fragmentation needs to be introduced in the debate because it's very important So I'm going to take those two questions Thank you both Yeah, really good questions, and I see that the concerns about fragmentation have struck a chord very strongly so I agree with you Aryan on the inevitability of the fragmentation if you will I think the Not at all because there's an economic or logic to it and from the perspectives of developing countries a political logic But you can see the political logic at home You know for example, canada has a feminist international policy And so it's going to have a series of grounds and loans based on gender and climate Whereas the uk is interested in green finance and greening trade and so there's always going to be this domestic imperative there I think what I would highlight is that there are some really good success stories here Within that fragmented architecture and a few real car crashes So the the car crash is the green climate fund And it was designed that way the green climate fund is a financial mechanism of the un climate convention They had a choice at its inception about whether it would be Programmatic finance or project-based finance and they opted for project-based finance and so you Have ended up with a situation that has very high Transaction costs for various reasons and and not a huge amount of strategic alignment with country's development goals Often the vast majority of funding going through another layer of fragmentation Antony often dispersed to the mdbs to the un agencies and and so on But the success stories notably would include the gcf's counterpart the climate investment funds That was set up in parallel because there were concerns that there wouldn't be agreement on a un financial mechanism under the climate convention So it was set up by the eight multilateral development banks working together And they really have some wonderful stories about driving whole system change earlier. So supporting Dfis and commercial banks in turkey to scale energy efficiency in small-scale renewable products They completely transformed over five years built up this very very deep market of Of lease systems loan systems sms very active in that space And the south africa just energy transition partnership promises to do the same, you know That would be for the uk share of that is supposed to be about 1.5 billion I think that's several years as a big share of the next few years of climate finance for the uk And it implies that it's doing it in a much more systematic manner going forward if you get that kind of deal with three Or four more emerging economies Uh, then then you have started to see a real shift in the architecture Uh, I the one part I would push back on however, um arian is your is your point about Aligning climate and development personally my instinct is is absolutely with you. I think we should be thinking about low carbon and climate resilient development But uh, I have some very You can say either rich or frustrating Conversations with with my own colleagues at odi who who basically see that there's trade-offs between one or the other They say you can either have economic growth or you can act on climate You can either have industry or you can be low carbon. This is a crude characterization, of course But I think that um, there has there has certainly in the early days of climate finance To some extent you couldn't have aligned the two because there was too much risk that From developing countries or traditional development actors It might have been seen as climate options happening at the expense of development It had to be seen as new and additional For a while I think that narrative has moved on and I think that narrative has moved on partially because the economics has changed Solar and wind are wildly competitive now. Uh, and it makes sense for most countries. And so that that has changed your I hope that addresses your points as well of harshly antony, which I wholly agree with So the second point with a new collective quantified goal So the consensus with the hundred billion dollar target and the new collective quantified goal Is that there should be a balance of mitigation and adaptation finance And that's actually been written now into the Paris agreement and Katowice and others which it wasn't as you'll have seen in Copenhagen and and my personal recommendation here with no backing from anybody is uh What I was hoping to say was that I think That the volume of money as measured are as as the grant equivalent should be balanced for each one But then the adaptation finance should be dispersed as grants or something very highly concessional Whereas the mitigation finance while we might measure its grant based equivalent Which we do for development assistance and we don't do for climate finance Then that money could be leveraged at scale Uh, and so for comparison just for interest sake when I put up that fair share ranking That is the that is the value reported by countries to the OECD But doesn't actually reflect grant equivalent And so France and japan made it into my top six, but actually both of them provided 80% loans Whereas denmark uk Australia which is right down the bottom. They all provided 100 grants And so the system and the Copenhagen accord permits that But the system of truly capturing the contribution a country makes Is not always accurate and and I think that has just changed in 2020 in the OECD DAC system But it hasn't trickled through yet Uh into into that we haven't got the latest numbers basically which reflect that change But I think you'll see japan and france drop down very dramatically Um, so I saw a question from amir and I was also going to ask a question to our sister more from the audience. Let me go ahead Thanks for that presentation. So I'm here. Let me do it. So I seniority of london So given that, you know, you've with your perspectives on the politics of climate finance Um, I was wondering what do you think are the possible risks of Um conditionalities attached to the south of climate financing Based on industrial or strategic interests. For example Danmark providing a grant right for Renewables deployment, but it has to be vest as Wind turbines or the u.s. Providing, you know grants, but for anything that is not a chinese made solar cell So do you see this happening? Do you see is it possible with the current regulatory framework? Yeah Thanks So sarah, my question is the back of the politics of the hundred billion So how do you think that's been affected by this ukraine the current crisis is a big increase in energy prices At one level you could say that there's an increasing need, especially the eu and and the uk Overshift away from from Non-individual energy towards renewable energy importance of having energy energy security Other level the korean crisis also has led to a situation of public finances in many of the u countries going going And the uk taking a turn for the worse along with their shifts in the political Space on countries where your governments coming in who are less Aligned towards the climate change goals. So How does the political hundred billion change? Given what's going on right now in the energy price situation, that's my question. So two questions It's not a small question for now uh, so so Amir, I don't think I've got a strong answer to your question I actually think a number of other people in the room are better placed to speak about that because I think some of the Risks are the same Uh, and we we should be learning a lot more from development than we have about the risks of you know These very nebulous goals, you know poverty and climate smart poverty reduction and climate smart development It really depends on what indicators you choose and so on and there's a lot of scope to fudge To fudge data or choose problematic indicators. I think There is obviously a really important role for the hundred billion, but there is also accountability to taxpayers So there is a need for conditionalities But there is a need to design them in a way that genuinely allows a climate aligned form of development rather than You know the imposition that you have to buy us all the panels even if they're more expensive, you know So we would really welcome sort of thoughts on that immediately or over coffee So I think the ukraine I think actually There have been three things that have really in a one of which is the ukraine crisis That have really thrown into stark relief the kind of paltriness of the oecd country's response To the climate crisis with the hundred billion So The first is the fiscal stimulus package of 2008 to 2011 which absolutely dwarfed climate finance The second is the fiscal response to the pandemic And then the third is the ukraine crisis and that was the last of those there Developed countries were particularly incensed in the case of the us and I know this seems like a real american bashing session But that they're really bad Because you know the us owes 40 billion of climate finance and it took them about two weeks to turn around a 40 billion commitment for ukraine And so and that's one country and you know the other g g 76 are are outraged With a degree of being understandable I think I'm going to answer a slightly different but I think related question I think it is really interesting to see the impact that the ukraine crisis will have on global energy systems going forward So there has been a one of the reasons that this cop is going to fail is that there is a very widespread partially true perception that uh The north has for a long time demanded that developing countries take make sacrifices for climate action Uh, whereas they already achieved a high standard of life and can now slowly decarbonize At a rate that still consumes most of the remaining carbon budget And yet when ukraine got in the face of this threat from the east Germany turned back on its coal fired power plants and and europe scrambled for gas and encouraged senegal and katar In australia to open up new gas fields the the uk issued a hundred new licenses for oil and gas in the north sea uh, the biden administration while launching the fantastic inflation reduction act also opened up a huge amount of public land for for fossil fuel extraction And so there is a a a partially legitimate perception that the west is hypocritical in how important climate is relative to crises that happen at home versus crises that happen in the south And I would try and nuance that in a couple of ways The first thing to say is that I think for most of the For most high-income countries. Sorry for most developed countries And i'm differentiating here because high income includes say the kuwaits Uh, or singapore's that don't have obligations necessarily under under the climate accords Um, so that I think there are some developed countries that are going to see a temporary spike in emissions But mostly they are accelerating decarbonization. So germany is opening its coal plants for two winters again But it is also pouring money into energy efficiency into scaling its renewables and and so on The u.s. Is as terrible as it has been and it is opening up public land The inflation reduction act has 369 billion dollars to build green american industries at home And that will change the landscape of business lobbying and of energy markets within the u.s permanently Um, and there's there's pros and cons to this, you know, it's it's very much we talked yesterday about rising protectionism You know, you've got an eu or us and a china green technology hub Not necessarily standardized issue happening, but it will the u.s. Investment there will permanently shift the u.s Onto a lower carbon path But you've got a number of other countries that have absolutely seen this as an excuse to buckle down on fossil fuels including my own And then some countries that have been good like the uk have See under our recent flurry of prime ministers has Seen this is an opportunity to to issue new oil and gas licenses to to run over climate protesters on the highway Etc etc. Etc a really positive place to be right now 10 out of 10 would recommend The good news is that the international energy agency just published its world economic outlook yesterday I'd really recommend reading the executive summary. It's just a really great glimpse into into pathways ahead of us And for the first time ever they forecast a peak to all kinds of fossil fuels Not as soon as it needs to be for 1.5 degrees But it puts us on a path to 2.5 degrees And it was less than 10 years ago that we were on a path to sort of four plus degrees, which really is kind of a apocalyptic future And and that is very much due to the us inflation reduction act the eu green deal And then the additional scramble incurred by the ukraine crisis So it's a real tragedy that the This acceleration had to happen on the backs of the ukrainians But from a climate perspective in the next few years it has certainly injected a lot of momentum Right, that's really interesting. Thank you so much More questions for the audience marty. Yes Yeah, thank you and and Not really questions to sort of suggestions recommendations I mean While the 100 billion was agreed in 2009 There hasn't been many much of inflation since then Now there is so there it should be sort of Be updated in terms of its real Real value second I suppose not many of you know that they say a climate coalition of finance ministers The okay sarah knows this and there's 79 countries And they are responsible for 66 percent of gdp but global gdp And it includes the u.s But it also includes many african countries south american countries and asian countries And I just have the website of that in front of me and It has These principles which are called Helsinki principles because they were agreed in Helsinki And the fifth principle is mobilized climate finance I mean, I would suggest that you would Sort of Sort of contact them and and say could you share with your members the the information that you provided? and and because that's I mean they are at the end the Persons responsible for Providing the finance And they should be made aware of The applications that they have Thank you marty any final questions. We have about four minutes left anyone else Okay, so um Sarah Last few comments. Yes Thanks martin uh, so I I guess I'll answer the easy easy comment there first if you have the contact details for the sherpa for the coalition of finance ministers I'm super happy to have a chat Shutting me off is the hard part. You could probably guess The second part with the hundred billion. You're a hundred percent right about inflation Uh, I think the first thing I think there's a two-part response neither of which fundamentally addresses the question of inflation But is of interest The first thing is the climate vulnerable countries such as a block of about 53 Nations that have opted into this informal coalition in the climate accords Have proposed that given that developed countries have fallen short on the hundred billion goal for for the first three years That instead they should set themselves a target of 600 billion between 2020 and 2025 And so the expectation is that they make it up in the last few years Hasn't gained any traction yet. I will also talk to the coalition of finance ministers about that Um, but just so you know that that I think is you will by de facto see an increase If that should come through although it still falls short of what they've committed to when you take inflation into account Um, the second point is just for interest there are No official numbers currently being talked about in the space of the new collective quantified goal the one that will kick in from 2025 but there are three or four submissions coming forward from the negotiating blocks or publications coming forward from the Negotiating blocks. I think one of them was published last week and the other two are forthcoming next week And they're both starting to they're all starting to benchmark for next The new collective quantified goal at the one trillion dollar mark There has been no response from any developed nation to that figure But just so you know those are the kind of numbers that are being put on the table at the moment I certainly think that there's going to be a lot more rigged to questions about leverage ratios Grant equivalents concessionality, etc. If that kind of number is floated around And I I just wanted to take one second because we've ended up on a slide that we didn't talk about I opened up about by talking about article 2.1c of the Paris agreement this point about all climate finance All finance flows being aligned with climate goals And two points I wanted to make there the first is that I think there needs to be much more thinking About the role that that hundred billion or all one trillion Plays in helping to shift other flows And I wanted to put that particularly on the table to this audience because you are starting to see some really interesting work coming out from finance ministries and from central banks all over the world about climate proofing and climate aligning your Your spending and investment public spending and investment But also your financial regulation And I think the bank of Finland is is one of the leaders on thinking about that alongside the the dutch and British and french central banks But we do a lot of work for example with the reserve bank of india And you know you've really got a huge amount of scope if you think about climate risks at this point in development To shift the whole economy to something a bit more resilient and a bit more lower carbon And the second thing that I wanted to say Is that um odi a few years ago and I can be very proud of this because I had absolutely nothing to do with it Put forward this model basically on how you can operationalize article 2.1c of the climate of the of the Paris agreement And it basically picks out these four categories where you Need to think through what your set of instruments looks like from the perspective of a range of government ministries And over the last few years we've worked with 10 countries overwhelmingly sids, but also germany indonesia columbia To think just to start setting a benchmark for the first global stock take on how climate consistent countries currently are And it's fascinating because you know if you work with the switzerland It's a story about how you finance a huge proportion of the world's development From the alps and if you work with a rwanda, it's basically a story about how you very slightly tweak agriculture spending But just to say we would be really delighted to work with some of you in finland and look at what that looks like Over the next couple of years because I think this is something that's coming towards us like a truck Over the next little while and we have all the people in the room that we would need to do this Really well, so I will call you once I've spoken to the coalition of finance ministers Thank you So sir, thank you so much actually at the end. I think we can be a little bit more positive after After have some negative views about the way the hundred billion was going because you don't think the example of the south african example Which was a great example of how countries Which are going through a very very challenging just transition can be where different partners can get together thinking through I thought it was a really nice example I think the us the inflation reduction act has the promise that you mentioned it has in that in the respect of Climate financing was also very useful and of course the eu green climate funds and so on So there are some positives. So we maybe you should be a little bit more of this with coft 27 than Otherwise, so we're going to come to the end of this conference