climate finance

Introduction

Climate finance refers to the funding of public and private investments aimed at mitigating and adapting to climate change. This field has gained significant attention, especially following the Paris Agreement, as it is crucial for achieving global climate targets. The research on climate finance spans various disciplines, including environmental science, energy, economics, and finance.

Key Insights

Importance of Climate Finance for Mitigation and Adaptation:
- Climate finance is essential for both mitigation and adaptation efforts, with a significant focus on mobilizing at least USD 100 billion per year for developing countries .
Challenges in Climate Finance Allocation:
- There are significant challenges in the allocation of climate finance, particularly in project-based approaches. A shift towards supporting price-based national policies, such as carbon pricing, could improve international cooperation and cost-efficient mitigation.
Multidisciplinary Nature and Research Gaps:
- Climate finance research is multidisciplinary, involving environmental science, energy, economics, and finance. Despite the growth in publications, leading finance and economics journals have published only a few articles on this topic.
Role of Private Finance:
- Private finance plays a crucial role in achieving low-carbon development. However, there are significant difficulties in accounting for private finance, including poor data quality and lack of clear definitions.
Underfunded Areas in Climate Finance:
- While a large proportion of climate finance is directed towards renewable energy, other crucial areas like demand-side management (DSM) and carbon capture, usage, and storage (CCUS) are underfunded. More investment is needed in these areas without compromising funding for renewables.
Governance and Institutional Challenges:
- Effective governance frameworks are necessary to leverage climate finance for broader economic changes. Current frameworks often limit the financial sector to transactional roles, neglecting the potential for more comprehensive contributions through socially responsible investment (SRI).
Economic Impacts of Climate Finance:
- Sustained climate financing can help combat global climate change and has economic benefits for developing countries. Developed countries may experience slight GDP losses initially, but long-term benefits from climate mitigation will compensate for these losses.

Conclusion

Climate finance is a critical component in the global effort to mitigate and adapt to climate change. It involves significant challenges in allocation, accounting, and governance. While the focus has largely been on renewable energy, other areas like DSM and CCUS require more attention and funding. Effective governance frameworks and better accounting for private finance are essential for maximizing the impact of climate finance. Overall, sustained and well-coordinated climate finance efforts are necessary to achieve global climate targets and promote sustainable development.

Summary

Introduction

Key Insights

Conclusion

Sources and full results

Climate Finance

Climate finance is the study of local and global financing of investments to support climate mitigation and adaptation, as part of a broader research program on climate finance.

From climate finance toward sustainable development finance

Climate finance for carbon pricing can promote sustainable development and international cooperation, advancing national development goals and advancing climate policies.

A Review of the Global Climate Finance Literature

Climate finance research spans environmental science, energy, economics, and finance, with four main themes identified: financing renewable energy, climate change risks, investor preferences, and financial market risk pricing.

Financialisation, Climate Finance, and the Calculative Challenges of Managing Environmental Change

Climate finance has evolved from various phases, but an overall solution for accounting for climate change in financial interventions remains elusive.

CLIMATE FINANCE AND ITS GOVERNANCE: MOVING TO A LOW CARBON ECONOMY THROUGH SOCIALLY RESPONSIBLE FINANCING?

Climate finance can mobilize capital for clean energy and broker emission allowance trading, but its potential for broader positive changes in the economy is limited by inadequate governance and ethical abandonment.

Where are the gaps in climate finance?

Climate finance needs to be analyzed in terms of mitigation and adaptation needs, but also the ability of investors to mobilize funds, as some may face more difficulty in raising capital.

The role of climate finance beyond renewables: demand-side management and carbon capture, usage and storage

Climate finance should be refocused towards sustainable cooling and carbon capture, usage, and storage, rather than solely focusing on renewable energy development.

Climate Finance

India has managed to mobilize climate finance from various sources, but the current funding is inadequate for its climate needs.

Modeling and assessing international climate financing

Sustained climate financing can help combat global climate change, with economic benefits for developing countries and a 0.01°C reduction in global warming by 2100.

Difficulties in accounting for private finance in international climate policy

Private climate finance data is limited and of poor quality, requiring clear definitions and improved reporting systems before it can be included in international climate agreements.

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