Read: 2069
Executive Summary
Financing for reducing net greenhouse gas emissions and enhancing resilience to climate impacts serves as a crucial enabler for the low-carbon transition. Significant disparities in access to finance, alongside its terms and conditions, and countries' exposure to physical impacts of climate change are exacerbating an unfavorable global just transition high confidence. Decarbonizing the economy necessitates coordinated international action med at addressing fundamental economic inequalities and overcoming the climate investment obstacle faced by many developing nations.
In these countries, financing's costs and risks represent substantial challenges for stakeholders across all levels. These challenges are further exacerbated by the general economic vulnerability and indebtedness of such nations. The increasing public fiscal burden on mitigation efforts and adapting to climate shocks is affecting numerous countries, worsening public debt and country credit ratings at a time when financial stresses were already prominent. The COVID-19 pandemic has intensified these pressures and tightened public finances.
Additional major obstacles for commercial climate finance include mismatches between capital avlability and investment requirements, home bias considerations, regional variations in risk perceptions, as well as limited institutional capacity to ensure effective safeguards are implemented Section 15.6.
The financial institutions involved in this context encompass the various actors, instruments, and markets that play a pivotal role in shaping decisions regarding climate mitigation and adaptation finance.
In recent years, significant events and macroeconomic trs have shaped developments in climate finance over the past five years and beyond. Key areas requiring focus include transitioning towards alignment with global long-term objectives by 2030 high confidence.
This chapter focuses on the financial landscape surrounding the climate crisis by defining terms crucial to understanding it and presenting background considerations.
15.2 Background Considerations
The institutions under climate finance encompass key players in the financial sector, including public and private entities involved in decision-making regarding climate mitigation and adaptation efforts.
Four major events have significantly influenced recent developments in climate finance:
The Paris Agreement marks a pivotal moment in global cooperation on the climate aga.
Macro-economic context is an essential factor influencing climate finance discussions.
The impact of the COVID-19 pandemic has exacerbated existing financial stresses, tightening public finances.
The concept of just transition has emerged as a central consideration for aligning with global goals.
Section 15.3 delves into current status and alignment issues in global climate finance agnst the backdrop of these developments.
The following sections outline strategies to accelerate alignment of financial flows with long-term global objectives, focusing on knowledge gaps regarding climate risk analysis, enabling environments for renewable energy deployment, public sector funding considerations, insurance approaches, community engagement at local levels, innovative financial products, development of local capital markets, and fostering new businessand financing techniques.
By addressing these areas comprehensively, the report support the readiness of the financial system as an enabler of the transition towards a sustnable future.
This article is reproduced from: https://www.ipcc.ch/report/ar6/wg3/chapter/chapter-15/
Please indicate when reprinting from: https://www.i466.com/Financial_and_financial_stocks/Global_Finance_Climate_Transition.html
Global Climate Finance Challenges Low Carbon Economy Transition Funding International Coordination on Climate Action Financing Net Greenhouse Gas Reduction Overcoming Just Transition Barriers Commercial Climate Finance Mismatches