How to Finance the Green Transition
In addition to reaffirming their commitment to reducing greenhouse-gas emissions, world leaders who gathered for the UN Climate Action summit this week also discussed how the public and private sectors can work together to tackle climate change. They should focus on the role of private finance, without which there will be no green transition
NEW YORK – World leaders gathered at the United Nations in the New York this week to take stock of the global fight against climate change, and to submit new emissions-reduction commitments. Given the scale of the climate crisis, we are not moving nearly as fast as we should be. We have been stuck in second gear for too long. Accelerating the pace of change will require a combination of efforts from all actors, public and private.
Fortunately, there is already a growing private-sector coalition dedicated to combating climate change, through the work of the Climate Finance Leadership Initiative (CFLI). Led by Michael Bloomberg, the UN’s Special Envoy for Climate Action, the CFLI was created to mobilize private capital at the global level in response to this critical issue. This month, the CFLI released a new report, Financing the Low Carbon Future, which outlines ways green finance can be scaled up to support an orderly transition to a low-carbon economy, and identifies opportunities for public-private partnerships to meet the objectives of the 2015 Paris climate agreement.
The EIB is the largest multilateral investor in climate-related projects in the world. But now, answering the call of European heads of state and European Commission President-elect Ursula von der Leyen, we intend to scale up our ambitions and strengthen the EIB’s role as the European Union’s dedicated climate bank. By mainstreaming climate considerations and targeting low-carbon investments, the EIB will be able to channel at least €1 trillion ($1.1 trillion) toward low-carbon projects over the next decade.