Editing IPCC:AR6/SYR/Longer-Report (section)

=== 4.8 Strengthening the Response: Finance, International Cooperation and Technology ===

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'''Finance, international cooperation and technology are critical enablers for accelerated climate action. If climate goals are to be achieved, both adaptation and mitigation financing would have to increase many-fold. There is sufficient global capital to close the global investment gaps but there are barriers to redirect capital to climate action. Barriers include institutional, regulatory and market access barriers, which can be reduced to address the needs and opportunities, economic vulnerability and indebtedness in many developing countries. Enhancing international cooperation is possible through multiple channels. Enhancing technology innovation systems is key to accelerate the widespread adoption of technologies and practices. ( '''''high confidence''''' )'''
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==== 4.8.1. Finance for Mitigation and Adaptation Actions ====

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'''Improved availability and access to finance''' [[#footnote-000|157]] will enable accelerated climate action ( '''''very high confidence)''''' '''.''' Addressing needs and gaps and broadening equitable access to domestic and international finance, when combined with other supportive actions, can act as a catalyst for accelerating mitigation and shifting development pathways ( ''high confidence'' ). Climate resilient development is enabled by increased international cooperation including improved access to financial resources, particularly for vulnerable regions, sectors and groups, and inclusive governance and coordinated policies ( ''high confidence'' ). Accelerated international financial cooperation is a critical enabler of low-GHG and just transitions, and can address inequities in access to finance and the costs of, and vulnerability to, the impacts of climate change ( ''high confidence'' ). { ''WGII SPM C.1.2, WGII SPM C.3.2, WGII SPM C.5, WGII SPM C.5.4, WGII SPM D.2, WGII SPM D.3.2, WGII SPM D.5, WGII SPM D.5.2; WGIII SPM B.4.2,WGIII SPM B.5, WGIII SPM B.5.4, WGIII SPM C.4.2, WGIII SPM C.7.3, WGIII SPM C.8.5, WGIII SPM D.1.2, WGIII SPM D.2.4, WGIII SPM D.3.4, WGIII SPM E.2.3, WGIII SPM E.3.1, WGIII SPM E.5, WGIII SPM E.5.1, WGIII SPM E.5.2, WGIII SPM E.5.3, WGIII SPM E.5.4, WGIII SPM E.6.2'' }

'''Both adaptation and mitigation finance need to increase many-fold, to address rising climate risks and to accelerate investments in emissions reduction (''' '''''high confidence).''''' Increased finance would address soft limits to adaptation and rising climate risks while also averting some related losses and damages, particularly in vulnerable developing countries ( ''high confidence'' ). Enhanced mobilisation of and access to finance, together with building capacity, are essential for implementation of adaptation actions and to reduce adaptation gaps given rising risks and costs, especially for the most vulnerable groups, regions and sectors ( ''high confidence'' ). Public finance is an important enabler of adaptation and mitigation, and can also leverage private finance ( ''high confidence'' ). Adaptation funding predominately comes from public sources, and public mechanisms and finance can leverage private sector finance by addressing real and perceived regulatory, cost and market barriers, for instance via public-private partnerships ( ''high confidence'' ). Financial and technological resources enable effective and ongoing implementation of adaptation, especially when supported by institutions with a strong understanding of adaptation needs and capacity ( ''high confidence'' ). Average annual modelled mitigation investment requirements for 2020 to 2030 in scenarios that limit warming to 2°C or 1.5°C are a factor of three to six greater than current levels, and total mitigation investments (public, private, domestic and international) would need to increase across all sectors and regions ( ''medium confidence'' ). Even if extensive global mitigation efforts are implemented, there will be a large need for financial, technical, and human resources for adaptation ( ''high confidence'' ). { ''WGII SPM C.1.2, WGII SPM C2.11, WGII SPM C.3, WGII SPM C.3.2, WGII SPM C3.5, WGII SPM C.5, WGII SPM C.5.4, WGII SPM D.1, WGII SPM D.1.1, WGII SPM D.1.2, WGII SPM C.5.4; WGIII SPM D.2.4, WGIII SPM E.5, WGIII SPM E.5.1, WGIII 15.2'' } ( [[#2.3.2|Section 2.3.2]] , 2.3.3, 4.4, Figure 4.6)

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[[File:8805dbbeeb418f0e3e37712e634fc864 IPCC_AR6_SYR_Figure_4_6.png]]
'''Figure 4.6: Breakdown of average''' '''mitigation''' '''investment flows and''' '''investment needs until 2030 (USD billion).''' Mitigation investment flows and investment needs by sector (energy efficiency, transport, electricity, and agriculture, forestry and other land use), by type of economy, and by region (see WGIII Annex II Part I Section 1 for the classification schemes for countries and areas). The blue bars display data on mitigation investment flows for four years: 2017, 2018, 2019 and 2020 by sector and by type of economy. For the regional breakdown, the annual average mitigation investment flows for 2017–2019 are shown. The grey bars show the minimum and maximum level of global annual mitigation investment needs in the assessed scenarios. This has been averaged until 2030. The multiplication factors show the ratio of global average early mitigation investment needs (averaged until 2030) and current yearly mitigation flows (averaged for 2017/18–2020). The lower multiplication factor refers to the lower end of the range of investment needs. The upper multiplication factor refers to the upper range of investment needs. Given the multiple sources and lack of harmonised methodologies, the data can be considered only if indicative of the size and pattern of investment needs. { ''WGIII Figure TS.25, WGIII 15.3, WGIII 15.4, WGIII 15.5, WGIII Table 15.2, WGIII Table 15.3, WGIII Table 15.4'' }

[https://www.ipcc.ch/figures/figure-4-6 ]

'''There is sufficient global capital and liquidity to close global investment gaps, given the size of the global financial system, but there are barriers to redirect capital to climate action both within and outside the global financial sector and in the context of economic vulnerabilities and indebtedness facing many developing countries''' '''''(''''' '''''high confidence).''''' For shifts in private finance, options include better assessment of climate-related risks and investment opportunities within the financial system, reducing sectoral and regional mismatches between available capital and investment needs, improving the risk-return profiles of climate investments, and developing institutional capacities and local capital markets. Macroeconomic barriers include, amongst others, indebtedness and economic vulnerability of developing regions. ( ''high confidence'' ). { ''WGII SPM C.5.4; WGIII SPM E.4.2, WGIII SPM E.5, WGIII SPM E.5.2, WGIII SPM E.5.3'' }

'''Scaling up financial flows requires clear signalling from governments and the international community (''' '''''high confidence). Tracked financial flows fall short of the levels needed for adaptation and to achieve mitigation goals across all sectors and regions (''''' '''''high confidence). These gaps create many opportunities and the challenge of closing gaps is largest in developing countries (''''' '''''high confidence).''''' This includes a stronger alignment of public finance, lowering real and perceived regulatory, cost and market barriers, and higher levels of public finance to lower the risks associated with low-emission investments. Up-front risks deter economically sound low carbon projects, and developing local capital markets are an option. Investors, financial intermediaries, central banks and financial regulators can shift the systemic underpricing of climate-related risks. A robust labelling of bonds and transparency is needed to attract savers. ( ''high confidence'' ). { ''WGII SPM C.5.4; WGIII SPM B.5.4, WGIII SPM E.4, WGIII SPM E.5.4, WGIII 15.2, WGIII 15.6.1, WGIII 15.6.2, WGIII 15.6.7'' }

'''The largest climate finance gaps and opportunities are in developing countries (''' '''''high confidence)''''' '''''.''''' Accelerated support from developed countries and multilateral institutions is a critical enabler to enhance mitigation and adaptation action and can address inequities in finance, including its costs, terms and conditions, and economic vulnerability to climate change. Scaled-up public grants for mitigation and adaptation funding for vulnerable regions, e.g., in Sub-Saharan Africa, would be cost-effective and have high social returns in terms of access to basic energy. Options for scaling up mitigation and adaptation in developing regions include: increased levels of public finance and publicly mobilised private finance flows from developed to developing countries in the context of the USD 100 billion-a-year goal of the Paris Agreement; increase the use of public guarantees to reduce risks and leverage private flows at lower cost; local capital markets development; and building greater trust in international cooperation processes. A coordinated effort to make the post-pandemic recovery sustainable over the long term through increased flows of financing over this decade can accelerate climate action, including in developing regions facing high debt costs, debt distress and macroeconomic uncertainty. ( ''high confidence'' ). { ''WGII SPM C.5.2, WGII SPM C.5.4, WGII SPM C.6.5, WGII SPM D.2, WGII TS.D.10.2; WGIII SPM E.5, WGIII SPM E.5.3, WGIII TS.6.4, WGIII Box TS.1, WGIII 15.2, WGIII 15.6'' } .

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==== 4.8.2. International Cooperation and Coordination ====

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'''International cooperation is a critical enabler for achieving ambitious climate change mitigation goals and climate resilient development (''' '''''high confidence).''''' Climate resilient development is enabled by increased international cooperation including mobilising and enhancing access to finance, particularly for developing countries, vulnerable regions, sectors and groups and aligning finance flows for climate action to be consistent with ambition levels and funding needs ( ''high confidence'' ). While agreed processes and goals, such as those in the UNFCCC, Kyoto Protocol and Paris Agreement, are helping ( [[#2.2.1|Section 2.2.1]] ), international financial, technology and capacity building support to developing countries will enable greater implementation and more ambitious actions ( ''medium confidence'' ). By integrating equity and climate justice, national and international policies can help to facilitate shifting development pathways towards sustainability, especially by mobilising and enhancing access to finance for vulnerable regions, sectors and communities ( ''high confidence'' ). International cooperation and coordination, including combined policy packages, may be particularly important for sustainability transitions in emissions-intensive and highly traded basic materials industries that are exposed to international competition. ( ''high confidence'' ). The large majority of emission modelling studies assume significant international cooperation to secure financial flows and address inequality and poverty issues in pathways limiting global warming. There are large variations in the modelled effects of mitigation on GDP across regions, depending notably on economic structure, regional emissions reductions, policy design and level of international cooperation ( ''high confidence'' ). Delayed global cooperation increases policy costs across regions ( ''high confidence'' ). { ''WGII SPM D.2, WGII SPM D.3.1, WGII SPM D.5.2; WGIII SPM D.3.4, WGIII SPM C5.4, WGIII SPM C.12.2, WGIII SPM E.6, WGIII SPM E.6.1, WGIII E.5.4, WGIII TS.4.2, WGIII TS.6.2; SR1.5 SPM D.6.3, SR1.5 SPM D.7, SR1.5 SPM D.7.3'' }

'''The transboundary nature of many climate change risks (e.g., for supply chains, markets and natural resource flows in food, fisheries, energy and water, and potential for conflict) increases the need for climate-informed transboundary management, cooperation, responses and solutions through multi- national or regional governance processes (''' '''''high confidence).''''' Multilateral governance efforts can help reconcile contested interests, world views and values about how to address climate change. International environment and sectoral agreements, and initiatives in some cases, may help to stimulate low GHG investment and reduce emissions (such as ozone depletion, transboundary air pollution and atmospheric emissions of mercury). Improvements to national and international governance structures would further enable the decarbonisation of shipping and aviation through deployment of low-emissions fuels, for example through stricter efficiency and carbon intensity standards. Transnational partnerships can also stimulate policy development, low-emissions technology diffusion, emission reductions and adaptation, by linking sub-national and other actors, including cities, regions, non-governmental organisations and private sector entities, and by enhancing interactions between state and non-state actors, though uncertainties remain over their costs, feasibility, and effectiveness. International environmental and sectoral agreements, institutions, and initiatives are helping, and in some cases may help, to stimulate low GHG emissions investment and reduce emissions. ( ''medium confidence'' ) { ''WGII SPM B.5.3, WGII SPM'' . ''C.5.6, WGII TS.E.5.4, WGII TS.E.5.5; WGIII SPM C.8.4, WGIII SPM E.6.3, WGIII SPM E.6.4, WGIII SPM E.6.4, WGIII TS.5.3'' }

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==== 4.8.3. Technology Innovation, Adoption, Diffusion and Transfer ====

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'''Enhancing technology innovation systems can provide opportunities to lower emissions growth and create social and environmental co- benefits. Policy packages tailored to national contexts and technological characteristics have been effective in supporting low-emission innovation and technology diffusion.''' Support for successful low-carbon technological innovation includes public policies such as training and R&amp;D, complemented by regulatory and market-based instruments that create incentives and market opportunities such as appliance performance standards and building codes.. ( ''high confidence'' ). { ''WGIII SPM B.4, WGIII SPM B.4.4, WGIII SPM E.4.3, WGIII SPM E4.4'' }

'''International cooperation on innovation systems and technology development and transfer, accompanied by capacity building, knowledge sharing, and technical and financial support can accelerate the global diffusion of mitigation technologies, practices and policies and align these with other development objectives''' '''''(''''' '''''high confidence)''''' '''.''' Choice architecture can help end-users adopt technology and low-GHG-intensive options ( ''high confidence'' ). Adoption of low-emission technologies lags in most developing countries, particularly least developed ones, due in part to weaker enabling conditions, including limited finance, technology development and transfer, and capacity building ( ''medium confidence'' ). { ''WGIII SPM B.4.2, WGIII SPM E.6.2, WGIII SPM C.10.4, WGIII 16.5'' }

International cooperation on innovation works best when tailored to and beneficial for local value chains, when partners collaborate on an equal footing, and when capacity building is an integral part of the effort. ( ''medium confidence'' ). { ''WGIII SPM E.4.4, WGIII SPM E.6.2'' }

'''Technological innovation can have trade-offs that include externalities such as new and greater environmental impacts and social inequalities; rebound effects leading to lower net emission reductions or even emission increases; and overdependence on foreign knowledge and providers (''' '''''high confidence).''''' Appropriately designed policies and governance have helped address distributional impacts and rebound effects ( ''high confidence'' ). For example, digital technologies can promote large increases in energy efficiency through coordination and an economic shift to services ( ''high confidence'' ). However, societal digitalization can induce greater consumption of goods and energy and increased electronic waste as well as negatively impacting labour markets and worsening inequalities between and within countries ( ''medium confidence'' ). Digitalisation requires appropriate governance and policies in order to enhance mitigation potential ( ''high confidence'' ). Effective policy packages can help to realise synergies, avoid trade-offs and/or reduce rebound effects: these might include a mix of efficiency targets, performance standards, information provision, carbon pricing, finance and technical assistance ( ''high confidence'' ). { ''WGIII SPM B.4.2, WGIII SPM B.4.3, WGIII SPM E.4.4, WGIII TS 6.5, WGIII Cross-Chapter Box 11 on Digitalization in Chapter 16'' }

Technology transfer to expand use of digital technologies for land use monitoring, sustainable land management, and improved agricultural productivity supports reduced emissions from deforestation and land use change while also improving GHG accounting and standardisation ( ''medium confidence'' ). { ''SRCCL SPM C.2.1, SRCCL SPM D.1.2, SRCCL SPM D.1.4, SRCCL 7.4.4, SRCCL 7.4.6'' }

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