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COP29 – Accelerating Climate Finance
COP29 – Accelerating Climate Finance 1024 768 Global Climate Finance Accelerator

COP29 concluded on November 24, 2024. Referred to as the “Finance COP”, its central focus was on adopting a new climate finance target. Read on to explore the global progress made in climate finance.

This COP started strong, with three major advancements in climate finance negotiations:

  • The “Baku Finance Goal” (BFG): A new commitment to channel $1.3 trillion of climate finance to the developing world each year to help address the negative effects of climate change
  • Full operationalization of Article 6: Implementing cross border cooperation to reduce the costs of achieving national GHG emission reduction targets by up to $250 billion per year
  • Full operationalization of the Loss and Damage Fund: Total pledged financial support now exceeds $730 million, with project financing to help the world’s most vulnerable countries respond to loss and damage starting in 2025

Breaking It Down: What Do These Developments Mean?

1. The Baku Finance Goal (BFG):

  • The BFG contains a core target for developed countries to lead on mobilizing at least $300 billion annually for developing countries by 2035. 
    • As background, the previous climate finance pledge, made at COP15, committed to $100 billion annually by 2025. According to an OECD analysis, this goal was achieved for the first time in 2022.
  • Additionally, Multilateral Development Banks (MDBs) announced the estimation of $170 billion climate finance annually by 2030. This includes $120 billion for low- and middle-income countries and $50 billion for high-income countries. In addition, each group has a target of mobilizing $65 billion annually from the private sector.
  • Despite these efforts, gaps remain between the trillion-level goals and billion-level commitments. The COP Presidencies will lead the “Baku to Belém Roadmap to 1.3T” to make progress towards that aim in COP30 next year. Additionally, the Independent High-Level Expert Group on Climate Finance report highlights pathways to bridge these gaps:

 

2. Article 6 Operationalization: 

  • The Paris Agreement’s Article 6 allows countries to collaborate on achieving Nationally Determined Contributions (NDCs) by establishing the framework for an international carbon credit trading marketplace.
    • To recap, Article 6.2 facilitates government-to-government carbon credit trading via Internationally Transferred Mitigation Outcomes (ITMOs), and Article 6.4 establishes an UN-backed carbon-crediting program. COP29 also concluded negotiations on Article 6.8 to facilitate internation cooperation through non-market approaches such as capacity-building and technical support.
    • The UN first approved Article 6.4 on day one of COP29, showing a strong signal to move forward and attract more capital. Trading in carbon credits could reduce the cost of implementing countries’ NDCs by more than half – up to $250 billion by 2030, while enabling the removal of 50% more emissions (about 5 gigatons of CO2 per year by 2030) at no additional cost. 
  • Voluntary carbon markets may align with Article 6 standards, enhancing transparency and credibility while enabling  high-integrity carbon credits to trade under Article 6. This alignment leverages existing voluntary carbon market infrastructure and supports countries and the private sector in transitioning to Article 6 markets.
  • Article 6 is far from perfect at this stage. Negotiations are ongoing, with the deadline to transition Certified Emission Reductions (CERs) from the legacy Clean Development Mechanism (CDM) to Article 6.4 set for 2028. Updates to Nationally Determined Contributions (NDCs) are expected in early 2025.
  • While the details will continue to evolve, the uncertainty impeding action has ended. Article 6 now represents an important and tangible tool for scaling up climate finance in developing countries.

3. The Loss and Damage Fund:

  • The Loss and Damage Fund is a climate finance mechanism designed to assist developing countries that are particularly vulnerable to the adverse effects of climate change.  It addresses losses and damages caused by climate-induced events such as extreme weather and sea-level rise. 
  • Established at COP27, the fund saw $700 million pledged at COP28 and now exceeds $730 million following COP29.
  • COP29 formalized critical operational measures, including the appointment of Ibrahima Cheikh Diong as Executive Director and an agreement between the fund’s board and the World Bank. Financing projects are set to commence in 2025.

What Is Canada’s Role in Climate Finance?

  • Canada announced  the launch of GAIA during COP29: a US$1.48 billion blended finance platform supporting high-impact climate projects in up to 25 emerging markets and developing economies.
  • 70% of the platform will support adaptation projects and 25% will invest in small island developing states and least developed countries.
  • GAIA, co-founded by FinDev Canada, Mitsubishi UFJ Financial Group (MUFG), and the Green Climate Fund in 2023, exemplifies innovative financing. Structured to accelerate the availability and accessibility of long-term loans for climate projects, GAIA aims to demonstrate how a blended finance structure that combines commercial, concessional, and grant capital can catalyze private finance at scale to support projects aligned with the Paris Agreement.
  • In 2021, Canada doubled its international climate finance commitment from $2.65 billion (2015-2021) to $5.3 billion (2021-2026), including 40% grant and 60% unconditional repayable contributions (akin to concessional loans). 

As COP29 concludes, the progress achieved sets a strong foundation for climate finance, although significant gaps remain. The Global Climate Finance Accelerator addresses these challenges by offering innovative and affordable capital solutions through customized collaboration between partners in business, finance, government, and academia to more effectively mobilize resources. 

Learn more about our work in global climate finance by visiting our Ocean Love project site. Ocean Love is pioneering sustainable and equitable growth in the blue economy by investing directly in the untapped carbon sequestration and biodiversity projection potential of local coastal communities in the Caribbean and East Africa.

Hao Tian is an independent advisor on blended finance solutions for the Global Climate Finance Accelerator. She has nearly a decade of experience in finance and sustainability across global banks and the World Bank Group. As a seasoned leader in finance and sustainability, Hao connects the dots between capital markets, VC, and the public sector across developed and developing markets by exploring collaborative pathways design and innovative blended finance solutions. Hao holds a Master of Finance degree and a Graduate Diploma in Social Responsibility and Sustainability from the University of Toronto, and a Bachelor of Economics degree from the Central University of Finance and Economics. She is a Certified Financial Risk Manager and owns IFRS (ISSB) FSA Credential.

Ocean Love
Ocean Love 500 281 Global Climate Finance Accelerator
PROJECT OCEAN LOVE LOCAL BLUE ECONOMY INITIATIVE DEVELOPER FOR COASTAL COMMUNITIES PROJECT OCEAN LOVE Pioneering sustainable and equitable growth in the blue economy by investing directly in the untapped carbon sequestration and biodiversity protection potential of local coastal communities in the Caribbean and East Africa. VISION MISSION Our mission is to create and support carbon and biodiversity credit generation projects that not only mitigate the effects of climate change but also enhance resilience against its physical impacts. WHAT WE DO Pioneering sustainable and equitable growth in the blue economy by investing directly in the untapped carbon sequestration and biodiversity protection potential of local coastal communities in the Caribbean and East Africa. OUR APPROACH Our approach centers on leveraging the natural capital of marine and coastal ecosystems, transforming traditional conservation efforts into proactive, income-generating activities. INVEST IN PROJECT OCEAN LOVE Together we will chart a sustainable course towards a resilient and equitable blue economy. Project Ocean Love is creating the Blue Economy Starter KitTM, a portable toolkit of technologies and methodologies to forecast the impacts of location-specific conservation approaches on carbon sequestration and ecosystem resilience. Included in the BE Starter KitTM is a comprehensive guide to environmental markets including existing protocols for carbon and biodiversity credits with best practices for developers on how to proceed in regions lacking formal frameworks. PROJECT OCEAN LOVE IS IN THE PROCESS OF COMPLETING A PROTOTYPE, WHICH WILL BE PILOTED IN THE BAHAMAS. HOW WE DO IT Replicated for Global Coastal Communities Once demonstrated at the Project Ocean Love’s Conservation Institute, the BE Starter KitTM will be replicated for coastal communities throughout the Caribbean and East Africa, starting with our partner in the Somaliland region of Somalia. PROJECT OCEAN LOVE PLANS TO SUPPORT ITS ACTIVITIES THROUGH THE FOLLOWING REVENUE-GENERATING OPPORTUNITIES: Deep Sea Fishing Deep sea fishing revenues from a resort currently existing on the Conservation Institute proposed site. Green Coffee Exports Roasted Coffee US Distribution Experiential Education Sales of BE Starter KitTM Carbon & Biodiversity Credits Specialty Kenyan Green Coffee beans, ethically sourced and sustainably harvested with cupping scores of 87 and above. Wholesale and Retail online roasted coffee sales and subscription. Student conservation programs at the high school and university level. Sales of BE Starter KitTM to coastal communities funded by Global North climate funds. Carbon and biodiversity credit revenues. WHAT WE NEED OCEAN LOVE PROJECT Purchase of land to host the Conservation Institute facilities and marine ecosystem assessment work Revenue generating land site potential: Deep sea fishing Marina International student conservation projects BE Starter KitTM technology demonstration funding Project Ocean Love operational expenses Salaries (R&D) IT Infrastructure Professional services e.g., legal contracts OUR TEAM NIKITA SHIEL-ROLLE,FOUNDER & CEO - YME BAHAMAS & THE CAT ISLAND CONSERVATION INSTITUTE IS A COMMUNITY BASED ORGANIZATION BUILDING SKILLS FOR THE BLUE ECONOMY AND SUSTAINABLE DEVELOPMENT IN LOCAL COMMUNITIES IN THE CARIBBEAN AND AFRICA VAVA COFFEE IS A COFFEE PRODUCER AND EXPORTER OF EAST AFRICAN SPECIALTY COFFEE HORN ENVIRONMENTAL AND FISHERIES ORGANIZATION IN THE SOMALILAND REGION OF SOMALIA WORKS TO BUILD CAPACITY FOR THE BLUE ECONOMY IN RURAL COASTAL COMMUNITIES WITH A FOCUS ON WOMEN AND CHILDREN. ISENSYS IS A TECHNOLOGY AND ENGINEERING COMPANY FOCUSED ON CREATING MORE EFFICIENT AND COST EFFECTIVE TECHNOLOGICAL SOLUTIONS FOR SCIENCE AND SUSTAINABLE DEVELOPMENT PLANETWERX A US NPO LEVERAGES TECHNOLOGY, FOSTER’S COMMUNITY ACTION, AND PROMOTES EDUCATION FOR THE PRESERVATION OF OUR EARTH. THE GLOBAL CLIMATE FINANCE ACCELERATOR CONVENES PARTNERS ACROSS BUSINESS, FINANCE, GOVERNMENT AND ACADEMIA ON STRATEGIES, POLICIES, PROCEDURES AND TOOLS TO FINANCE CLIMATE SOLUTIONS

Building capacity in local communities to capitalize on carbon sequestration and biodiversity credit markets in the Caribbean and African coastal communities.

Climate Justice
Entrepreneurship
Women & Youth
Education

Impact: SDG
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Heard at PRI in Person 2024: Partnerships
Heard at PRI in Person 2024: Partnerships 565 300 Global Climate Finance Accelerator

Partnership was an underlying theme in every discussion last week on how to advance climate solutions and sustainable development goals. In his opening remarks, PRI CEO David Atkin emphasized one of the organization’s core principles: Cultivating collaboration among key stakeholders, including investor signatories, policymakers, and academics.

At the Sustainable Finance Policy Conference on October 8, the PRI introduced updates to its Policy Toolkit on sustainable finance policy reforms. The event, which convened policymakers, regulators, and investors, explored reforms that support sustainability goals while maintaining competitiveness and economic resilience. Discussions also focused on how to navigate political cycles to ensure long-term support for responsible investment initiatives.

Speakers from all regions – North America, Europe, Africa – advocated for a “whole of government” approach, emphasizing the need for comprehensive coordination across various government departments, agencies, and levels. Coordination ensures that all facets of policy, from environmental regulation to financial oversight, are aligned to address systemic challenges such as climate change. In resource-based economies, from Canada to South Africa, targets along the transition trajectory must include human rights; not just to address job joss, but also to crowd people into new industries.

Speakers in all regions also noted the need to work together in addressing what have become human rights trade-offs in the path to net-zero, primarily land acquisition for renewables. Speakers acknowledged that this remains a steep learning curve that must be solved through collaboration between the Global North and South alongside governments and the private sector.

Back on the ground following PRI, speakers from the electricity sector at the Smart Growth Symposium talked about the historic undertaking of doubling the electricity grid by 2050. They called for more strategic collaborations between universities, industry, and government with better linkages between ivory towers and the shop floor. 

The room took a moment to celebrate an initiative to emulate. The University of Toronto’s long-standing reputation as a global leader in AI research acted as a foundation for bringing together researchers, government entities, and private sector partners to create the Vector Institute for Artificial Intelligence in 2017. U of T’s expertise in AI, particularly through faculty members such as Nobel Prize winner Geoffrey Hinton, provided the academic credibility and leadership that helped position Toronto as a significant hub for AI innovation globally.

On the energy transition, the university recently announced funding to make its Grid Modernization and Testing Centre, a Climate Positive Energy initiative, a reality. Industry facing, this test centre will help address a market capacity gap related to technology testing and real time simulation of various grid models. 

The Global Climate Finance Accelerator is delighted to collaborate with Climate Positive Energy and Rotman School of Management on interdisciplinary research to investigate and deploy new financing strategies and tools to accelerate the energy transition.

The Global Climate Finance Accelerator convenes partnerships across business, finance, and government on strategies, policies, procedures, and tools to finance the deployment of technically viable climate solutions.

Heard at PRI in Person 2024: Action
Heard at PRI in Person 2024: Action 565 300 Global Climate Finance Accelerator

On October 9, 2024, the Government of Canada announced the advancement of the “Made-in-Canada Sustainable Investment Guidelines,” which included provisions for categorizing investments based on their contribution to the net-zero transition. It could take up to three years, however, to finalize discussions on incentives to support the development of green projects, hindering progress on incentive structures that are crucial for attracting investments into green infrastructure and projects.

The good news is that many organizations are (more quietly) soldiering on in the face of regulatory uncertainty and political backlash. As noted in an April 2024 issue of Time Magazine, BlackRock’s Larry Fink and JP Morgan’s Jamie Dimon “know that clean technologies are where the biggest growth opportunities remain.” 

Dimon is placing his bets: To directly impact the transition to a low-carbon economy and provide investment opportunities related to climate change, conservation and biodiversity, JPM Asset Management acquired Campbell Global, a forest management and timberland investing company. The acquisition gives the firm a strategic entry point into the global carbon markets, as well as investment opportunities in climate change, biodiversity, and conservation. To hedge carbon pricing risk, the firm built its own internal management strategy rather than relying on government backstops.

Interesting opportunities in the global middle market were also widely noted at PRI this year. These businesses, historically overlooked by large institutional investors, present unique investment opportunities due to their agility and potential for rapid adoption of sustainability-related technologies and initiatives. Sustainable investors can drive significant impact in the mid-market by funding companies that are ready to invest in climate-positive solutions but lack access to capital. The sector’s flexibility makes it an ideal testing ground for innovative financing mechanisms for the deployment of technically viable, but underutilized, climate solutions. 

Some of the best examples of Action came from the deep dive into the real economy at the Ontario Chamber of Commerce + Climate Positive Energy Smart Growth Symposium. Culminating with the wrap of PRI, the Symposium dug into the specific barriers companies face in decarbonizing their operations. Many of these obstacles aren’t financial. For Uber, it’s overcoming “car-based culture”, which they’re tackling through behavioural science research in Canadian and US cities. Green uber selections, which are pennies extra per person, create a significant incentive for drivers. For Purolator, it’s access to electricity to charge their e-bikes for last mile delivery in urban areas. Surprisingly, electricity access in the parking lots housing e-bike containers don’t all have access to power. In addition to advocating with utilities, Purolator is piloting alternative sources of on-site power generation.

The Symposium left this Call to Action with its attendees: “Prioritize trying things. Some will succeed, some will fail. Persevere through the hiccups.”

Check this space tomorrow for more of what we heard on the need for partnerships and collaborative action in solving these tough challenges.

The Global Climate Finance Accelerator convenes partnerships across business, finance, and government on strategies, policies, procedures, and tools to finance the deployment of technically viable climate solutions.

Heard at PRI in Person 2024: System-level Developments in Advancing Responsible Investment
Heard at PRI in Person 2024: System-level Developments in Advancing Responsible Investment 565 300 Global Climate Finance Accelerator

Although the future of capital markets will look vastly different from the past, many systems remain anchored in backward-looking frameworks. While ESG and sustainability continue to evolve, we understand which factors are material to investment decisions through the ISSB standards and regional taxonomies. The focus must now shift to addressing organizational barriers—societal constructs that hinder progress. How do we create the flexibility needed to overcome these obstacles and align capital with socially inclusive, net-zero goals? 

First, by leaning toward curiosity, not fear. There’s political theater at play, especially around anti-trust accusations and climate-cartel fears, but there’s little legal basis according to Faegre Drinker’s Tiffany R. Reeves. Most of it is noise that critics are using to stoke a different agenda. Fear-based decisions, however, can stifle progress. The net-zero transition is a massive disruption unlike anything we’ve ever seen. That does create risks, but also tremendous opportunities.

Second, by tackling legacy systems. PRI Chair Conor Kehoe provides the example of tracking an issuer’s stock price for 18 months after a change in capex allocation, essentially penalizing investments in the transition. It’s not just about diversifying asset classes and geographies, says CalSTRS’ Kirsty Jenkinson. It’s also about making lots of small bets so capital can find its winners because we can’t tell yet who the winners are going to be. To help enable these bets, regulatory bodies must create safe harbours so companies feel comfortable disclosing scenario analysis. Finally, positive lobbying (for climate and other sustainability-related outcomes) is still rare. Leaders who may genuinely want to advance climate solutions are expressing their views quietly says Climate and Nature Solutions CEO Catherine McKenna. This reticence makes it difficult for government to action their feedback compared to louder, more public views. We need an enabling policy environment to level the playing field.

Third, by framing the political rhetoric around ESG in the appropriate investment context. Pension funds have overwhelmingly long term time horizons; tune out the noise and stick to strategy. For example, Wellington Management’s Wendy Comwell believes the US Inflation Reduction Act, with its focus on job creation in waning industrial areas and tax credits that work for nuclear as much as they do for wind, is a difficult bill to repeal irrespective of election outcome.

Tune in tomorrow for more of what we heard in the Call to Action.

The Global Climate Finance Accelerator convenes partnerships across business, finance, and government on strategies, policies, procedures, and tools to finance the deployment of technically viable climate solutions.

Sydney Wisener
Sydney Wisener 350 350 Global Climate Finance Accelerator

Sydney has professional experience in government relations, research, and fundraising. She is eager to leverage her skills to connect diverse stakeholders and increase support for climate solutions. Recognizing that interdisciplinary challenges like climate change require interdisciplinary solutions, Sydney is committed to driving progress through collaboration.

Her undergraduate thesis project on the consequences of geoengineering sparked a deeper interest in the intersection of clean technology, policy, and climate innovation. Sydney aims to advance Canada’s climate finance and innovation policy landscape, while fostering meaningful international collaboration to ensure that no country is left behind.

Currently, Sydney is pursuing a Master of Global Affairs at the Munk School of Global Affairs and Public Policy, focusing on innovation, global markets, global security, and policy. She holds a Bachelor of Arts and Science with a Combined Honours in Biology and a minor in Sustainability from McMaster University.

Annabel Vrba
Annabel Vrba 350 350 Global Climate Finance Accelerator

Annabel is currently completing a Master of Engineering in Biomedical Engineering at the University of Toronto. With an undergraduate background in mechanical engineering specializing in biomechanics, she is driven by a passion for optimizing processes in technological innovation and integrating sustainable processes into manufacturing and design.

Professionally, Annabel has honed her skills in optimizing data collection workflows and analysis at the Skeletal Observation Lab. She developed software to streamline the collection of biomechanical data from human motion trials and enhance the analysis of force-time data acting on the upper body. Her work in designing and prototyping biopsy sample batch processors has focused on optimizing speed and efficiency in hospital laboratories. An example of her innovative design thinking is a virtual reality simulator and physical training tool she recently pitched. The goal was to provide a highly realistic and precise training environment for physicians in placing small tracking devices under the skin.

 Annabel’s technical skills include design thinking, human-centered design, and usability analysis, all centered around optimization. Annabel’s contributions to the field have been recognized with the George Christie Design Award and a 2nd place finish in Queen’s Next Generation Biomedical Engineering Hackathon. She is seeking to leverage these skills with the Accelerator to refine climate technologies, especially in addressing the world’s enormous need to optimize available data for faster decision-making.

Outside of her professional pursuits, Annabel enjoys playing softball and volleyball, watercolor painting, and hiking.

Deep Parekh
Deep Parekh 350 350 Global Climate Finance Accelerator

Deep is a professional engineer with over six years of experience in energy consulting, focusing on strategic energy efficiency and energy transition in North America. Currently pursuing a Master of Science in Sustainability Management at the University of Toronto, Deep combines technical expertise with advanced business acumen to drive impactful energy conservation initiatives. His experience spans across stakeholder engagement, regulatory compliance, and market trend analysis, having supported electric and gas utility clients in strategic planning and advisory services. Deep aspires to work at the intersection of the social impact of climate change, energy transition and sustainable finance. He holds a Bachelor of Engineering in Sustainable and Renewable Energy from Carleton University and serves as Vice President of The Energy Network (TEN).

Arushi Parashar
Arushi Parashar 350 350 Global Climate Finance Accelerator

 Arushi Parashar is a finance and strategy professional with close to five years of experience, driven by a passion for shaping sustainable business strategies. With a strong foundation in capital markets and consulting, Arushi has developed a proven ability to analyze financial data and implement strategic solutions that create lasting value. 

During her time at Morningstar, Arushi contributed to the development of ESG index products, supporting the growth of sustainable investment strategies. She has also held various roles in the fintech sector, where she focused on driving operational efficiencies and developing innovative financial solutions. These experiences have deepened her belief in the importance of integrating sustainability into financial models to foster long-term business success. 

Arushi holds a degree in Commerce from the University of Delhi and is currently pursuing her MBA at the Rotman School of Management, University of Toronto. 

Sunidhi Adiga
Sunidhi Adiga 350 350 Global Climate Finance Accelerator

Sunidhi combines her background in Electrical and Electronics Engineering with a passion for social entrepreneurship to drive sustainability-focused solutions. She has worked in technology consulting at Deloitte, where she led digital transformation initiatives. Sunidhi developed a tool to support investment decisions in renewable energy projects, offering real-time insights on key financial metrics, and is currently creating an AI tool to help companies convert their sustainability initiatives into strategic advantages. Currently pursuing her MBA at the University of Toronto’s Rotman School of Management, she focuses on integrating finance, technology, and strategy to foster sustainable change.