Mathieu Jusse: “5% of low-carbon financial flows go to low-income countries”

The last part of the report of the IPCC (Intergovernmental Panel on Climate Change), published last April, presents solutions to combat global warming. In their multi-thousand-page report, climate experts focused on the role of finance and investment in climate change mitigation. Mathieu Jusse, Director of Action at the GoodPlanet Foundation, works to fund national and international projects that help both climate change mitigation and adaptation. In this interview, he provides elements of understanding, explanation and interpretation of what is said in the latest Giec report on carbon financing.

matthieu jousset financial investment carbon climate southern countries
Mathieu Jousse © GoodPlanet Foundation

What does the IPCC report say about the contribution of finance to climate change mitigation?

Chapter 15 of this report deals with the finances and resources involved in ensuring the carbon neutrality set out in the Paris Agreement. The report focuses on mitigation, ie solutions to reduce greenhouse gas emissions. The IPCC report said that the overall level of investment was much lower than what would be needed to limit the temperature rise to 2 ° C.

“The IPCC report says that the overall level of investment is much lower than what would be needed to limit the temperature rise to 2 ° C. »

If we want to stay on the trajectory of the Paris Agreement, the IPCC report states that investment in global warming should be 3-6 times higher in developed countries, while for developing countries and least developed countries it will be necessary. multiply them 4 to 8 times. More specifically, it points to inequalities in access to finance, especially for developing and least developed countries.

The IPCC authors point to the slowness of finances to master this topic, and the gap between the distribution of financial flows and the need to reduce greenhouse gas emissions, how can this be corrected?

There are several solutions. One of the tasks is to address the structural difficulties of access to the capital market for developing countries. They are explained by the fact that these countries often have significant debts, that their financial systems are very national and less internationally oriented than in developed countries. This leads to weak integration into regional and international capital markets. From now on, more investment should be directed to low-carbon projects globally, particularly in developing countries. 5% of low-carbon investments go to low-income countries.

“We need to invest more in low-carbon projects. »

In addition, it is necessary to reduce the degree of uncertainty of the risk associated with these investments. Indeed, in addition to renewable energy, mitigation projects involve innovations and technologies that have not yet been extensively tested or even implemented. Investors need to be reassured by better transparency of these investments, with greater visibility of the created non-financial value. Everything can be appreciated thanks to labels.

[À lire aussi L’essentiel sur le nouveau rapport du Giec consacré aux solutions pour réduire les émissions de gaz à effet de serre et atténuer le changement climatique]

Finally, the IPCC report emphasizes the need to provide cross-border funding to countries that have difficulty raising funds at the regional and international levels. The IPCC recalls the need to develop green or green bonds and the importance of financing natural solutions such as carbon sequestration through mechanisms such as REDD + (reducing emissions from deforestation and forest degradation in developing countries). , which is to pay for the preservation of forests. The issue of transition covers both mitigation, adaptation and increase of natural carbon sequestrants that form healthy ecosystems. Therefore, it means investing in their preservation.

[À lire aussi REDD+ ou rémunérer la protection des forêts ]

The report also states that 90% of climate finance is for mitigation, does this mean that adaptation is a bad attitude, and does it mean that we risk losing resources to prepare for the effects of global warming?

Indeed, developing countries and the least developed countries have a significant need to adapt to climate change, being both the least responsible and the first victims of this change. But the situation is more contrasting between the countries of the North and the South. Funding is lower than the needs of developing countries that have been the first to suffer from global warming. However, there is a real urgency to mitigate the consequences, even if action is needed everywhere. As the amount of global warming increases in these countries, more resources can be allocated to adaptation.

“There is also a lot of educational work to be done with investors to reassure them and make them understand the need to align their decisions with the goals of the Paris Agreement. »

In already developed countries, the financial allocation for adaptation remains very small, and it seems doubtful to me, because they have more resources and now have to show that they can predict the future.

[À lire aussi Réchauffement climatique : l’adaptation est aussi à la traîne, selon l’Onu]

What needs to change in the first place to accelerate investment in reducing greenhouse gas emissions?

Investments should be at least three times. To this end, a lot of work is being done to harmonize the international financial base and capital market. This would make it easier to distribute financial flows to all regions of the world. There is also a lot of educational work to be done with investors to reassure them and make them aware of the need to align their decisions with the goals of the Paris Climate Agreement. They need to show that climate-friendly investments have benefits. The cost of inaction on the climate is higher than the investment needed to address it. Giec makes it clear in this report that we must move out of the logic of safe short-term investments.

“Exit from the logic of short-term investments. »

[À lire aussi  La charge de la dette externe, une entrave à l’action climatique des pays les plus pauvres]

Do low-carbon investments and financing necessarily have to go through the price of CO2? and the higher the price?

The cost of carbon today corresponds to local or national logic or project logic, so it is not homogeneous. However, it would be interesting for the carbon price to follow the signals sent by central banks and international organizations in order to achieve harmonized costs at the global or regional level. However, the convergence of carbon prices at the global level also raises the legitimate question of whether developing countries and the least developed countries can be required to bear exorbitant carbon prices, even if they are trying to attract investment. To ensure the fairness of the system, I believe that it is necessary, first of all, to separate the carbon price between developing countries and developed countries. And then make it converge.

“It is very important to continue to support the logic of international solidarity with developing countries. »

Do you have the last word?

It is very important to continue to uphold the logic of international solidarity with developing countries until the climate finance system is harmonized globally in terms of access to capital and ease of investment from country to country, whether in the North-South or South-South direction. This logic of international solidarity can be achieved through the impact of investment in low-carbon markets in the least developed and developing countries, through official development assistance, carbon financing or environmental sponsorship. These are ways to respond to an emergency in anticipation of harmonizing climate finance.

Interview with Julien Leprove

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