Equity considerations in guiding global financial flows for regional investments in climate change mitigation are of critical importance. A new study helps inform current negotiations at COP27 while keeping equity front and center.
It is clear that we need to invest in climate change mitigation now, not later. The Sixth Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC) has shown that mitigation investment pathways can reach global climate goals in a cost-effective manner, however, who should fund these investments is subject to ongoing debate at COPs Last .
In a new IIASA-led study published in SciencesAn international team of researchers has explored how global investment is divided among the countries of the world. The team applied a systematic approach with different considerations of fairness and equity and estimated “fair” financial flows between regions.
The study builds on emerging principles of climate justice and focuses on mitigation investment needs in the near term to 2030.
“We found that the US$100 billion pledged for mitigation and adaptation from developed to developing countries is insufficient to tap the scale of financing required to fairly achieve the long-term temperature target. Even under the most favorable equity assumptions for rich countries, financial flows must be increased to developing countries to US$250 to US$550 billion annually,” says IIASA Program Director for Energy, Climate and Environment Kewan Riahi, one of the study’s co-authors.
“Previous work has focused on equitable global carbon budget sharing schemes, but few focus on equity considerations in financing mitigation investments,” says Shonali Pachauri, chair of the IIASA’s Changing Institutional and Social Solutions Research Group and lead author of the study.
Investing in mitigation measures in low-income areas is not only important from an ethical standpoint, but, as the authors point out, can be a productive use of capital.
“We are in the process of accelerating a range of mitigation technologies. If we want to deploy them at the speed required for our climate goals, we need to make sure that they also occur at scale in poorer regions of the world,” says Christophe. Bertram, 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 have to increase significantly compared to current levels to meet the goals of the Paris Agreement under most equity considerations. They estimated that the financial inflow required under the selected equity considerations ranged from US$250 billion to US$1.5 trillion annually.
According to the authors, the new quantitative target is one of the most important negotiating points of COP27.
“This is a critical opportunity for governments to signal to each other and to the private financial sector the size and direction of necessary financial flows,” notes Sito Pilz, co-author and researcher with the IIASA Transformative Institutional and Social Solutions research group.
“Agreement on how to redirect international and domestic financing towards urgent mitigation investments in the near term will be critical to the success of negotiations at COP 27. Progress here will be a clear signal to governments, industry and non-state actors, and will be critical to building the necessary momentum in areas where where financing is scarce.