COP28: Now put the money to work

A deal has been done and whilst there will be arguments between the substantive difference between “move away” and “phase out” of fossils fuels many will breathe a sigh of relief. The key positives are an explicit focus for the first time on “transitioning away from fossil fuels” in the text and a specific to do list for Governments on critical next steps.

But once the 100,000 people attending COP28 leave Dubai will anything actually have been achieved?

In my experience of attending all but two of these climate Glastonbury’s success can never be judged at the event itself but what is certain already is that there were real resources present in Dubai. According to Reuters more than $83 billion was mobilised during the first five days. However real climate impact will only be when those funds flow to those countries which need them most.

To attract these life changing sums of private and public investment, countries must adapt their regulatory, legal and financial frameworks to provide adequate carbon reduction targets and strategies, establish reliable institutional processes and lower investor risk. Sadly, COPs are not known for their track record in achieving this.

This COP started with some surprising announcements of over $700m support into the Loss and Damage Fund. A mechanism that was fought against for so many years. But that is a relatively small sum compared to institutional and private capital that is looking for Governments and projects that are committed to this journey. The next critical steps need to be focussed on lowering investor risk. Governments should work with risk instruments that capital markets are already successfully using in other sectors of the economy. These include advanced market commitments (AMCs), sovereign guarantees, risk transfer products, and results-based financing models.

Once investor risk has been lowered then trusted intermediates are needed to help support the flow of money by working with governments to approach delivery risk at multiple levels: For nations heavily in debt, public financial management tools can help use resources effectively and transparently. This will increase investor confidence by reducing fiduciary risk. To lower political risk, intermediaries who understand the political economy can be brought in to leverage long-standing relationships with key influencers which outlast the government of the day. In Ukraine, for example, an economy under attack and in transition civil society has brought about important policy changes and is therefore a powerful force to be reckoned with.

Affordable, truly sustainable climate initiatives can be delivered across the continent fast once the capital starts to flow. Huge development benefit will follow. We have seen how quickly private investment can move innovation in the climate sector, linking renewables, energy storage, climate-friendly digital technologies and electric vehicles. These are the innovations that will secure the future of our planet long after the lights are turned off in Dubai.

James Cameron, Chairperson, Crown Agents Limited

About  James

James has negotiated international agreements including UNFCCC and the Kyoto Protocol representing the Alliance of Small Island States (AOSIS) – a coalition he helped to build. He has also advised the EU Commission on the creation of the European Emissions Trading System (EU ETS) and was Counsel to Baker & McKenzie, founding and heading their Global Climate Change & Clean Energy Practice.