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HomeNewsThe trillion dollar climate finance challenge (and opportunity) — Global Issues

The trillion dollar climate finance challenge (and opportunity) — Global Issues

Investments in renewable energy and sustainable infrastructure are increasing, but from January 2020 to March 2021, globally, more money was spent on fossil fuels, which, when burned, create the harmful gases at the root of climate change.

Women are building barriers in Nepal to prevent the river from overflowing and flooding neighboring villages.

UNDP / Azza Aishath

Women are building barriers in Nepal to prevent the river from overflowing and flooding neighboring villages.

Many countries lack the financial resources to make the transition to clean energy and a sustainable lifestyle that could reverse climate change. The UN says climate finance is the answer because not investing will cost even more in the long run, but also because there are significant opportunities for investors.

What is climate finance?

Broadly speaking, climate finance is about the money that needs to be spent on a whole range of activities that will help slow climate change and help the world meet the goal of limiting global warming to an increase in global warming. 1.5 ° C above pre-industrial levels.

To achieve this goal, the world must reduce its greenhouse gas emissions to virtually zero by 2050; the expression net-zero is also heard a lot in the context of financing climate action (you can read more about it here).

Women in rural Costa Rica are planting trees to fight climate change.

UNDP Costa Rica

Women in rural Costa Rica are planting trees to fight climate change.

Initiatives that must be funded to achieve net zero include those that reduce emissions of harmful gases as well as improving or protecting natural solutions that capture these gases, such as forests and the ocean.

The funding also aims to build the resilience of populations most affected by climate change and help them adapt to changing climatic conditions, measures which in turn will help reduce warming.

Finance exists and there are also solutions to move to what the UN calls a green economy. Renewable energy that provides electricity without producing carbon dioxide or other forms of air pollution is an essential element in fueling sustainable economic growth.

Why is this important?

With increasing global temperatures, changing weather conditions, rising sea levels, increasing droughts and flooding, the world’s most vulnerable populations face ever-increasing risks, to the insecure and are less likely to escape poverty and build a better life.

Floods in Bangladesh destroyed homes in remote villages of Islampur.

UN Women / Mohammad Rakibul Hasan

Floods in Bangladesh destroyed homes in remote villages of Islampur.

In fact, the UN estimates that climate change could push an additional 100 million people into poverty by 2030.

Significant financial resources, judicious investments and a systematic global approach are needed to address these worrying trends.

So how much does it take?

Significant investments are needed and international cooperation is essential. More than a decade ago, developed countries pledged to jointly mobilize $ 100 billion per year by 2020 to support climate action in developing countries.

This may sound like a lot, but compare it to global military spending in 2020 which has been estimated at just under $ 2 trillion or $ 2 trillion or the trillions of dollars spent by developed countries on related relief. to COVID for their citizens.

Solar panels are used in Cambodia to meet the country's energy demand.

UNDP / Manuth Buth

Solar panels are used in Cambodia to meet the country’s energy demand.

According to an expert report prepared at the request of the Secretary-General of the United Nations, the target of 100 billion dollars has not been reached (the latest data available for 2018 is 79 billion dollars), even if the finance climate is on an “upward trajectory”.

So there is still a big gap in finance.

Does it make financial sense?

The real question is whether the world can afford not to invest in climate action.

Communities in all parts of the world are already suffering the financial effects of climate change, from crop losses due to drought to severe infrastructure damage from floods and other extreme weather conditions.

UN Special Envoy for Climate Action and Finance Mark Carney said the huge amount of investment required represents an opportunity and not a risk, arguing that the benefits that flow from such investments exceed considerably the initial costs.

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