The Frederick S. Pardee Center for the Study of the Longer-Range Future recently hosted a seminar titled “Financing Global Climate Change Commitments: The Role of Public Finance” featuring a panel discussion with Faculty Research Fellow Prof. Kevin Gallagher (Pardee School of Global Studies; Global Economic Governance Initiative), Faculty Associate Henrik Selin (Pardee School of Global Studies), and Miquel Muñoz Cabré (Global Economic Governance Initiative). The seminar stemmed from climate finance research presented in three recent working papers authored by the panelists, and published by the Global Economic Governance Initiative (GEGI).
Prof. Selin began by providing an overview of the Paris Agreement’s call for climate finance to developing countries. Article 2 of the Paris Agreement calls for developed countries to provide $100 billion per year by 2020, to be gradually scaled up over time. Prof. Selin stressed that there is an urgent need to reform the climate finance regime if there is to be any hope of reaching this goal, and proposed three sets of steps to do so. First, he encouraged a more cooperative and coherent approach among all actors in the climate finance regime. Second, he recommended the establishment of a clearinghouse tasked with collecting finance and presenting data in a transparent way. Finally, he urged the development of consistent definitions and standards in order to more accurately calculate climate finance.
Muñoz Cabré explained his analysis of over 100 Nationally Determined Contributions (NDCs) from developing countries. He explained that NDCs include contributions that are both conditional on international support and unconditional, which are likely to be realized regardless of international support. He found that 28 African countries have made a cumulative unconditional contribution of 102 GW of renewable energy generation by 2030, and he calculated that these unconditional contributions represent an investment opportunity of $241 billion.
Prof. Gallagher further explored the role of public sector finance in the global energy sector, specifically through the lens of Chinese development finance. He explained that China’s national development banks fund more international energy projects than the World Bank and all regional development banks combined. However, the majority of those projects are coal power plants (66 percent) while non-hydro renewable projects account for just 1 percent. Chinese development banks are also much more willing to finance economically and politically risky projects. Still, Gallagher explained that if China rebalances its energy portfolio, it is well-positioned to lead the transition to a clean energy future.
The seminar can be viewed in its entirety in the video above. To download the three GEGI working papers on which the discussion was based, click the links below.
- “Climate Finance and Developing Countries: The Need for Regime Development” by Henrik Selin
- “Renewable Energy Investment in Africa and Nationally Determined Contributions (NDCs)” by Miquel Muñoz Cabré and Mohamed Youba Sokona
- “Fueling Growth and Financing Risk: The benefits and risks of China’s development finance in the global energy sector” by Kevin Gallagher, Rohini Kamal, Yongzhong Wang, and Yanning Chen