Expectations of big headlines from COP23 were set low and probably with good reason. Even stellar results when the topics under discussion are things like a rulebook and a facilitative dialogue were never likely to stir any kind of 9th Symphony emotions. Rather, progress on these process issues was likely to satisfy those who are stirred by the more sombre and sinuous warp and weft of a Late Quartet.
At the time of writing, the final outcomes on aspects of the negotiations that were more likely to stir passions, such as loss and damage and speeding up action before 2020, aren’t fully clear, though indications from groups representing developing countries, such as IIED, are signalling that they haven’t got what they need. Negotiations on these points went on till the early hours of Saturday morning, after the official close of the COP.
The “COP of Exercise”
The dynamic of this COP was an odd one. At previous COPs I’ve attended, the negotiation zone (here called Bula) and the exhibition and side events zone (here called Bonn) are next door to each other, giving some sense of linkage between the two worlds. This time, they were a mile or so apart across a Rhine-side park. So though you got plenty of invigorating fresh air, riding the free bike service to and fro – some were calling it the ‘COP of Exercise’ – in the Bonn Zone there was a sense of divorce from the negotiations, with the vast marqueed space feeling like a slightly random trade fair rather than the advocacy adjunct it’s intended to be.
Lack of any presence of the private finance sector was a big omission by the UNFCCC
As ever, speech after speech called for urgency over implementation – calls reinforced this year by fresh memories of extreme climate events and by a small-island state, Fiji, holding the Presidency. Also as ever, though, there was an almost total absence of the people with the money to make the urgent progress happen, namely the private sector, especially institutional investors and banks. There were some announcements from investor groups, but unless I missed them all, as far as I could see there were only two finance-related stalls in the exhibition space – one for local insurer Munich Re and one for the International Emissions Trading Association (IETA), which has a very strong advocacy interest in Article 6 of the Paris agreement (covering carbon markets).
In a country with such a powerful financial sector, this seemed a big omission on UNFCCC’s part – surely, if asked, Germany’s lead financial institutions would have organsied such input well. What’s for sure is that the venue for the next COP, Katowice in Poland, is not a place the money (wo)men will be queuing up to visit, and that should be a matter for concern. The longer that COPs are not associated with finance, the more other forums, such as the upcoming Macron “Climate Finance Summit”, will come to be seen as the channels for movement around this topic.
Deutsche Asset Management did, however, launch a very good cartoon video on climate finance at a COP side event, which is our resource this week.
Adaptation in the Headlights
The Fijian presidency had signalled an intention to focus on adaptation, and there were a number of side-events on the topic. At these, however, the private sector presence was pretty much limited to the Global Adaptation and Resilience Investment working group (GARI), which has now secured some grant finance to develop a $500 million adaptation-themed fund. The Nature Conservancy also announced that it was replicating its innovative Seychelles debt-swap structure with three more small island states, and that it’s developing an innovative reef protection insurance structure in Mexico.
But these are drops in the ocean compared to the needs. Meaning no criticism of GARI, but just to illustrate the problem: The GARI fund was announced a year ago, at COP22. The way these funds go, it will take another year to structure and find investors and then 5 years to deploy. That’s a total of seven years to get $500 million into the system, when the need runs to $300 billion a year for adaptation, according to UNEP. Meantime, the giant multinationals, whose supply chains face major climate-related risks, and who will therefore be a big part of the answer to resiliency, were nowhere to be seen at the COP. No surprise, then, that just 3% of the money the private sector is putting into climate-related projects is for adaptation, according, again, to UNEP.
Climate Funds: GCF and GEF promise more “Coherence”
On the “official” climate finance side (the bi- and multi-lateral climate funds), there appeared to be some inklings of recognition of the huge overlap between the 30 or so funds, and the difficulties in access – especially for smaller players – created by their multifarious agendas and application processes. The two largest funds, the GCF and the GEF (Global Environment Facility) promised to make progress on what in UNFCCC parlance is called “coherence” during 2018.
Meanwhile, as part of the early-hours-of-Saturday final negotiations, it was agreed that the Adaptation Fund “shall serve Paris”. But there was no light shed on where the money would come from to keep it going. Another reason, we’d suggest, that now is the time for a wholesale rationalisation of the climate funds.
And insurance for the most vulnerable gets a boost
There were two potentially important announcements on insurance at the COP. The first was the launch of the Insuresilience Global Partnership, an expansion of a G7 initiative first announced at Paris but now a joint venture between the G20 and the V20 (the group of vulnerable nations, of which there are actually 49). MDBs, civil society organisations and private sector insurers have also now joined the state actors. The Partnership has about $550 million of funding, which, properly targeted, could make a big difference in vulnerable communities. The governance arrangements, though, look heart-sinkingly like those of the GCF, so let’s hope we aren’t disappointed by the pace of actual deployment.
The other second announcement was a clearing house on insurance data, to be run by the UNFCCC and named in honour of the Fiji presidency the Fiji Clearing House on Risk Transfer. Exactly what this clearing house will do isn’t obvious at this point, however. Its main feature is a service called “Risk Talk”, providing online access to a community of experts for those seeking “solutions” to insurance needs. Whether such access will then translate into, say, an actual written policy for an actually threatened community on a small island we can’t see or say. It’s a testament to the UNFCCC’s persistence that the clearing house has been established, but also a testament to the glacial pace of action that it was apparently first mooted some 30 years ago…
Civil society organisations are somewhat sceptical about the move to insurance solutions to what they see as climate justice issues, i.e. the “privatisation” of what should be a duty of developed nations to pay for loss and damage caused by their actions. Let’s hope that the Insuresilience initiative can be a success and prove that the trade-off is much wider availability of ultra-affordable insurance for the most at-risk populations.
For more climate finance news and comment, subscribe to our free weekly newsletter.
Anchors away for Blockchain?
A welcome detour from the COP zone for a couple of hours had me visiting a boat moored on the Rhine. Temporarily renamed the Fiji, this vessel was home to the 100 coding experts from around the world assembled by the Climate Ledger Initiative for a 24-hour hackathon addressing applications of blockchain technology to climate issues. 21 ideas had been worked on during the hack. More on this when the results are in, but as an aside, the visit was a startling confirmation of the weird gender (im)balance in the tech engineering world. While the coders came from many different countries and cultures, at a rough count about 96% were male. No one I asked had an explanation for why this was the case.
And so …?
Despite the finance world not being present at this COP, there was nevertheless a lot more talk about money than at previous ones. “Blended finance”  was a term used often, and though it wasn’t always clear that users fully understood the term, its prevalence was a sign of the growing recognition that “climate finance” means more than just donations from rich countries to poor.
This growing ability to see a wider spectrum of financing options for Paris is extremely welcome, and we sense that there’s community out there that could make the financing work, if it could only find itself. We recently reported that we are failing by a factor of perhaps 8 to mobilise the amounts needed for NDC-related implementation, so it was hard to escape the feeling at this COP that we’ve just wasted another year and the job of co-ordinating the money is not yet in the right hands. Perhaps Macron’s Climate Finance Summit in December will send a stronger, more hopeful message to the world on that front?
 The Fijians, by the way, have renamed the Facilitative Dialogue the Talanoa Dialogue, a change that at least makes the obscurity of the process exotic (though some experts in Polynesian languages were claiming that “talanoa” has more of a connotation of gossip than of “sharing stories and building empathy so as to make wise decisions”, as the UNFCCC has been defining it.)