Last May, Vermont became the first state to pass a “Climate Superfund” law. The concept is modelled after the 1980 federal Superfund law, which holds companies responsible for the costs of cleaning up their hazardous waste spills. The state-level climate version requires major oil and gas companies to pay for climate-related disaster and adaptation costs, based on their share of global greenhouse gas emissions over the past few decades. Vermont’s law passed after the state experienced torrential flooding in 2023. In December, New York became the second state to pass such a law.

This year, 11 states, from California to Maine, have introduced their own Climate Superfund bills. Momentum is growing even as Vermont and New York’s laws face legal challenges by fossil fuel companies, Republican-led states and the Trump administration. Lawmakers and climate advocates told Grist that they always expected backlash, given the billions of dollars at stake for the oil and gas industry – but that states have no choice but to find ways to pay the enormous costs of protecting and repairing infrastructure in the face of increasing floods, wildfires and other disasters.

We realized that these big fossil fuel companies were, frankly, not paying their fair share for the climate crisis that they’ve caused.

– Adrian Boafo, Maryland state delegate

The opposition “emboldens our fight more,” said Maryland state delegate Adrian Boafo, who represents Prince George’s County and co-sponsored a Climate Superfund bill that passed the state legislature in March. “It means that we have to do everything we can in Maryland to protect our citizens, because we can’t rely on the federal government in this moment.”

Attribution science spurs Climate Superfund movement

While the concept of a Climate Superfund has been around for decades, it’s only in recent years that states have begun to seriously consider these laws.

In Maryland, federal inaction on climate change and the growing burden of climate change on government budgets have led to a surge of interest, said Boafo. Cities and counties are getting hit with huge unexpected costs from damage to stormwater systems, streets, highways and other public infrastructure. They’re also struggling to provide immediate disaster relief to residents and to prepare for future climate events.

Maryland has faced at least $10 billion to $20 billion (all dollar figures are U.S.) in disaster costs between 1980 and 2024, according to a recent state report. Meanwhile, up until now, governments, businesses and individuals have borne 100% of these costs. “We realized that these big fossil fuel companies were, frankly, not paying their fair share for the climate crisis that they’ve caused,” Boafo said.

Recent bills have also been spurred by increased sophistication in attribution science, said Martin Lockman, a climate law fellow at the Sabin Center for Climate Change Law at Columbia University. Researchers are now able to use climate models to link extreme weather events to greenhouse gas emissions from specific companies. The field provides a quantitative way for governments to determine which oil and gas companies should pay for climate damages, and how much.

Vermont’s law sets up a process for the government to first tally up the costs of climate harms in the state caused by the greenhouse gas emissions of major oil and gas companies between 1995 and 2024. The state will then determine how much of those costs each company is responsible for, invoice them accordingly and devote the funds to climate infrastructure and resilience projects.

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New York’s law, by contrast, sets a funding target ahead of time by requiring certain fossil fuel companies to pay a total of $75 billion, or $3 billion per year over 25 years. The amount each company has to pay is proportionate to its share of global greenhouse gas emissions between 2000 and 2024. Both Vermont and New York’s laws apply only to companies that have emitted more than one billion metric tons of greenhouse gas emissions over their respective covered periods. That would include ExxonMobil, Shell and other oil and gas giants.

Two steps forward, one step back

Maryland’s law is so far the only Climate Superfund–related legislation to pass a state legislature this year, although Governor Wes Moore vetoed the measure late on Friday. The original draft of the bill would have required major fossil fuel companies to pay a one-time fee for their historic carbon emissions. But over the course of the legislative session, the bill was amended to instead simply require a study on the cumulative costs of climate change in Maryland, to understand how much money an eventual program would need to raise. The study would be due by December 2026, at which point Maryland lawmakers would need to propose new legislation to actually implement a Climate Superfund program.

“I wish it wasn’t amended the way it was,” Boafo said, adding that lawmakers devoted much of their energy this legislative session to addressing Maryland’s $3.3-billion budget deficit.

In a veto letter, Moore stated that Maryland’s “budget situation” and “chaos from Washington, D.C.” mean that the state needs to reconsider any bills that require resource-intensive studies. “We face a real and present danger from a White House that continues to attack our economy with reckless abandon,” Moore wrote. “In this time of profound uncertainty, we must evaluate every expenditure with a critical eye towards our future.”

Climate advocates decried the governor’s decision, calling it “an inexplicable reversal of a position that threatens to stymie Maryland’s climate progress for negligible budget savings.” In a joint press release by three environmental groups, Kim Coble, executive director of the Maryland League of Conservation Voters, said, “This veto is not fiscal responsibility, it’s a definitive step in the opposite direction of our climate goals.”

In California, environmental groups are optimistic about the chances of a bill passing this year. This is the second year a Climate Superfund bill has been introduced in the state, and the sponsors of the new bill have focused on building a broad coalition of environmental, community and labour groups around the proposal, said Sabrina Ashjian, project director for the Emmett Institute on Climate Change and the Environment at the UCLA School of Law.

This year’s legislation was introduced shortly after the devastating Los Angeles wildfires in January, which could amplify lawmakers’ sense of urgency. The bill has now passed out of each legislative chamber’s environmental committee and is awaiting votes in their respective judiciary committees. If passed, the bill will next move to the full Senate and Assembly for a final vote.

Legal battles centre on jurisdiction

In the meantime, legislators are keeping a close eye on ongoing legal challenges to Vermont’s and New York’s laws. In January, the U.S. Chamber of Commerce and the American Petroleum Institute, two trade groups, launched a lawsuit against Vermont’s Climate Superfund law. In February, 22 Republican state attorneys general and industry groups filed a lawsuit against New York’s law. Both challenges claim that the laws violate interstate commerce protections and are preempted by federal law. Because the federal Clean Air Act regulates greenhouse gas emissions, the groups argue, states cannot pass laws related to climate damages.

Now the Trump administration has joined the legal battle. On May 1, the Department of Justice sued the states of New York and Vermont over their Climate Superfund programs, echoing the same arguments raised by the fossil fuel industry. The same day, the department also sued the states of Hawaii and Michigan over their intentions to sue fossil fuel companies for climate-related damages.

All four lawsuits frequently use identical language, Lockman pointed out. The lawsuits follow last month’s executive order by President Donald Trump that called for the Justice Department to challenge state climate policies, and directly targeted Vermont and New York’s Climate Superfund laws. Shortly after the Justice Department’s lawsuits were filed, West Virginia and 23 other states announced they would join the existing lawsuit against Vermont’s law led by the Chamber of Commerce and the American Petroleum Institute.

Legal experts noted that Trump’s executive order itself has no legal impact and that states have well-established authority to implement environmental policies. Patrick Parenteau, a legal scholar at Vermont Law and Graduate School, told The New York Times he expected the Justice Department’s cases to be dismissed. A court could end up consolidating the federal suits with existing challenges against Vermont’s and New York’s laws, although given that they raise the same arguments, “there’s really nothing new being added here,” said Lockman.

Climate experts told Grist that with huge amounts of money and liability at stake, lawsuits from the fossil fuel industry weren’t unexpected. Boafo said that given how much financial and political support the Trump campaign received from oil and gas corporations, it’s not a surprise that the Justice Department has sued New York and Vermont. Pursuing these laws invites inevitable opposition – but avoiding the growing costs of climate devastation is even riskier, advocates said.

Lawmakers are “passing these bills because in writing budgets, in dealing with the day-to-day operation of their states, they’re facing really serious questions about how our society is going to allocate the harms of climate change,” said Lockman. “I suspect that the lawmakers who are advocating for these bills are in it for the long haul.”

This article originally appeared in Grist. It has been edited to conform with Corporate Knights style. Grist is a non-profit, independent media organization dedicated to telling stories of climate solutions and a just future. 

The post State-level ‘Climate Superfund’ bills are spreading fast in the U.S. appeared first on Corporate Knights.

The umbrella organization for global financial-industry action on climate change, the Glasgow Financial Alliance for Net Zero (GFANZ), is in crisis after major U.S. and Canadian financial institutions quit the alliance in recent weeks. In a related development, the money manager group affiliated with GFANZ suspended its activities and will review its future in the face of growing challenges to climate action by lawmakers, the courts and clients.

The suspension is part of a stunning chain of events that has rocked the member alliances of GFANZ and the umbrella organization itself. The crisis was triggered by the recent departure from the Net Zero Asset Managers (NZAM) initiative of U.S.-based BlackRock, the largest money manager in the world, and the exodus of six large U.S. banks and four large Canadian banks from the GFANZ-affiliated banking alliance.

The GFANZ crisis comes as U.S. public attention focuses on global warming with climate-induced fires ripping through Los Angeles suburbs and recent data that show the earth experienced record-breaking global temperatures in 2024.

The dilemma highlights the depth of anxiety felt by executives of major financial institutions, particularly those in the United States, over the pushback to the net-zero agenda triggered by the election of Donald Trump, and a growing hostility to environmental, social and governance (ESG) investing by U.S. courts.

These events also come at a bad time for former central banker and GFANZ founder Mark Carney, the former United Nations special envoy on climate action who is now running to lead the Canadian Liberal Party into a national election later this year.

Why is this crisis happening now, and does it represent an about-face by the financial industry in how it handles the climate emergency? Here’s a backgrounder with questions and answers on recent events.

What is GFANZ?

GFANZ is a global network of financial institutions supporting the Paris Agreement goal of a transition to net-zero by 2050. The “Glasgow” in GFANZ comes from the Scottish host city for the 2021 UN climate summit where the alliance was launched. GFANZ was regarded as the world’s most important organization coordinating climate action by banks, asset managers, asset owners and other financial sectors, though now that reputation is very much in doubt. According to GFANZ’s 2023 progress report, 675 institutions from 50 countries were members of its affiliated alliances in these sectors.

What’s happening now?

Between December 6 and January 7, Goldman Sachs, Wells Fargo, Citigroup, Bank of America, Morgan Stanley and JPMorgan Chase – the six largest banks in the United States, with vast operations around the world – announced departures from the Net-Zero Banking Alliance (NZBA), the banking network affiliated with GFANZ. According to NZBA’s website, U.S. participation in the banking alliance is now down to three explicitly sustainable and responsible banks: Amalgamated Bank, Areti Bank and Climate First Bank. Four large Canadian banks – TD, Bank of Montreal, National Bank and CIBC – also left the NZBA on January 17.

On January 9, BlackRock left NZAM, the asset manager alliance. Many small and medium-size U.S. asset managers remain at NZAM. However, BlackRock’s departure is a big loss. The asset management industry is dominated by three companies internationally: BlackRock, Vanguard and State Street. Only State Street remains from these three companies after Vanguard left the alliance in 2022.

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What’s behind this exodus?

Statements by the banks have not provided a clear picture on why they have left NZBA, instead emphasizing a commitment to work with clients on sustainability matters. However, in a client letter about its departure, BlackRock said its net-zero alliance memberships “have caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various officials.”

In the last two years, banks and asset managers employing ESG investment practices have faced boycotts and lawsuits from Republican-led states. Most recently, Texas filed a lawsuit joined by 10 other states against BlackRock, Vanguard and State Street, alleging that their energy and ESG investment policies conspire to reduce competition in the coal industry. A federal judge has recently ruled that American Airlines breached its legal duty to make pension investment decisions based solely on financial interests by allowing BlackRock, its pension manager and a major shareholder, to consider ESG factors.

These business and legal considerations have unnerved the financial community, but there is also growing unease at the prospect this month of Donald Trump assuming control of the White House while Republicans control Congress. “A few years ago when climate change was at the front of the political agenda, the banks were keen to boast of their commitments to act on climate,” Patrick McCully, analyst at the Paris-based climate group Reclaim Finance, told The Guardian. “Now that the political pendulum has swung in the other direction, suddenly acting on climate does not seem so important for the Wall Street lenders.”

What does this mean for GFANZ?

The depth of the crisis is demonstrated by the NZAM suspension, which means the group will suspend the tracking of implementation and reporting of climate activities by its member firms. It will also remove the commitment statement for member firms from its website, along with the names of members, their targets and case studies.

In addition to the NZAM announcement, GFANZ announced it will allow participation from “any financial institution working to mobilize capital and lower the barriers to financing energy transition.” What this means is that GFANZ will no longer require its members to belong to any of the sectoral alliances, which expect members to adopt net-zero targets and transition plans to achieve them.

GFANZ also said it will be governed by a “principals group” outside of the sectoral alliances. Perhaps most significantly, GFANZ said it will turn its focus to closing the investment gap needed for the energy transition, especially in emerging markets and developing countries. This signals that the focus will no longer be on the net-zero transition of banks, asset managers and asset owners and instead will concentrate on the capital needs of developing countries.

Is the financial industry abandoning net-zero?

None of the departing companies cited any change to their net-zero targets, except for Morgan Stanley, which announced in October that it estimates that the 2030 implied temperature rise of its financed emissions could be as high as 1.7°C (above the Paris Agreement limit of 1.5°C). As for the remaining members of NZBA, the alliance continues to expect members to set and meet net-zero targets in alignment with the Paris Agreement. At least for now.

Even with few overt pullbacks in emission targets, the crisis at NZAM and the exodus of U.S. and Canadian banks from NZBA have dealt a major blow to GFANZ.

These leave the net-zero alliances significantly weakened, with less influence to counter the financing of North America’s oil and gas expansion. This is expected to create an even larger gulf between European financial institutions that operate under significant government climate directives and their less-regulated North American counterparts.

This puts the cause of voluntary global financial-industry collaboration on climate in doubt, as North American financial institutions seek to pacify an increasingly hostile political and legal environment.

Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association).

The post The anti-ESG movement scores a victory as net-zero financial alliance unravels appeared first on Corporate Knights.

At the heart of the climate change challenge is the dependence on fossil fuels that is built into every sector, from buildings and vehicles to power plants and farm equipment, steel mills and breweries. With that built-in fossil fuel dependence comes locked-in greenhouse gas emissions. Sure, policies and behaviour change can reduce fossil fuel use, buy time and facilitate growth of zero-emission solutions, but eliminating fossil fuel dependence requires a transformation of that capital stock. 

The capital investment needed to decarbonize the Canadian economy was first estimated by Corporate Knights at about $150 billion per year, and the federal government and others have since corroborated that finding. For context, this amounts to the annual total raised by sales taxes in Canada. Total capital spending in Canada runs around $650 billion per year, most of which is making the problem worse and some of which, perhaps 10%, is providing some incremental moderation of emissions. Unless and until the majority of capital spending is aligned with our climate change commitments, we will not get at the root cause of the heat waves, droughts, floods and wildfires that are eating away at our prosperity.

Such an alignment is possible. Scores of innovations in recent years have opened up pathways to zero emissions. Super-efficient and fossil-free buildings, electric vehicles, cold-climate heat pumps, smart building design and operation, electrification of industrial processes, energy storage, regenerative agriculture, circular industrial production systems, wind and solar electricity, battery storage – climate solutions are growing at unprecedented rates. 

Globally, a post-fossil-fuel energy system is emerging, centred on efficiency, electrification and renewable energy. The carbon-free solutions often bring highly valued collateral benefits – better vehicle performance, healthier and more productive built environments, enhanced productivity and cost savings – that act as accelerants in the market uptake of the new technologies.

And yet, a yawning gap remains between current levels of investment in climate solutions and what it would take to get the job done. This “decarbonization capex (capital expenditure) gap” is the focus of the Climate Dollars research project at Corporate Knights. For each of the three most important sectors – buildings, transportation and power – there is an annual decarbonization capex gap of $30 to $40 billion, and the longer it takes to close it the more Canada will fall behind in the global energy transition that is underway, and the more disruptive will be the changes to our climate, our economy and our communities. 

The decarbonization gap is made up of stranded opportunities – investments needed to decarbonize that are technologically and economically feasible but that are left unrealized for a host of reasons. For many opportunities, the payback is too long for private investors or is out of scope for the traditional portfolio of the public investor. Other opportunities are stranded by perceived risk, incorrect or lack of information, lack of access to capital, regulatory roadblocks, and ineffective or conflicting public policies. Cementing the problem are underdeveloped supply chains, labour shortages, the inertia and entrenched advantages of the incumbent fossil fuel industry, as well as lacklustre rates of innovation in business models and a lack of public policies for clearing the financing and logistical barriers that are holding back progress. 

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Private investors account for 83% of all capital expenditures in Canada, and the private sector has the expertise for mobilizing capital on the scale needed to respond to the climate crisis. But timely decarbonization will require increased public investment in opportunities that are currently stranded in the gap. Corporate Knights has partnered with York University’s Schulich School of Business to develop a Canadian climate-finance index that tracks and measures private-sector climate-finance flows. 

Beyond the widely acknowledged need for more blended finance, closing the gap will require revising century-old utility mandates and regulatory frameworks, capturing inter-sector opportunities that are currently falling through the cracks, financing innovations to eliminate first-cost barriers, incentives and business models that avoid the half-measures that drive up costs in the long run, and a level of determination and cooperation across all sectors of society that has yet to materialize in Canada.

This is a big transition.  It is disruptive, messy and full of wicked complications and pleasant surprises. But the map to a low-carbon future is taking shape, the climate imperative provides a compelling destination, and pioneering explorers and innovators are finding pathways through the decarbonization capex gap.

Ralph Torrie is the research director at Corporate Knights.

The post Closing the climate funding gap is key to Canada’s prosperity appeared first on Corporate Knights.

The need for adaptation strategies is urgent. And yet, funding remains a significant barrier. In response, Kenya and other African pioneers are exploring alternative financing mechanisms such as green bonds and debt-for-nature swaps. Despite these efforts, systemic challenges hinder progress, underscoring the complex interplay between sustainability, finance and international cooperation in addressing climate change.

Indeed, the climate dilemma in Africa is amplified by contradiction: the continent is responsible for just 4% of global carbon emissions, yet it experiences a significantly higher degree of climate change’s negative effects. Data compiled by the International Energy Agency in 2010 illustrated the global carbon-footprint imbalance with a striking image: at the time, a single American refrigerator consumed three times more energy than the average African used in a year. Africa’s struggle is compounded by its limited ability to access climate finance. As President Macky Sall of Senegal has put it, Africa faces a “double penalty,” not only susceptible to the impacts of climate change but also confronting hurdles in accessing financing desperately needed for adaptation and mitigation.

The African Development Bank estimates that Africa incurs annual losses of between $7 and $15 billion (all dollar figures are U.S.) because of climate change, a figure expected to escalate to $50 billion by 2030. But the continent garners a mere 3% of global climate finance. Africa made up less than 1% of the $2.2 trillion in community green bonds in 2022, according to the African Development Bank Group. Europe alone issued more than $100 billion in green bonds that year. This investment gap significantly curtails African nations’ capacity to tackle their unique climate challenges. 

The situation is exacerbated by high levels of debt from international loans and bonds, placing 21 African countries in or at high risk of debt distress. The intersection of climate vulnerability and unsustainable debt stalls economic development and exacerbates poverty. The burden of debt servicing constrains these nations’ ability to attract investments for crucial climate adaptation and mitigation measures, such as transitioning to cleaner energy sources, adopting sustainable agriculture practices and enhancing infrastructure resilience.

Debt-for-nature swaps, alongside the broader concept of debt-for-climate swaps, are transformative strategies that can address these challenges. By converting a portion of a country’s debt into funds dedicated to environmental conservation, these mechanisms promise financial relief and a pathway to sustainable development for African nations.

This has the potential to alleviate a country’s debt burden and ensures that crucial funds are directed toward combatting deforestation, protecting endangered species and supporting community-based conservation initiatives that provide sustainable livelihoods. The success of these projects hinges on transparent and equitable management, ensuring that the benefits reach the local communities most affected by climate change and biodiversity loss.

In this context, debt-for-nature swaps surface as potent tools to bridge the climate finance gap. Kenya, with its rich natural resources and acute climate vulnerabilities, serves as a prime example of how such mechanisms can be leveraged for sustainable development.

The complex reality of climate finance in Kenya

The Lake Turkana Wind Power project, the largest wind farm on the African continent, is proof of the kind of enthusiasm that Kenya’s renewable-energy sector is generating among investors. While this is crucial for reducing carbon emissions, other vital sectors such as agriculture, forestry, transportation and water management are scrambling to find similar backing to cope with the changing climate.

In other East African countries such as Tanzania, Uganda and Rwanda, the potential in debt-for-nature swaps could be a game changer. However, the scale remains modest compared to other continents. The reality is that not enough climate financing is reaching local African communities.

Abdul-Karim Mohamed, an African start-up investor, recently questioned whether climate finance in Africa is “hope, hype or hypocrisy,” noting that less than 10% of committed climate financing from international funds trickles down to the grassroots level. This inefficiency is compounded by a perceived bias from Western funders, who have a strong preference for their own knowledge and methods over those of local partners. Mohamed concluded that if this bias continued “within climate finance initiatives, it will be more challenging to find and support local solutions to local climate change problems.”

In Kenya, the juxtaposition of rich natural resources, poor governance and the challenges of climate change adaptation presents a complex scenario. The country’s lush mangroves and mineral wealth, essential for sustainable development, are often mismanaged, leading to social and environmental repercussions. This mismanagement has seeped into government-backed carbon credit programs, which have resulted in community evictions and protests. 

In the report Blood Carbon: How a Carbon Offset Scheme Makes Millions from Indigenous Land in Northern Kenya, non-profit Survival International casts a critical eye on the Northern Kenya Grassland Carbon Project managed by the Northern Rangelands Trust. This project was first touted as a premier carbon-credit initiative, attracting substantial investment from Meta and Netflix. But the scheme’s ambition to generate $300 to $500 million potentially displaces traditional grazing practices in favour of commercial ranching models, undermining the land rights and cultural heritage of the Indigenous populations involved. Kenya’s experience highlights the critical need for effective and equitable management of natural resources for climate finance, broadening the scope to include comprehensive adaptation strategies across all vulnerable sectors. 

Africa incurs between US$7 and $15 billion in damages from climate change every year but garners just 3% of global climate finance.

The Triple B Framework, conceptualized by Gillian Marcelle of Resilience Capital Ventures in 2021, represents an alternative approach to financing. It addresses common pitfalls such as underutilization and misallocation by refining funding mechanisms, uncovering areas often overlooked by conventional financial systems due to perceived risks or insufficient returns, and harnessing the power of blended finance. This method brings together diverse types of funding, including monetary investments as well as vital non-financial resources, such as expert knowledge, technical support and access to networks, to amplify its impact significantly.

A notable instance of the Triple B Framework’s implementation is the Seychelles’ “blue bond,” which targets ocean conservation and the sustainable use of marine resources – an area that often lacks sufficient investment. Launched in 2018 as the first initiative of its kind, the blue bond garnered $15 million to safeguard marine ecosystems, improve fisheries management and bolster economic development through projects related to the ocean. 

Organizations such as The Nature Conservancy (TNC) and the World Wildlife Fund have been instrumental in structuring debt-for-nature swaps across the globe, including in Africa. The debt-for-nature swap facilitated by TNC in 2015 allowed the Seychelles to restructure part of its national debt, with the savings generated from the debt restructuring redirected toward funding conservation projects. The success of this debt-for-nature swap paved the way for the blue bond.

East African nations, with their wealth of terrestrial and marine biodiversity, could certainly benefit from adopting financing strategies similar to those recently demonstrated in Kenya, especially in the realm of green bonds. For instance, Acorn Holdings made history in Kenya by issuing the country’s first green bond, listed for trading on the Nairobi Securities Exchange in 2019. The bond, valued at 4.3 billion shillings ($42.5 million), was issued by the Nairobi-based property developer to finance the construction of eco-friendly student accommodations. 

 This forward-thinking move by Acorn Holdings serves as a practical example of how innovative financing mechanisms can support sustainable development initiatives. It offers a replicable model for other East African nations. 

A call to amplify impact and investment

The journey of Kenya in navigating the complexities of climate finance underscores a broader narrative of resilience and innovation. However, the scale of investment and the reach of these modern financing mechanisms need more amplification. The global community, including international financial institutions, creditor nations and conservation organizations, must rally to support and scale up debt-for-nature swaps in Africa.

Expanding the scope and scale of debt-for-nature swaps in East Africa could serve as a beacon for other African countries, demonstrating that sustainable development and conservation can be achieved even amidst financial challenges. 

Shilpa Tiwari is CEO of No Women No Spice, an organic spice company, and Isenzo Group, a sustainability strategy firm. 

This story is part of our Spring 2024 issue. 

The post Is swapping debt to protect nature the key to solving Africa’s climate woes? appeared first on Corporate Knights.

In a pitch to convince foreign investors to put their money in Canadian industries, Freeland said the federal government has “a suite of policies for the industrial transformation” worth around $120 billion. She pointed to federal climate initiatives such as the $15-billion Canada Growth Fund and more than $80 billion being rolled out in clean investment tax credits.

But there’s a major caveat to all of this: no one is tracking actual investments in the green technologies and infrastructure we need.

At least no one was tracking them until now.

Analysis from a new report from Corporate Knights’ Climate Dollars initiative shows that the federal government is at least $14 billion behind on rolling out the climate funding it had committed to spending by now. And since 2015, there has been a 30% shortfall between what the government has committed to spending on climate and what it has actually invested. It’s critical to close this climate-investment gap in order to close the emission-reduction gap.

By properly tallying up climate investments, starting with the federal government and large corporations, Climate Dollars aims to establish an accurate baseline of where we are at now versus what is required to ensure that Canada meets its 2030 emission-reduction commitments.

“With this report, Corporate Knights has given us a valuable and readable scorecard that highlights federal government initiatives to address climate change across departments and policy instruments. What was promised? What has been delivered?” writes Kevin Page, the president of the Institute of Fiscal Studies and Democracy and former parliamentary budget officer, in the inaugural Climate Dollars report, Committed and Actual Federal Government Climate Spending. “We need this information to assess, debate and adjust our collective plans to reduce carbon emissions.”

Not all countries making significant climate transition investments have had this lack of public accounting on their progress. To document the impact of the Inflation Reduction Act (IRA) – the single largest investment in climate and energy in U.S. history – the White House has published an interactive map that illustrates the levels of investment in the climate transition across the country. In addition, a research team from Rhodium Group and the Massachusetts Institute of Technology has created the Clean Investment Monitor, which provides real-time tracking of all public and private investments in emission-reducing technologies in the United States.

Without this same level of public reporting and research, the knowledge gap in Canada looms large.

The Corporate Knights research team accepts this challenge. Our Climate Dollars initiative is tracking investments in climate solutions year-over-year and compares them against what needs to be spent to reach the country’s climate goals.

Our past research has shown that it will require about $126 billion per year in Canada, including public and private investment, to meet the country’s 2030 greenhouse gas emission target.

While Freeland’s $120-billion tally is a useful starting point, quantifying how much the Canadian government has already spent, going back to 2015, on climate solutions is a harder nut to crack. It requires reviewing budget documents, fiscal updates, economic statements, departmental reports and emission-reduction plans to create an inventory. The Climate Dollars inventory looks across departments, agencies, sectors and types of investments to track the climate-investment announcements, re-announcements and actual expenditures the federal government has made since 2015.

The inaugural report tells a story of the Canadian government’s efforts to both lead the economy through the green transition and position itself as a supplier to the global market. Our research shows that direct federal spending has thus far been the largest source of the government’s funding for climate solutions, followed by loans and equity investments, and then tax expenditures and refundable tax credits.

Going forward, tax expenditures and credits are set to become the largest form of public climate spending. Budget 2023 took an approach geared to compete with the IRA’s investment package and outlined five major investment tax credits: hydrogen; carbon capture, utilization and storage; clean technology; clean technology manufacturing; and clean electricity.

There are risks to climate policy initiatives that rely on the private sector, namely that public–private partnerships tend to be slow or continue to benefit the fossil fuel industry. However, as most capital expenditures in Canada are borne by the private sector, we need Canadian business leaders to rise to the challenge.

To confront the climate threat, we will require a mobilization of capital the likes of which has not been seen since the Second World War.

Tracking climate investments is key to understanding what we should be asking for, and where more funding is needed. It also bolsters accountability by measuring how much progress is made or not made, and why.

An economy in which investment is driven toward the right mix of climate solutions will help achieve an equitable transition to a net-zero economy. Climate Dollars takes the first step toward closing the “say–do” gap for climate investments in Canada, democratizing access to information on the severity of this complex issue and driving changes in policy and behaviour.

Jessica Carradine is project lead on Corporate Knights’ Climate Dollars initiative. 

The post The federal government is more than $14 billion behind on climate funding appeared first on Corporate Knights.

The joke is a good reminder of the limitations of the climate-scenario exercise about to be conducted by Canada’s financial regulator, the Office of the Superintendent of Financial Institutions (OSFI). All federally regulated financial institutions, including banks and insurance companies, will be required to participate during 2024 in an echo of a pilot project conducted with similar methodology last year with a handful of financial institutions volunteering.

Scenario analysis is a structured way of asking “What if?” based on possible versions of the future so that risks can be assessed and managed. In the climate context, possible future scenarios centre on physical risk, transition risk or both. Physical risk is the tangible impacts of climate change, like fires and flooding, while transition risk is the impact that climate policy has on the economy, technology and consumer demand.

The good news is that OSFI’s exercise will help to bolster acceptance of climate risk within Canadian financial institutions as a counterbalance to the sector’s prevailing focus on short-term profit. Last year’s pilot project arrived at some remarkable conclusions about the potential loss of value of carbon-intensive assets like oil and gas and the significant rise in the probability of debt default in those companies. Canada has a polluting, high-carbon economy, so it’s no surprise that the economic institutions that finance and facilitate these sectors face high transition risk.

The bad news is that to run the exercise, OSFI is assuming a can opener. In part, this is inevitable since all scenario analysis will assume away large amounts of complexity to have a workable model. As the analysts say, “All scenarios are wrong, but some are useful.” The question is whether the particular assumptions OSFI is making in its exercise lead to a result that enlightens more than it obscures.

One major choice OSFI is making is to essentially ignore physical risk. While its model assesses real-estate exposure to physical risk, it doesn’t actually assign a financial cost to that exposure. In other words, this means that climate change itself is assumed away. Only the implications of economic policy response will be factored into the possible future impacts on asset prices and credit risk.

This effectively bypasses the raging debate in the climate-scenario community about the pace and scale of climate impacts on the economy. Mainstream economists have generally pegged these impacts as relatively small and manageable, ignoring both the litany of climate catastrophes – this year was the worst on record for billion-dollar climate disasters in the U.S. alone – and  the increasingly dire findings of climate scientists. Should the world breach climate tipping points or experience so-called second-order impacts such as mass migration or wars, the impact on the economy could be catastrophic.

That’s a lot to leave out and strains the plausibility of the model on its face. Dig deeper, and we see that physical risk also affects the assumptions that go into a pure transition risk model, such as macroeconomic factors like growth, or sector-specific pathways like for agriculture, which will be significantly affected by floods and drought, or for the power sector hit by water availability.

Moreover, OSFI’s transition scenarios are bloodless narratives that don’t sound much like the real world. For example, one says we keep current policies constant, while another says we reach compliance with under 2°C of warming after initial foot-dragging. But none talks about the whiplash of policy that we see because of things like the war in Ukraine or conservative politicians resisting change. The International Monetary Fund just published a paper analyzing how the “polycrisis”  – the simultaneous experience of multiple global disruptions like inflation and armed conflict – challenges transition scenarios. Overall, transition scenarios need to place more emphasis on extreme volatility and explore how that will affect financial institutions.

OSFI is accepting feedback on its proposed exercise until December 22. We’ll never have perfect climate scenarios, and odds are OSFI will press ahead with the model it has proposed without much revision. It’s important to keep its limitations front and centre and to keep asking about what it includes, and what it doesn’t.

Ultimately, though, we need to ask what the climate-scenario exercise will actually accomplish. OSFI seems to believe that better information will mitigate climate risk. It won’t by itself. While the exercise can be useful, the history of financial crises shows that the financial sector won’t properly manage risk unless it is regulated to do so. OSFI has stronger tools than climate-scenario analysis in its toolbox once that realization hits home. The safety and soundness of the financial system in the face of climate change depends on their use.

Matt Price is executive director of Investors for Paris Compliance, a shareholder advocacy organization holding Canadian companies accountable to their net-zero commitments.

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On the opening day of the conference, delegates from nearly 200 countries adopted a draft framework to establish an international loss and damage fund, with the World Bank as its temporary host, Bloomberg News reports. The fund launches with US$260 million in pledges, including $100 million each from the UAE and Germany, $50 million from the United Kingdom, and $10 million from Japan.

Later in the day, the European Union came in with $250 million, including Germany’s share, followed by the United States at $17.5 million.

“This agreement is a vital first step towards ensuring communities get the support they desperately need—but stops short of the fund communities deserve,” said Tracy Carty, global political expert at Greenpeace International. “This COP must confirm that rich countries with the greatest contribution to climate change will lead the way. And that the fossil fuel industry, which continues to reap billions by exploiting fossil fuels, pays for the harm they have caused.”

“The progress made today at COP28 on loss and damage is a valuable step towards supporting people facing the devastating consequences of climate-fuelled disasters to recover and adapt,” agreed Chiara Liguori, senior climate justice policy advisor at Oxfam International. “However, much work remains to ensure the funding can truly benefit the communities most affected.”

But Adrián Martinez, director of La Ruta del Clima in Costa Rica, took a less optimistic view of what he cast as a “lost and damaged” funding mechanism. “A fund can be a functional financial mechanism but not promote justice, and this sums up the decision adopted today,” he said in a release. “Justice and dignity are not transactional, which is something parties and some NGOs have long forgotten at the UNFCCC.”

In the days leading up to the conference, COP watchers and delegates had hoped an early agreement on loss and damage would bring new momentum to a conference opening roiled by bombshell revelations that COP28 officials had sought to mix bilateral climate negotiations with oil and gas trade discussions on behalf of the summit’s host country, the UAE. COP28 President Sultan al Jaber is also the CEO of the Abu Dhabi National Oil Company (ADNOC). And on Monday, the UK-based Centre for Climate Reporting and the British Broadcasting Corporation published details of COP28 briefing notes meant to be used in targeting nearly 30 countries for international oil trade deals during pre-COP discussions.

That news shared space earlier Thursday with the word that a loss and damage deal might be imminent. “If nearly 200 nations agree during the opening session on the fund’s hard-fought outline, that could remove a major source of acrimony from the conference agenda,” Politico reports. “From there, the United States and other rich countries will have to figure out how to find potentially hundreds of billions of dollars for island nations and other vulnerable communities.”

Show Us the Money

Loss and damage has been on the international climate agenda for decades, gaining urgency as the front-line impacts of climate change become ever more severe for the world’s most vulnerable countries. A framework agreement on loss and damage was the signature win at last year’s COP27 negotiations in Egypt, and after anxious debate over most of the last year, countries reached a compromise on how to manage a new international loss and damage fund in the weeks leading up to this year’s COP.

As an estimated 70,000 delegates gathered for this year’s COP, early reports identified at least three G7 countries, including Germany, that might be ready to make concrete pledges during today’s opening session, while climate hawks attending the conference in Dubai pushed Canada to be a “first mover” in support of the fund. In a published report this morning, climate diplomacy veteran Ed King said US$290 to $580 billion will be needed “to help countries smashed by extreme weather,” and developing countries are looking for $100 billion by 2030.

“What we do anticipate at this COP will be the announcement of a new fund around this, and that countries will be in a position to voluntarily provide funding,” a Canadian government official told media in a background briefing yesterday. “Member states have come together and I believe a conclusion to that negotiation is in sight. The deal seems to be holding.”

Al Jaber Denial

The CEO of one of those fossil companies, COP President al Jaber, was on the offensive yesterday, with forceful denials that he had ever seen or made use of the briefing notes revealed by the Centre for Climate Reporting and the BBC.

In the original news exposé, a spokesperson for the COP28 organizing team did not deny that business talks may have been combined with bilateral meetings related to the UN summit. Al Jaber “holds a number of positions alongside his role as COP28 President-Designate,” the spokesperson told the two news agencies. “That is public knowledge. Private meetings are private, and we do not comment on them.”

Al Jaber took a different tack Thursday morning. “These allegations are false, not true, incorrect and not accurate,” he told media, alleging that the news report was meant to undermine his COP28 presidency. “I promise you, never ever did I see these talking points that they refer to or that I ever even used such talking points in my discussions.”

“Do you think the UAE or myself will need the COP or the COP presidency to go and establish business deals or commercial relationships?” al Jaber added. “This country over the past 50 years has been built around its ability to build bridges and to create relationships and partnerships.”

BBC stood by an investigation that a spokesperson said “was rigorously researched according to highest editorial standards.” The broadcaster said it was not invited to al Jaber’s news conference.

The controversy triggered a hoax media release Wednesday, erroneously attributed to the COP28 secretariat, claiming that al Jaber had agreed to step down from his position as ADNOC CEO.

“Following ADNOC’s recent strategic announcements that are incompatible with several clauses of the Paris Agreement, concerns were raised by several parties inside the UNFCCC and from the advisory committee about the efficacy of Dr. al Jaber’s role as President Designate if he retains his affiliations to ADNOC,” the faux release said. It had al Jaber declaring that it’s time to “replace discord with solidarity”, bring transparency to climate negotiations, and “restore trust through united climate action”.

Fossil Era’s ‘Terminal Decline’

In opening remarks early Thursday, UN climate secretary Simon Stiell urged delegates to take their responsibilities seriously.

“If we do not signal the terminal decline of the fossil fuel era as we know it, we welcome our own terminal decline. And we choose to pay with people’s lives,” he said. “If this transition isn’t just, we won’t transition at all. That means justice within and between countries.”

Stiell put countries on notice that they’ll be expected to report back to next year’s COP with a transparent account of their climate action to date, then show up at COP25 with accelerated targets to reduce climate pollution and adapt to climate impacts.

“Every single commitment—on finance, adaptation, and mitigation—has to be in line with a 1.5°C world,” because “science tells us we have around six years before we exhaust the planet’s ability to cope with our emissions,” he declared. “Attending a COP does not tick the climate box for the year. The badges around your necks make you responsible for delivering climate action here and at home.”

This story was first published by The Energy Mix. Read the original article here. 

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In the Yucatán Peninsula in Mexico, I snorkelled with giant sea turtles alongside bleached coral reefs and explored parts of a 180-kilometre semicircle of cenotes, majestic underground caves filled with azure water that the Maya believed was a gateway to the underworld.

The cenotes formed around the impact zone of a colossal 10-kilometre-wide asteroid that crashed into Earth 66 million years ago. The impact set off mega-tsunamis and ignited fires that blazed through an estimated 70% of the world’s forests. All told, scientists reckon it killed off 75% of all life on Earth.

In the Red Sea off the coast of Sharm el-Sheikh, Egypt, where the recent UN global climate talks were held, I was blown away by the vibrant pink, orange and turquoise colours of the coral reefs. They were teeming with schools of majestic heart-shaped neon-yellow and -green fish, as well as one turtle, which had a Michael Phelps–like stroke, quickly leaving me in its wake. So much for the myth about turtles being slow – at least not when they are in their element.

Which made me wonder if the same might be true about humans and our race to a low-carbon economy.

Just as turtles are slow on land but can turn on their jets when they’re wet, humans tend to make a dash when cash is involved. But we are plodding along on climate action. The difference between what corporations and governments say and do (or the “say–do” gap) looms stubbornly large despite spiralling climate-commitment inflation. The first thing we need to do to close the gap is cut out the poison that is at the heart of our climate breakdown.

That means finally cutting out the annual US$6 trillion in subsidies to fossil fuels, which account for two-thirds of global greenhouse gas emissions.

It also means cutting off financing for new fossil fuel projects, which HSBC (one of the largest banks in the world) and Lloyds (the largest domestic bank in the U.K.) have done for new oil and gas fields – with some caveats. We will know that the rest of the US$130-trillion GFANZ (Glasgow Financial Alliance for Net Zero) coalition is serious when they follow suit.

And it means stopping all finance for activities that are killing our forests – a mistake the Mayans made that we are now repeating. Deforestation accounts for 11% of global greenhouse gas emissions, more than comes out of the tailpipes of all 1.4 billion cars on the world’s roads. If we went a step further than putting a stop to ripping out our forests and mangroves and started to restore them, we could get almost 40% of the way to our Paris Agreement goals by 2030.

But as former Bank of England (and Canada) governor Mark Carney has made clear, “the biggest threat to achieving 1.5 degrees is the speed at which we invest, not divest. We need at least $4 in clean energy investment for every $1 maintaining fossil fuels until we can phase them out by the end of this decade.”

The good news is that over the past decade, the flow of money into clean energy and efficiency infrastructure has tripled to about US$1 trillion annually.

This decade we need to move faster, quadrupling current levels of investment to the US$4 trillion annually (4% of global GDP) that is required, according to the International Energy Agency.

Finance ministers hold the keys to unlocking climate action. Fortunately, a new group, called the Coalition of Finance Ministers for Climate Action, from more than 80 countries, is looking to shift the view of climate action from a cost to a unique growth and investment opportunity. These finance ministers recognize that the current energy crisis and growing incidence of climate hazards are an opportunity for more, not less, action. And a rapid switch to renewable energy presents an opportunity for countries to deliver clean, cheap, secure energy and new employment at the same time.

Finance ministers globally manage huge annual budgets that collectively add up to around 30% of GDP. Mobilizing 4% of global GDP for climate action is not going to happen without backing from heads of state, most critically those from the G20 countries. It is a tall task but one with precedent. It wasn’t that long ago that governments mobilized trillions of dollars to keep businesses and workers afloat during the early days of the COVID-19 pandemic.

In 1962, spurred on by the Soviet Union making Yuri Gagarin the first man to orbit Earth, John F. Kennedy gave his moonshot speech at Rice University in Houston.

“We choose to go to the moon in this decade and do the other things not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win.”

That bold invocation was then backed by billions of dollars.

Eight years later, on July 20, 1969, two American astronauts walked on the moon’s surface.

History doesn’t repeat itself, but it rhymes. Money was an accelerant for the mission to the moon.

Today’s moonshot is addressing the climate crisis, and what gets funded, gets done.

Time for our heads of state and finance ministers to take the plunge and turn on the jets – just like our shelled friends in the sea.

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There has been less fanfare around finance at the UN Climate Change Conference this time around, but it is very important to keep the global momentum from Glasgow. Are we making progress in Canada? While there is a lot of goodwill in the financial industry, and a significant amount of capital flowing to address the climate crisis, we are being held back for a variety of reasons.  

For a start, we need to do a much better job of assessing and disclosing the risks Canadian companies face due to climate change – both the costly devastation brought on by climate-related events, such as floods and fires, and the economic challenges of transitioning to a net-zero world.  

This is essential for Canadian competitiveness and the proper functioning of Canadian markets. It is also necessary for companies to develop their own plans to reduce emissions and adapt to a changing climate. Canadian and global bodies are currently drafting regulations for this kind of reporting, and this issue will eventually affect every Canadian company.  

Financial institutions, including Canada’s largest pension funds, have indeed taken a leadership role, issuing rare joint statements in 2020 and 2021 that advocated for companies to provide climate-related disclosures to the highest global standards.  

We need to do a much better job of assessing and disclosing the risks Canadian companies face due to climate change.

Organizations such as Chartered Professional Accountants of Canada have been vocal supporters of international standards for disclosures and helped lay the groundwork for the Montreal location of an office of the International Sustainability Standards Board (ISSB) earlier this year. Also, we are seeing that more Canadian companies are recognizing the importance of climate-related disclosures, and doing some really heavy lifting on preparing reports. 

However, as a new analysis by the Institute for Sustainable Finance (ISF) shows, we have a long way to go in terms of providing the reliable, consistent, comparable and accessible climate-related data that is essential to make real progress. 

The ISF report found that less than half of the largest TSX-listed corporations provided meaningful climate-related risk reports during 2020, and beyond the largest public corporations, such reporting barely exists at all. There is also a need to improve the quality of climate-related reporting, which is mediocre on average among the companies that do provide such information and varies significantly.  

More broadly, as previous ISF research has demonstrated, a majority of Canada’s publicly listed companies are reporting on their greenhouse gas emissions, but progress seems to have stalled. And while more companies are setting targets for reducing their carbon footprints, we are lagging behind other jurisdictions.  

What can be done when it comes to climate-related disclosures?

There is a key role for regulators to play, and climate-related reporting should be made mandatory, as we currently do with financial disclosures. The Canadian Securities Administrators issued proposed regulations for climate-related disclosures around this time last year, but there were some noticeable gaps, as the ISF identified at the time.  

And we have since seen more stringent standards proposed globally by the ISSB, as well as the Securities and Exchange Commission in the U.S. We need to ensure that reporting in Canada is in line with global standards, so as not to disadvantage both our capital providers and the companies themselves that require capital at attractive market prices to prosper and remain competitive. 

Mandating high-quality reports will mean more and better climate-related data, as well as improved access to data that already exists. We know that there is a hunger in the market among practitioners and sustainability experts for better data. Both public and private providers of corporate sustainability data should take note. 

There is also a significant need to improve both education and leadership that illustrates the importance of such disclosures to both users and preparers of this information, with an increased emphasis on best practices.  

We can mitigate climate change and adapt to the effects of a warming world. And business and finance in Canada have a major role to play in getting there. But we are still too often flying blind on the risks and opportunities of a changing climate and a transformed economy. That needs to change. 

Sean Cleary is chair of the Institute for Sustainable Finance (ISF) and professor of finance at the Smith School of Business at Queen’s University.  

Pamela Steer is president and CEO of Chartered Professional Accountants of Canada (CPA Canada) and a member of the ISF Advisory Board. 

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Developed countries now project that they won’t meet that pledge until 2023 – three years late and still woefully short of the real need.

A new report from the Intergovernmental Panel on Climate Change, released Feb. 28, 2022, provides more evidence of what billions of people are facing: Developing countries that have contributed the least to climate change are suffering the most from it, and the damage is escalating.

Small island states and low-lying coastal areas are losing land to rising seas. Flooding from extreme storms is wiping out people’s livelihoods in Africa and Asia. Heat waves are harming people who have no access to cooling, killing crops and affecting marine life communities rely on. Documents from the United Nations suggest that the cost for low-income countries to adapt to these and other climate impacts far exceeds the promised $100 billion a year.

What’s less clear is how much impact the climate finance already flowing to these countries, estimated at $79.6 billion in 2019, is having. There is an overwhelming lack of data, as well as evidence that countries have been supporting projects that could harm the climate with money they count as “climate finance.”

Part of the problem is how that money gets from donors to projects in countries in need. I have worked closely with developing countries seeking help to deal with climate change. I believe that by paying closer attention to the strengths and weaknesses of climate finance delivery channels and matching them to countries’ needs, the international community can make a real difference in the fight against climate change.

How does climate finance flow?

Donor countries have three major channels through which they can route climate finance: bilateral agreements between small groups of countries, international funds like the Green Climate Fund and development banks like the World Bank. Each has benefits and drawbacks.

Bilateral agreements: First, countries can directly negotiate financing commitments, also known as bilateral agreements. These arrangements allow donors to target specific areas of need and are often more efficient than multilateral agreements, since they involve fewer entities.

For example, at the Glasgow climate conference in November 2021, South Africa and a group of donor countries announced an $8.5 billion effort to help South Africa transition away from coal while increasing renewable energy generation. This deal allowed four national governments and the European Union to come together and craft a package around what South Africa wanted.

Groups of donors have also come together to support national-level financing, though new research suggests these arrangements are underused.

A major drawback of bilateral arrangements is that they can be sensitive to the ebbs and flows of political attention. While issues in the news can attract funding, some countries struggle to get help.

Climate funds: It is precisely to ensure that countries have regular and consistent access to climate finance that a second option exists: international climate funds.

For example, the U.N.-backed Green Climate Fund is one of the largest and offers universal eligibility. The GCF’s scope is also deliberately broad to allow room for programming based on what countries actually need, rather than what is politically attractive at any given moment.

However, the GCF has received pledges totaling only about $18 billion. Developed countries are more likely to route contributions through their own bilateral channels or major development banks than through climate-focused funds.

Development banks: Finally, major development banks manage significant amounts of climate financing, though there are two key barriers to fully using them.

First, many of these banks have not ambitiously incorporated climate change into their programming. In fact, some came under scrutiny when their joint statement at the Glasgow climate conference did not include specific targets and timetables for ending financing for fossil fuel projects.

Second, most development banks have not been able to effectively mobilize finance from the private sector, in part because of their business models. Development banks tend to prefer projects with lower risk and like to operate in settings where the cost of doing business is not very high. Private-sector funding is crucial to filling the climate finance gap, which means that development banks also need to use instruments that are better able to mobilize private capital such as equity instead of relying too heavily on lending.

Ultimately, splitting climate finance across these different channels is helping to render financing largely ineffective, with developing countries receiving a fraction of the resources necessary to make an impact. Spreading finance thinly across delivery channels means the international community is neither learning from experimentation nor betting on bold ideas.

Getting serious about impact

Currently, the efforts to track the $100 billion are focused on counting how much money has actually flowed and where, not what impact has been achieved. Two key issues are complicating efforts to measure the impact.

First, there is no agreed-upon definition of what climate finance is, and countries use their own definitions. For example, in the past Japan counted money for new coal plants that are more efficient than old ones, but still highly polluting, as “climate finance.”

Second, some projects focus on helping countries put in place plans and policies. For example, countries have been receiving support to create national adaptation plans. The impact of these planning efforts really relies on how well the plans are implemented.

If the global community is serious about rising to the climate challenge, I believe the conversation needs to move forward in three ways:

1) The scale of financing should far surpass $100 billion.

2) The international community should be more targeted about which sources and channels best meet specific needs.

3) More research is needed to assess the impact of international climate finance so far and establish a sound understanding of which delivery channels work best for which purposes.

The $100 billion in promised funding is much-needed glue that helps hold the U.N. climate process together – it reflects the responsibility borne by countries that have been emitting greenhouse gases for years for driving climate change and the harm to countries that emit little.

Rishikesh Ram Bhandary is an assistant director of the Global Economic Governance Initiative at Boston University’s Global Development Policy Center.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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