Paris Agreement Ushered In New Era of Climate Finance, DOE Official Says

Abby L. Harvey
GHG Daily
1/14/2016

The significant financial commitments made during the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) held in Paris late last year, as well as those included within the global climate agreement finalized at the meeting, represent a noteworthy step forward for climate finance, Leonardo Martinez-Diaz, deputy assistant secretary for energy and environment of the U.S. Treasury Department, said this week at an event hosted by the Center for American Progress.

Throughout negotiations at COP21, the ambition of the agreement was a key negotiating point. Several developing countries pushed for a deal with a stated goal of limiting global temperature rise to 1.5 degrees Celsius. Prior to the negotiations, the generally agreed-upon target had been 2 degrees. The final agreement negotiated a compromise, setting the goal to limit global temperature rise to “well below” 2 degrees with an aim at limiting it to 1.5.

That increased ambition pushed the rest of the negotiations, Martinez-Diaz said. “The finance targets and the finance ambition we had had to be consistent with that vision. When you do that, what happens is that it becomes clear that a lot of finance will be required, far more than is currently flowing and far more than the public sector can provide alone, so it became very clear to us that in order to have high ambition in finance, you have to recognize the role of the private sector.”

The inclusion of the private sector at the COP was noteworthy, with several big names, including Bill Gates of Microsoft, Jeff Bezos of Amazon, Richard Branson of Virgin Group, Tom Steyer of NextGen Climate, Meg Whitman of Hewlett-Packard, and Mark Zuckerberg and Priscilla Chan of Facebook and the Primary School, respectively, pledging to fund clean energy technology innovation through the newly created Breakthrough Energy Coalition.

“More and more the business sector really, really wants to join this multi-stakeholder platform kind of thing, not because they are [required], but it’s because of the business bottom line. They see more and more business opportunity,” Naoko Ishii, chairperson and CEO of the Global Environment Facility, said during the CAP event.

While the public and private sectors have stepped up to support clean energy, that means little without the policy framework to back up those investments, Martinez-Diaz said. “The technologies may be there, the business interest may be there, but if the regulatory framework for these long-term transactions is not in place the private sector will not commit,” he said.