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The Latest From Bonn, Canada's Adaptation Fund, Space Tech for Climate Risk, and More
Negotiations over the New Collective Quantified Goal float potential US$400bn for adaptation
Louie Woodall
June 10, 2024
AI-generated via DALL-E
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How are Negotiations on the New Climate Finance Goal Going?
The Bonn Conference (SB 60) is into its second week, and negotiations over the New Collective Quantified Goal (NCQG) for climate finance are grinding on.
Today, there was another meeting of the working group tasked with thrashing out the new goal. The NCQG is intended to replace the previous US$100bn annual finance target, which was finally achieved in 2022.
An input paper for today’s session offers clues as to the current state of play. First and foremost, US$100bn a year of finance has been set as the floor, rather the ceiling, for the new goal. This follows a recognition that current finance flows from rich nations have been far from enough to meet developing countries’ needs. Later in the paper, an overall goal of US$1.1-1.3trn a year by 2030 is floated — a more than 10 times increase on the previous target.
There’s plenty in the text on current thinking about the purpose of NCQG finance, too. Importantly, it says the new goal should cleave to the “needs and priorities of developing countries” and be informed by recent UN-backed studies, including the 2023 Adaptation Gap report. This claimed that the adaptation finance needs of poor nations are 10-18 times larger than international public finance flows. The input paper also highlights the “urgent need” for more grant-based and concessional finance “in particular for adaptation and loss and damage.”
Significantly, under the ‘Principles’ section, the input paper says the NCQG should aspire to “non-debt inducing finance for developing countries”, underscoring the desire among poor countries for more climate funds to be in grant or concessional form, so that they don’t add to their existing debt burdens. The Organisation for Economic Co-operation and Development (OECD) reports that loans made up 69% of all public climate finance provided in 2022.
Public climate finance provided in 2016-2022 by financial instrument (US$bn)
Improving access to climate finance is another issue highlighted in the input paper. Specifically, it says no additional conditions should be imposed on developing countries in the provision of NCQG funds. The idea is to speed up delivery of capital to low income countries and climate-vulnerable nations, rather than have it tied up in red tape.
Where things may get especially tricky is around the “thematic sub-goal approach” that has been floated, which would see the overarching NCQG cascade down to multiple potential smaller goals, focused on specific issues. One is a sub-goal linked to ensuring that developing countries have the resources “to adapt and foster climate resilience to the worst-case projected temperature scenario.” In other words, this would be a dedicated adaptation finance goal. The input paper even puts an aspirational number to this: US$400bn per annum by 2030. That’s four times the total climate finance goal adopted back in 2009.
While the input paper is by no means a polished document, and will likely be substantially re-worked before the end of SB 60, it sets a high bar of ambition — one that may be fiercely contested at the UN Climate Change Conference in Azerbaijan (COP29) later this year.
Canada Launches CAD$530mn Adaptation Fund
Canada is doling out adaptation dollars to the country’s towns and cities — more than half a billion, in fact.
The new Green Municipal Fund, announced last Monday by Minister of Environment and Climate Change Steven Guilbeault, is “one of the largest ever investments in building liveable and resilient communities,” according to the government.
The CAD$530mn (US$385mn) cash pile will be parceled out to municipalities to help them draw up adaptation plans, build up expertise, and conduct project feasibility studies. Cities and towns can also apply for up to CAD$1mn to get started on shovel-ready projects. The government hopes to fund more than 1,400 “municipal activities” by 2031.
While CAD$530mn is a hefty chunk of change, it’s a fraction of what’s required to climate-proof the country, according to the Federation of Canadian Municipalities (FCM). In a 2019 report, the research and advocacy group — which lobbies on behalf of 2,100 towns and cities — said CAD$5.3bn of spending at the local, federal, and provincial levels is needed every year .
From projects that support storm-resistant coastal barriers and water conservation practices, to slope stabilization for fire-impacted and permafrost-degraded areas, this initiative is a national declaration with locally felt impacts.
The Green Municipal Fund was first announced by the Liberal government in 2022, as the country’s national adaptation plan was being knocked into shape. Guilbeault said the funding was only confirmed in this April’s budget.
Also last week, the government announced CAD$3.3mn (US$2.4mn) of investments to build up capacity and expertise at the local level and engage communities in climate action.
Other Stuff
African Development Bank joins the African Carbon Markets Initiative to enhance climate finance (African Development Bank Group)
World Bank and Government of Türkiye kickoff US$400mn project to make the country's forests more resilient (World Bank)
New Zealand government budget redirect NZD$2.4bn of funding previously earmarked for climate adaptation and mitigation (RNZ)
Oklahoma approves law providing financial grants to build and retrofit homes to be more climate resilient (Oklahoma Insurance Department)
Massachusetts governor awards US$3.4mn to universities to support climate workforce training (mass.gov)
What’s on at Bonn
It’s not just climate finance on the Bonn agenda this week — adaptation-specific issues are getting their turn in the spotlight, too.
Earlier today, informal consultations were held on National Adaptation Plans (NAPs), matters relating to the global goal on adaptation (GGA), and the Nairobi Work Programme (NWP), which focuses on impacts, vulnerability, and adaptation to climate change. Let’s take a look at each of these in turn.
On NAPs, a draft text, dated June 7, notes “with concern” that many developing countries are yet to put these plans in place. As Simon Stiell, the UN Climate Change Executive Secretary, remarked last week, just 57 have drafted plans — a number he says must “grow substantially.”
However, the fault is not all on the laggards themselves. The draft text notes that there are “gaps and needs” stymying the drafting of these plans, “including in terms of access to adequate and predictable finance, technology transfer and capacity-building support.”
To remedy this, the text urges developed countries and other entities to back up developing countries’ efforts and invites them “to explore all sources of available financial support for strengthening the formulation and implementation of national adaptation plans, including public, private, domestic and international resources.” It also requests that the Least Developed Countries Expert Group (LEG) — a group of nations tasked with providing technical assistance on NAPs — and the Adaptation Committee step up their work on dealing with the “gaps and needs” referenced.
As concerns the GGA, informal notes published today focus on the COP28 mandate to build out the UAE Framework for Global Climate Resilience — last year’s agreed-on approach to achieving the goal. A handful of approaches on addressing the adaptation targets set out by the Framework are included. One option is to instruct UN bodies to compile or map “existing indicators” that are relevant to these adaptation targets, potentially in order to identify “a set of universally applicable indicators” that all countries can then use.
The notes also float the idea of establishing seven working groups to dig into the seven targets, which, you may remember, are related to: water, food systems, health impacts, ecosystems and biodiversity, infrastructure and human settlements, poverty, and cultural heritage. Another option under discussion is delegating this expert engagement work to the Adaptation Committee or an ad hoc group, which would review, refine, and identify any gaps in the indicators referenced above.
Finally, the NWP. Its avowed purpose is to help countries, particularly the poorest and most climate-vulnerable, to improve their understanding and ability to assess climate impacts and vulnerability, so that they can make better adaptation decisions. Going by the language of the latest draft text, however, it seems like there’s some uncertainty around how the NWP should feed into the UAE Framework for Global Climate Resilience.
Several options appear in the draft text. One is for the NWP to contribute specifically to the Framework’s programme on indicators for measuring progress achieved towards adaptation targets. Others suggest a more vague role for the programme.
Interestingly, the draft also has language expressing “serious concern” on the poor collaboration between the NWP and other bodies when it comes to “identifying progress and gaps in knowledge and practices related to the provision of support by developed countries for adaptation action in developing countries.”
Now I’m not the best interpreter of whatever convoluted language UN negotiators like to use, but “serious concern” suggests the NWP and its fellows have fallen short when it comes to some of their responsibilities.
Ireland Rolls Out Revised National Adaptation Plan
While some countries are still working on getting their first NAP out the door, Ireland is out with its second in six years.
The new National Adaptation Framework, as it’s called, accounts for the latest assessment of the Republic’s climate risks and adaptation and resilience needs. It instructs government parties to prepare adaptation plans for specific sectors, including agriculture, transport, and tourism.
While climate change itself is challenging, adaptation is equally challenging. It will require each sector, each utility company, each local authority to plan seriously for the inevitability of more extreme weather events. At a local authority level, this will include how we zone and develop into the future.
The Framework is intended to be a money saver over the next six years. The Irish Fiscal Advisory Council (IFAC) has pegged the cost of extreme weather events to Ireland’s economy at around €3bn (US$3.2bn) from now to 2030. Recent climate-related disasters have already exacted a heavy toll. Heavy rains this year and last have waterlogged farms, complicating the growing of fruit, vegetables, grains, and fodder for livestock.
US Senate Hearing on Climate Impacts to Insurers
Escalating climate risks in the US are pushing insurance premiums higher, yet some US senators seem to think the solution is something other than greater investment in resilience, adaptation, and intelligence.
At a hearing of the Senate Budget Committee last week, Republican lawmakers admitted that the price of covering homes and property was rising, but did not want to engage on a primary cause — climate change. Chuck Grassley (R-IA), the ranking member on the committee, called the hearing part of a “crusade against American fossil fuel companies” and an attempt to “bully insurers into abandoning their diversified portfolios, so they stop underwriting all fossil fuel projects.”
Grassley admitted that while insurance premiums “may increase after the recent storms, including those very storms in my state of Iowa” climate change “isn’t the primary driver of insurance rate hikes.” He added, incredibly I thought, that the collapse of the insurance industry was not an immediate concern, and in the very next breath admitted that six insurers had recently exited Iowa.
In contrast, committee chairman Sheldon Whitehouse (D-RI) addressed the climate threat to insurance directly: “Climate risk makes things uninsurable. No insurance makes things unmortgageable. No mortgages crashes the property markets. Crashed property markets trash the economy. It all begins with climate risk, and a major party pretending that climate risk isn’t real imperils our federal budget and millions of Americans all across our country.”
Other Stuff
Climate change threatens progress against malaria, countries warn at World Health Assembly (Health Policy Watch)
US builders face climate adaptation lawsuits as building codes fail to keep pace with changing climate (Smart Cities Dive)
In hotter, drier Colorado River region, USDA programs don’t help farmers tackle climate crisis (Environmental Working Group)
IIGCC Call to Action for the next EU political cycle (IIGCC)
Brazil legislature approves bill forcing public sector to draft climate change adaptation plans (BN Americas)
Mauritius plans 2% climate levy on company profits to back climate adaptation and ecosystem restoration (BNN Bloomberg)
New York legislature passes Climate Superfund Act, now awaits Governor’s signature (Food & Water Watch)
UN official highlights how better preparation has shrunk disaster deaths despite worsening climate (AP)
FIS gets into Climate Risk Modeling Game
US fintech giant FIS is muscling in on the crowded climate risk analytics space with a new software-as-a-service (SaaS) offering.
The Climate Risk Financial Modeler is designed to help all kinds of businesses “better assess, reduce and report their exposure to the physical risks of climate change.” By leveraging data from PwC US — and combining this with data from clients on their buildings, warehouses, and other fixed assets — the Modeler claims to be able to guess the potential impacts of all kinds of extreme weather events and estimate potential financial losses.
FIS is an established tech provider (and S&P 500 company), which puts it in a good position to popularize its Modeler. However, it’s entering a competitive space. Jupiter Intelligence, S&P Global, and Moody’s are other prestigious names already in physical risk modeling. A raft of startups are also chasing market share, including the UK’s Climate X and Sust Global.
‘CommonSpace’ Looks to the Stars to Provide Adaptation Intelligence
Developing countries are looking to the heavens for climate adaptation intelligence. Last week witnessed the launch of the Commonwealth Space Collaboration, or ‘CommonSpace’ initiative, which aims to increase Commonwealth countries’ use of space technology, data, and research in their climate-proofing efforts.
A dedicated Space Data Hub will be established to promote the use, and sharing of, space-based climate risk data to enhance resilience and help pursue the UN’s Sustainable Development Goals.
“In the long run, this initiative will provide these countries with essential data to make critical decisions, direct investments in resilience-building projects, and safeguard the lives and livelihoods of those on the frontline.”
The Commonwealth is an association of 56 countries with historic links to the British Empire – though any country can join the club today.
Other Stuff
More VC money is going toward European positive impact-driven startups than ever before (European Women in VC)
Scientists are on a quest for drought-resistant wheat, agriculture’s ‘Holy Grail’ (CBC Lite)
Emerson Electric to sell climate tech portfolio, which includes energy efficient heating and cooling solutions, to alternative asset management giant Blackstone (Emerson)
Research
Improving energy resilience in Pakistan can avert 175,000 child and adult deaths (UNICEF)
Number of children in crisis level of hunger due to extreme weather events doubles in past five years, analysis shows (Save the Children)
Climate change, El Niño and infrastructure failures behind massive floods in southern Brazil (World Weather Attribution)
Indicators of Global Climate Change 2023: annual update of key indicators of the state of the climate system and human influence (Earth System Science Data)
Urban Content of NDCs: Local climate action explored through in-depth country analyses: 2024 Report (UN Habitat)
Informal institutions and “Imperfect Equity” in internationally financed adaptation in Madagascar and Mauritius (World Development)
Thanks for reading!
Louie Woodall
Editor
