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

==== 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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