Climate investment: light at the end of the tunnel

10th January 2024 by CMIA

Although at COP 28 there were several issues on which the member countries could not agree, it seems that climate investment will see light at the end of the tunnel.  

The summit opened with great news: the launch of the U$400 million Climate Loss and Damage Fund for vulnerable countries. Despite being a breakthrough, the money raised was much less than the $100 billion proposed by developing countries.  

We also saw how World Bank President Ajay Banga announced ambitious plans for the growth of high-integrity global carbon markets, in which 15 countries will earn revenue from the sale of carbon credits generated by the preservation of their forests. 

Although we applaud the fact that there are more public resources for climate action, the reality is that, to achieve the objectives of the Paris Agreement, public financing is far from sufficient. Proof of this is that COP 28 failed to define the details of financing the energy transition and new technological methods for the removal of carbon dioxide.  

For this reason, private climate investment is essential to achieve the goals, and at this COP the interest of many actors in investing in this sector could be felt, more than in previous years. 

COP28 was expected to agree on the operating framework of Article 6 of the Paris Agreement, which sets the rules for global trade in greenhouse gas emission reductions, a mechanism that allows countries and companies to accelerate the achievement of their climate ambitions.  

Although there was significant progress on this issue, no agreement was reached at COP 28 and many actors agree that “it is better not to have an agreement than to have a bad agreement”. But the member countries remain committed to the pilot projects under this article. 

For example, bilateral agreements were reached between Costa Rica, Senegal and Fiji with Singapore; Chile and Tunisia with Switzerland; Papua New Guinea and Singapore; Morocco and Norway; and Rwanda with Singapore and Kuwait. 

Also cooperation agreements between the United States and Brazil were also announced; Germany and Australia; Europe and Indonesia; Switzerland and Ghana; and the United Kingdom and South Africa. 

Voluntary carbon markets (VCM) also gained prominence in the absence of a fully operational Article 6 framework. Voluntary carbon markets (VCM) have also been strengthened and are working to improve their integrity and transparency. 

Thus, six independent VCM accreditation programs made a Joint Statement in support of countries implementing Article 6 to achieve NDCs. An “End-to-End Integrity Framework” was also published on how different actors (VCMI, ICVCM, SBTi, GHG Protocol and CDP) play a complementary role in carbon markets.  

There is still a long way and hard work to achieve a new generation of climate transactions. CMIA and its members know that we are on the right track, and will continue contributing to all discussion spaces that generate enabling environments for the increase in climate investments needed to achieve the climate goals that the world urgently needs.