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1. Finance for nature: how to improve funding for the protection of biodiversity

Author:
Heather Grabbe and Luca Léry Moffat
Publication Date:
12-2024
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The economics of biodiversity are still little understood and the loss of nature, which provides pollination, clean water and other ecosystem services, is often considered to have primarily local economic impact. But nature has an intrinsic value and also has extrinsic value to many parts of the economy. Destruction of nature has global costs because nature loss accelerates climate change by releasing greenhouse gases into the atmosphere, causes water stress and crop failures that reduce food exports, and can force people to move. Some of the consequences are systemic. Others are long term, because potential solutions to human problems contained in intact ecosystems, such as medicines and bio-technologies, are lost to future generations. The benefits from nature – and particularly biodiversity – do not result in revenue flows that would protect natural capital assets from degradation. The costs of ecosystem destruction are still largely unaccounted for. Finance for biodiversity is very small relative to what is required for its maintenance. Most of the sources are state or public funds, or from private philanthropy. Because biodiversity is complex and has largely been ignored as an economic issue, market mechanisms are still at an early stage of development. Nature still does not appear on many balance sheets, and nor is it integrated into risk assessments across the public and private sectors. This policy brief summarises the options and outlines the main considerations in finding better ways to value nature. We explain why financial tools are important for biodiversity, give an overview of the range of tools developed to finance ecosystems and assess which would be most suitable to pursue at European Union level. The focus in developing existing and new tools should be on whether they can deliver reliable revenue streams over a long period to maintain the value of natural assets. In the EU, the most impactful immediate means of using financing to protect and restore nature is to defund the damage caused to biodiversity by eliminating nature-harming subsidies, starting with reform of the common agricultural policy.
Topic:
Climate Change, Climate Finance, Biodiversity, and Energy
Political Geography:
Europe

2. Is International Climate Finance Unfair and Inefficient?

Author:
Thibaud Voïta
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
Institut français des relations internationales (IFRI)
Abstract:
Finance is arguably the most sensitive climate negotiation topic. Different studies have shown that rich countries emit the majority of greenhouse gas (GHG) emissions, while the climate footprint of the poorest countries is much more limited. In addition, the countries that emit the less often turn out to be among the most vulnerable to climate change, with high needs in terms of adaptation finance. According to some analysis, the 46 least-developed countries suffer from a high risk of loss and damage, and the countries that are the least at risk are in Europe. Therefore, developing countries are demanding contributions from the developed world to address their climate finance needs (both in terms of mitigation and adaptation). These demands have been somehow met with a pledge made at COP 15 in 2009, where developed countries announced a yearly contribution of 100 billion dollars (USD) by 2020. However, this pledge has not been honored. Meanwhile, climate change is accelerating and, as a result, countries’ needs in terms of adaptation are increasing, as well as their loss and damage. The finance gap is widening and though the 100 USD billion pledge is expected to be achieved in 2023, analysis from the think tank Climate Policy Initiative (CPI) shows that it will not be enough to address the current needs. According to their analysis, the current flows need to be increased by at least 590% annually. This briefing will show that, in addition, climate finance is not accessible to the poorest and therefore increases inequalities and the exclusion of the most vulnerable countries. The Prime Minister of Barbados, Ms. Mia Motley, complains that the “international financial system […] is broken, outdated, infested with short-termism and downright unfair. In parallel, the multilateral climate finance governance is evolving: new multilateral banks and donors are gaining ground and could be the first step of a power shift in climate finance from Western countries to emerging economies. Meanwhile, the Bretton Woods institutions are being reformed, and new mechanisms may bring promising developments (e.g., under Article 6 of the Paris Agreement). The Paris Summit for a New Global Financial Pact on June 22-23, 2023 is an opportunity to address these issues, though it also risks highlighting the North-South tensions further.
Topic:
European Union, Climate Finance, Energy Transition, and Green Economy
Political Geography:
Africa, Europe, Asia, and France

3. EuroPACE Market Analysis

Author:
Grzegorz Poniatowski, Izabela Styczynska, Karolina Beaumont, and Karolina Zubel
Publication Date:
10-2019
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
EuroPACE is an innovative tool designed to make home renovation simple, affordable and reliable for all Europeans by combining affordable financing with people-centric technical assistance. EuroPACE offers 100% up-front financing that can be repaid over a long term of up to 25 years. The innovation lies in the collection and repayment mechanism – financing is attached to the property and is repaid regularly with charges linked to a property. Homeowners are offered logistical and technical support throughout the process and access to trained and qualified con-tractors. Thus, EuroPACE overcomes the main barriers to home renovation – lack of financing, technical knowledge and complexity of the works. The concept of EuroPACE is inspired by the success of a financing model called Property Assessed Clean Energy (PACE), launched in California in 2008. In the United States (US), the PACE market reached over USD 6 billion in funded projects, including the retrofit of over 220,000 homes, which resulted in more than 50,000 new local jobs and the creation of hundreds new companies.
Topic:
Energy Policy, Markets, Climate Finance, Fiscal Policy, and Innovation
Political Geography:
Europe