Climate Finance is Grossly Inadequate in Developing Countries, says UAE Minister

Sultan Al Jaber, the UAE’s Minister of Industry and Advanced Technology and COP28 President-Designate expressed concern over the availability of climate finance, especially for the countries in the Global South.

Co-chairing a high-level round table conference held for a New Global Financing Pact at the Palais Brongniart in Paris on Thursday, the UAE Minister said that climate finance was nowhere “near available enough, accessible enough and affordable enough” for these countries.

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), Ajay Banga, President of the World Bank, and Mark Carney, UN Special Envoy for Climate Action, and Finance and Co-Chair of the Glasgow Financial Alliance for Net Zero (GFANZ) also co-chaired the meeting.

The roundtable is a key forum for an informal exchange of high-impact ideas to drive substantive progress on the climate finance agenda. It also brought together net zero-committed financial institutions in GFANZ, government officials, and the leadership of the IMF and multilateral development banks (MDBs) to identify priority actions to mobilize private climate investment in emerging markets and developing countries (EMDCs).

The World Bank also launched the Private Sector Investment Lab, which will be co-chaired by Mark Carney and Shriti Vadera of Prudential. The Co-chairs agreed to include discussion of early proposals surfaced by the Lab in the next roundtable.

“To make finance more available, we need to figure out how to attract much more private capital into the investment pool. Private capital is the force multiplier that can really change the game when it comes to effective climate finance,” Al Jaber said.

Simplify Procedures

The UAE Minister also said that to make financing more accessible, there was also a need to simplify, speed up, and standardise access to climate funds across international financial institutions and specialised funds.

“To make finance more affordable, we must drive transparency and price discovery. We must give all market participants the tools and mechanisms that narrow the gap between perceived risk and actual risk when it comes to investing in emerging and developing economies. We need to shift the narrative that views climate finance as a burden and recognises it as an economic opportunity,” he added.

Kristalina Georgieva, said that given the huge financing required to deliver the transition to green and resilient economies, it was vital that everyone should work in partnership to accelerate investment flows— particularly to emerging and developing economies.

“Everyone has a role to play—multilateral institutions, national authorities, and the private sector—each using their expertise and comparative strengths. Working together we can harness the power of private capital in the fight against climate change,” she said.

In his comments, Mark Carney said that the transition to net zero must be global, and the scale of investment required in EMDCs can’t be met with public money alone.

“GFANZ continues to work closely with MDBs, the IMF, and governments as they develop and scale new approaches to address longstanding barriers to private investment, including through the World Bank’s Private Sector Investment Lab. We appreciate the COP28 presidency for taking a practical approach for moving this agenda forward, and we look forward the progress that must be delivered this year to ensure that investment can flow to where it’s needed most,” Carney added.

Private Sector’s Role Vital

Ajay Banga said that the governments, multilateral institutions, and philanthropies aren’t enough to make adequate progress toward climate and poverty goals in emerging markets and developing countries.

“The scale of our challenge requires the private sector to play a significant role alongside the World Bank Group and other development institutions. For years, we have tried – and fallen short – to mobilise meaningful private investment in these markets. Given the urgency and scale of our intertwined challenges, we must try a new approach. The Private Sector Investment Lab is a concrete step in a broader effort to develop, and rapidly scale, solutions that address the barriers preventing private sector investment in emerging markets,” he explained.

Current climate investment into EMDCs remains insufficient to meet the goals of the Paris Agreement, further underscoring the need to use MDB and other development finance catalytically to unlock local and international private finance, enhance technical capacity to build a pipeline of bankable climate projects, and implement public policies to establish an enabling environment for investment in the green transition.

The round table also agreed to following set of actions in recognising the progress made by the Working Group focused on increasing investment in sustainable infrastructure in EDMCs in preparation for the summit.

Given the importance of a country’s policy environment for enabling investments into climate transition, the IMF will continue to share the lessons learned from early RST programs and use the roundtable to share experiences going forward.

The COP28 Presidency will ask MDBs and specialized climate funds to act on simplifying and streamlining access to climate finance and implement practical new ways of working together as a system with objective of speeding and scaling up private financing of climate transition in EMDCs.

The participants recognised that private capital must play a key role in addressing the financing gap for transitioning to net zero. It will require multi-stakeholder action to position transition finance as a great investment opportunity that would help EMDCs to get on the path of sustainable low-carbon growth and create the necessary market and policy conditions for turning this opportunity into reality.