With trillions of dollars needing to be found for the world to play catch-up on its climate responsibilities, what does the COP28 brainchild – the UAE Consensus – suggest we do next?
How can we fix Climate funding –
What does the UAE Consensus suggest?
Ground gained at COP28
The UAE Consensus has since emerged from COP28 as the: “defining point of reference for global climate ambition and sustainable development”. Not only does it emphasise the need for collective action leading to results that can be scaled up quickly, it also contains a wide range of practical, specific solutions on the subject of climate financing.
The first tangible element of COP28 agreements that signal hope for rapid, positive change in the coming years was the sizeable “catch-up” delivery on past pledges and commitments. The long-overdue $100 billion climate financing goal was finally met, with the Green Climate Fund reaching an historic $12.8 billion alongside $317 million for the Adaptation Fund and Least Developed Countries Fund.
Injections of cash at this level signal that participating nations are looking to course correct. Collectively, we need to get to the point where annual climate funding commitment levels are sufficient to keep pace with the growing threat of climate change itself, while building the basis for a climate-resilient future that goes beyond the bare minimum of what is needed today.
Inclusion essential to Long-term climate funding approach
At the heart of the UAE Consensus is the realisation that not even the world’s biggest economies and most powerful governments can hope to shoulder the cost of climate financing alone. Its many provisions and future strategies focus on driving inclusivity in the hope of creating “force multiplier” collaborations between the public and private spheres.
International financing: Multilateral Development Banks (MDBs) are at the forefront of building and investing in our climate future, and the UAE Consensus recognises their vital role in driving a long-term, collective approach to its financing. With its guidance, MDBs have announced over $180 billion in additional climate finance commitments through multi-year programs. These efforts include working with nations and industrial sectors to decarbonise, support for nature-positive solutions, and improved progress tracking methods. Recent mobilisations such as the ADB’s $2 billion Nature Solutions Hub for Asia and the Pacific, and the $4 billion project pipeline for the Africa Green Industrialization Initiative – demonstrate the essential need to include and support developing nations in collective climate financing efforts.
Heavy industry and hydrocarbon-based power generation: The UAE Consensus acknowledges that the world’s heaviest emitting sectors must be brought along and included in the global green transition, and financing is a clear-cut pathway to their inclusion. Companies that are major emitters have been active in carbon offsetting and green finance markets for years, but now more active participation is needed.
Private sector funding: Beyond sector-specific efforts, the long-term scalability of climate funding will rely on a massive upswing in private sector participation overall. The UAE Consensus points towards greater regulation and formalisation of voluntary carbon markets, but also a widening range of both innovate and traditional investment models to attract private investment in climate projects. The UAE itself launched the $30 billion catalytic climate fund ALTÉRRA at COP28, which aims to attract $250 billion in global investments by 2030.
Vehicles for better climate strategy: Alongside levers for funnelling direct investment and funds with set purposes, the UAE Consensus also values inclusion and collaboration at the strategy formation level. Last November saw the UAE launch the Global Climate Finance Centre, a new think tank from Abu Dhabi Global Market (ADGM) whose mission is to revolutionise the sustainable finance sector. Its areas of focus include policy formation, innovation, capacity building and championing of best practice both for finance markets and global industrial sectors.
Forming a Consensus on Climate funding is essential for the 1.5C Target
Across its various provisions, suggestions and vision for a more resilient climate future, the UAE Consensus places a critical emphasis on climate funding. The message of successive COPs has consistently been a call for “more action, less rhetoric”, and action needs to be funded intelligently and appropriately.
While the complexities of climate financing plans, projects and politics are many, the main overarching problem is simple – not enough money is coming in to combat the threat of climate change. Fixing this means, ultimately, encouraging both the public and private sectors to see climate financing not as a tax to be paid begrudgingly, but as an essential long-term investment activity, one that is adaptable enough to suit investors of all sizes and backgrounds.
The UAE Consensus recognises that scalability in this endeavour will only come through encouragement and cooperation. It simply isn’t viable to attack the problem piecemeal any longer. Conversely, greater global discussion and collaboration on how to fund our climate future is the only way to ensure that it is built in time to stave off the worst disasters brewing through our collective inactivity.