The International Weather and Climate Forum (IWF) 2018 is one of the major events engaging and educating policy makers, businesses and citizens. It consists in three events: one for the public; a media-workshop gathering weather reporters from numerous countries, and; an international event for scientists and experts in climate finance.
The international event, attended by representatives from the World Bank, Météo et Climat, and ADEME focussed on new and innovative financial instruments to deliver a green transition to a low-carbon society. Representatives from companies such as I4CE, SNCF, Schneider Electric, EIFFAGE and C40 discussed the transition to a low carbon society to meet the terms of the Paris Agreement. Here’s what we learnt:
1. A profound transformation to a low carbon economy requires a massive reallocation of investments to assets, infrastructure projects and innovative technologies that can be reconciled with the physical limits of the planet. Building a society that has lower carbon emissions and which is adapted to the effects of climate change means investing in renewable energy production, the costs of which are falling, improving the energy efficiency of production systems, the thermal renovation of homes and innovation but also the transformation of transport and cities.
2. As set out in the Paris Agreement, there is a range of funding for this low-carbon transition which combines international, national and local schemes, draws on private and public capital and requires the support of the public authorities to define the right incentive systems for investors, companies and households.
3. Globally, the additional funding needs to maintain climate change below the limit of 2°C by 2050 is estimated to be:
- 29,000 billion dollars according to the International Renewable Energy Agency (IRENA)
- 40,000 billion dollars between 2016 and 2050 according to the International Energy Agency
- At a European level, according to the report by the High- Level Expert Group on Sustainable Finance (HLEG) (2017), Europe needs approximately 180 billion euros of additional annual investment over the next two decades, particularly in clean energy, to maintain the increase in global temperatures below 2 degrees.
- In France, the need for green investments to meet the objectives of the National Low Carbon Strategy and of the Multi-Annual Energy Programme by 2050 are estimated to be between 30 and 60 billion euros per year. According to research undertaken by I4CE approximately 32 billion euros were invested in climate annually in France between 2013-2016.
4. Investors are increasingly being asked to follow strategies compatible with the 2°C objective and be more transparent about their investment practices. The Task Force on Climate Disclosure (TCFD) recommends companies provide better information on climate risk to allow investors to make informed investment strategies. In France, Article 173-VIof the Law on « Energy Transition for Green Growth » requires corporate investors to specify how they take account of climate risk in their investment activities.
5. Local and regional authorities play a major role in deciding on the consumption of natural resources (water, energy), land use and the renovation of existing building stock and even investments in new green infrastructures. The stakes are particularly high in the fast-growing cities of developing countries, where the future of GHG emissions and vulnerability to natural disasters will play out over the coming decades.
6. Companies will have to make significant investments to reduce emissions. It may help if there are incentives and if they are protected from competitiveness issues. While large organisations have few financing issues in most countries, small businesses often have capital constraints, especially in developing countries.
- The investment needed for the low carbon transition of the energy system was estimated to be between 30,000 and 40,000 billion dollars worldwide (source: IRENA, IEA).
- Global investments in the electric sector exceeded those of the upstream oil and gas industry for the first time.
- In France, 31.7 billion euros were channelled into “green” assets in 2017 (source: I4CE).