The nitty gritty of climate finance

A flag-up to another now-published Green Futures piece that I’ve written on climate change funding and energy efficiency. This is slightly out-of-date now though, as the particular scheme in question, which provides interest-free loans to public bodies for energy efficiency, has now closed (I wrote it in September).

There were a couple of interesting thoughts while doing the research for it. The first was about the detail in climate finance generally – for most mitigation issues, I think, it is perfectly alright to use loans rather than grant mechanisms, because there is a payback involved, whether it is in increased efficiency or recovering the upfront costs of renewables. But adaptation activities will not always themselves generate economic returns that can be easily paid back, in projects such as regenerating coastal mangroves or shifting to more resilient crops. Adaptation really needs to be funded from grants instead – yes, ‘one-use’ money in this sense will see the bill rise, but to do otherwise would be to create a new form of debt that is difficult to repay over and above regular economic activities.

And the second really is just about the slam-dunk nature of energy efficiency, which is so frustrating to watch. If you use less of something, then you need less of it to begin with. So with carbon intensity targets (or rather, pledges made by many developing countries), it’s crucial that these aren’t pooh-poohed simply because they’re not absolute emission reductions. It means that we get as much bang out of every unit of energy expended as possible, rather than being wasted – and big steps on efficiency, in reducing demand for more energy, still come to the equivalent of slowing the rate, if not avoiding altogether, the increase of capital-intensive fossil fuel power generation.

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