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We Need Trillions of Dollars for Climate Finance, Where Will it Come From?

The COP 27, or Conference of the Parties, is currently underway in Egypt and brings the topic of climate change funding back into the limelight. Despite the fact that conferences like COP 27 have been occurring for over 30 years, and in addition to repeated calls for the U.S. to become a “carbon neutral country”, the amount of carbon emissions continues to rise year after year.


Climate Finance Agreements & Goals

The first COP took place in 1995 in Germany after establishing the United Nations Framework Convention on Climate Change (UNFCC) during the 1992 Rio Earth Summit. By 1997 there were a series of binding targets set out for 37 countries, which grew to 197 countries in 2015 when the Paris Agreement was adopted in order to outline ambitious goals to combat climate change.

It has been 7 years since the Paris Agreement and if one thing has been learned it’s that combating climate change is… expensive. The promises made have generated a lot of hope and excitement but the execution on them has been less than thrilling, especially from developed nations, which are responsible for 79% of historical carbon emissions. (*Center for Global Development)

Who caused climate change?

Climate Finance Broken Promises

There is a common theme emerging at all of these conferences. Rich nations make ambitious pledges to reduce their country’s emissions while also promising to contribute capital to less wealthy nations, theoretically allowing them to adapt and mitigate further rises in temperature. Unfortunately these pledges fall flat when the results are measured, with the UN Copenhagen Climate Summit being a prime example.

“Compared with the investment required to avoid dangerous levels of climate change, the $100-billion pledge is minuscule. Trillions of dollars will be needed each year to meet the 2015 Paris agreement goal of restricting global warming to “well below” 2 °C, if not 1.5 °C, above pre-industrial temperatures.” (Saleemul Huq, director of the International Centre for Climate Change and Development in Dhaka.)

Climate Finance Targets
Organization for Economic Co-operation and Development. Climate Finance Provided and Mobilized by Developed Countries: Aggregate Trends Updated with 2019 Data  (OECD, 2021)

Finance Needed to Reach Climate Targets

Total climate finance has grown steadily to USD 632 billion as measured in the Global Landscape of Climate Finance 2021 report. But wait, this sounds like a lot of money right? It certainly is a start, but based on estimates climate finance must increase by at least 590% (USD 4.35 trillion) annually by 2030 to meet climate objectives. So, where will this financing come from?

Democratizing Climate Investment Opportunities

Giving everyone access to invest in climate solutions is the only way we can hope of achieving such ambitious climate finance targets. Citizen Mint’s impact investment platform allows investors, financial advisors and wealth managers to access investment opportunities in affordable housing, renewable energy, carbon removal and more. With lower minimums and a simple signup process, you can make investments in minutes, which seek to maximize returns while solving global issues.

Climate Hope Looking Forward

As we face these global challenges it’s important to also recognize the progress we have made and celebrate the wins. Here are some top reasons to be hopeful that COP 27 will result in positive change for our planet:

  • Brazil’s new leader has promised zero deforestation: The most recent elections in Brazil in October 2022 were won by Luiz Inacio Lula da Silva, who pledged “zero deforestation” of the Amazon in his victory speech. *Source
  • We are at a historic energy turning point: It’s true that we’re in a global energy crisis triggered by Russia’s invasion of Ukraine. But that could be a “historic turning point” towards a cleaner, more affordable and more secure energy system, according to the International Energy Agency (IEA). *Source
  • Australia joined the COP26 methane pledge: Countries, which signed the pledge agreed to take voluntary action to lower methane emissions by at least 30% from 2020 levels by the year 2030. It has now be signed by 112 nations, with Australia, the world’s 11th largest methane emitter. *Source
  • The U.S. Inflation Reduction Act includes $360B+ in climate investment, tax credits and loans: This bill was passed in August 2022 and aims to reduce energy costs and emissions while increasing energy security, and investments in environmental justice and rural communities. *Source

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