“We will not reach the climate goals without a lot of money”

• 

  Helen Ekker

  Climate and Energy editor

The financial sector is the key to tackling climate change. Finance Minister Sigrid Kaag said this at the climate summit in Egypt this afternoon. At the Sharm el-Sheikh climate conference, the whole day was devoted to finance.

According to Kaag, climate goals are unattainable if money is not invested differently. “Without big money, real money, serious financial choices, we won’t achieve our goals,” the minister said.

In six months, Kaag will become co-chair of a group of nearly eighty finance ministers who want to work together on climate policy. Countries will have to create the conditions, making it clear and attractive for companies to invest their money differently.

“Ultimately, if the private sector and the broader financial playing field do not intervene on a large scale, we will not meet the financial targets for climate change mitigation, then it is an impossible path,” said Kaag.

He believes that banks and other financial institutions should also dare to take risks. “We can all have safe bearings, but if we no longer have a world to live in, the end is exercise.”

Until recently, the climate conferences were mainly attended by government leaders and environment ministers, but now more and more finance ministers are joining us. According to Kaag, this makes sense, because they are responsible for the treasure. “For many countries it is only really serious when the finance minister is seated at the table. Because then we talk about budget, priorities and other ways of investing”.

Note that companies want to know where they are. “The private sector is also at the table. He asks governments: change the rules, then we want to finance more. Give us the sectors where you cover a risk, such as the national government.” According to the minister, companies not only want different regulations, but also more information. For example, about what is happening in other countries.

Companies also want to know even better how the government sees the future. “What is green, what is not green”, they want to know. “They are asking for clear political choices. I will only tell the Dutch taxpayer. This does not cost us money. But it allows other large parties to intervene.”

On the day the climate summit discussed finance, US climate envoy John Kerry launched a new initiative to help poor countries. Not with government money, but through the introduction of a CO2 market. “Our intent is to make a carbon market work, to distribute capital that would otherwise be useless, to accelerate the transition from dirty to clean energy,” Kerry said.

The goal is to replace coal-fired power plants with sustainable energy sources. Details on how the initiative will work are still scarce. But according to Kerry, there is a great deal of interest from companies like PepsiCo and Microsoft.

His plan is an alternative to the large-scale deployment of US government money, for which there is no majority in the US. However, the money must go into the fight against climate change, Kerry said. “If we don’t find any more money, we won’t.” The plan is expected to be developed in the next year. In addition to the support, his plan also received a lot of criticism, because it was an old plan that had previously failed.

In Egypt there is a lot of talk about offsetting corporate emissions elsewhere. This can be done, for example, by planting trees or by capturing greenhouse gases from chimneys or technical installations. But carbon offsetting plans are heavily criticized at the Sharm el-Sheikh summit.

Yesterday, a group of UN experts warned that stricter standards are needed to combat “greenwashing” by companies and investors. According to Mohamed Adow, director of Power Shift Africa, a climate and energy think tank, carbon offsetting is an accounting trick that ensures big polluters can keep emitting.