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Finding equity in climate mitigation finance – ScienceDaily


Equity considerations in channeling global financial flows for regional climate mitigation investments are critical. New research is helping to inform the ongoing negotiations at COP27, while keeping equity at the forefront.

It is clear that we need to invest in climate mitigation now, not later. The Sixth Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC) has shown that mitigation investment pathways can achieve global climate goals in a cost-effective manner, but the question of who should finance these investments has been a constant debate at recent COPs. .

In a new IIASA-led study published in Science, an international team of researchers investigated how global investment can be divided among the countries of the world. The team applied a systems approach with different considerations of equity and fairness and assessed “fair” financial flows between regions.

The study builds on the new principles of climate justice and focuses on mitigation investments that need to be deployed in the near term to 2030.

“We believe that the US$100 billion pledged for mitigation and adaptation from developed to developing countries is insufficient to leverage the scale of funding needed to fairly achieve the long-term temperature target. Even under the most favorable equity assumptions for rich countries, global financial flows to developing countries need to be increased to US$250-550 billion per year,” says IIASA Energy, Climate and Environment Program Director Keivan Riahi, one of co-authors of the study.

“Previous work has focused on equitable global carbon budget allocation schemes, but few focus on equity considerations in financing mitigation investments,” says Shonali Pachauri, head of IIASA’s Transformative Institutional and Social Solutions Research Group and lead author of the study.

Investing in mitigation actions in low-income regions is not only important from an ethical perspective, but as the authors explain, it can be a productive use of capital.

“We are at an acceleration stage of a number of mitigation technologies. If we want to deploy them at the speed needed to meet our climate goals, we need to make sure that they also happen in greater numbers in poorer regions of the world,” says Christophe. Bertram, a researcher at the Potsdam Institute for Climate Impact Research and co-author of the study.

The researchers found that flows from North America and Europe to other regions would need to increase substantially from current levels to meet the goals of the Paris Agreement on most equity grounds. They estimated that the financial flow required under selected equity considerations ranges from US$250 billion to US$1.5 trillion annually.

According to the authors, the new collective quantitative goal is one of the most important points of negotiations at COP27.

“This is an important opportunity for governments to communicate to each other and the private financial sector the magnitude and direction of financial flows needed,” said Setu Peltz, study co-author and research fellow at IIASA’s Transformative Institutional and Social Solutions Research Group.

“Agreement on how to redirect international and domestic finance towards urgent short-term mitigation investments will be critical to the success of the COP27 negotiations. Progress here will send a clear signal to governments, industry and non-governmental actors and will be critical to building the necessary momentum in underfinanced regions,” concludes Pachauri.

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