* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
Can One Planet Summit move debate from "how much" to "what to fund"?
To mark the second anniversary of the Paris Agreement, France - under President Macron’s leadership and in cooperation with the World Bank and the United Nations - hosts the “One Planet Summit” on December 12. This summit represents an opportunity to further catalyse climate finance and gradually reorient investments, but only if it effectively supports a consistent approach bringing together the supply side (how to raise more money?) and the demand side (where and how would these financial flows be used?).
More specifically, progress on three aspects of the finance discussion can be expected.
First, the summit aims to show unity in addressing the climate challenge, with a specific focus on finance and how to mobilise new public and private funding sources as well as commitments. This summit is very timely: the recent COP23 climate conference in Bonn featured the resurgence of the fracture between developed and developing countries on the question of financing, which substantially impeded progress.
Second, the One Planet Summit constitutes the first moment in the “Talanoa Dialogue” that will be conducted throughout 2018 to assess collective progress on climate action. The purpose of this process is to kick-start a conversation on ways for countries to increase their individual ambition before 2020, current commitments being far from sufficient.
As some see finance as the key enabler for further climate ambition, the summit aims to support progress on the crucial question of greening public and private finance. It will do so primarily by showcasing the opportunities that arise from a set of transformative actions and projects, demonstrating not only what is possible but that it is desirable. However, this is not enough to effectively trigger the changes at the scale required by the climate and development challenges.
Overall, the summit represents a unique opportunity to go one step further and engage in the substantial discussion on “what to finance” at the domestic level as well as for the global economy. The volume of available funding is not independent from the use for these funds, since investors have a stronger incentive to commit the money if they know what growth strategies they will be financing.
Providing this visibility to investors requires establishing a clear, long-term vision, translated in tangible priorities at the sectoral level and laying out the rhythm and form of the structural transformations required to build low-emission, climate-resilient pathways consistent with the mitigation and adaptation objectives of the Paris Agreement.
Such a long-term vision is key for investors, given the durable nature of infrastructure, to consider the future implications of short-term investment decisions. It is equally essential for decision makers to secure sustainable choices and use the money to move effectively towards their development and climate goals.
A shared vision is a pre-condition for the alignment of national regulation and incentives with the “well-below” 2°C goal, and the emergence of a pipeline of bankable low-carbon and resilient projects at the required scale. That alone can gather the support of international finance needed to enable these national transformations.
Third, this summit is also an opportunity to accelerate investment shifts, by bringing together within one framework, governments and other major actors playing a role in shaping our common future - from multilateral development banks to sovereign wealth funds; large corporations to international NGOs.
As Argentina takes up the presidency of the G20 and announces its priorities, it will be an opportunity for the G20’s Financial Stability Board to further the work of its Task Force on Climate-related Finance Disclosure (TCFD), while UN Environment and 11 of the world’s leading banks are working on implementing the TCFD framework. Despite the fact that some asset management firms such as world leader BlackRock have called on their investors to factor in climate risks and opportunities, much remains to be done.
Investments in the fossil fuel industry continue, not because alternatives - such as investing in renewable energies and their infrastructure - are not in place, but rather because incentives to divest are still insufficient. Between 2013 and 2015, the G20 members’ public support for the fossil fuel industry was four times higher than their support of renewable energy, which is blatantly at odds with the Paris Agreement and G20 declarations in 2015 and 2016.
We have learned from the Paris climate conference in 2015 that the capacity to organise a dialogue between governments and civil society on climate action is an essential condition for success. The “real” economy and diplomacy are the two legs of the walk to stay well below 2°C. The One Planet Summit’s ability to provide the momentum for leadership from the financial sector, and to engage in the long-term transformation of our economic sectors, our development models and our production and consumption patterns, will be the real criteria for success.
Henri Waisman is a senior research fellow and director of the Deep Decarbonization Pathways Project at the Institute for Sustainable Development and International Relations (IDDRI).
David Levaï is director of IDDRI's Climate Programme.