Success in Paris with critical finance decisions still to be made
As Misum representative I participated in the UN COP21 negotiations for a new climate treaty in Paris in December 2015. Launched by French president Hollande and other profiled leaders of the world, mainly positive vibes and good energy characterized the meeting. The reaching of an agreement to keep global temperatures "well below" two degrees above pre-industrial times and "endeavor to limit" them even more, to 1.5C, was overwhelming and roused applauds and tears of joy among the participator. Most commentators agree that the Paris treaty is strong. A particularly promising part of the treaty is that each country's contribution to cutting emissions will be reviewed and revised every five years to scale up to the challenge. Moreover, the Paris treaty assigns important roles to the financial market to develop climate investment mechanisms. Nevertheless, there are still crucial decisions to be made, where both Misum and other research institutes of the Stockholm School of Economics can contribute by giving constructive input.
An issue I followed closely during COP21 was the financing of climate work in developing countries. The parties of the UN climate convention has earlier already agreed on establishing a Green Climate Fund, GFC with the aim of mobilizing USD 100 billion yearly from 2020 to respond to climate change by investing into low-emission and climate-resilient development in these countries. Still, however, there is no united mechanism for raising the GFC capital. Together with my Misum colleague, associate professor Joakim Sandberg, I have already published a debate article in Göteborgs Posten (2015-03-10) advising the Swedish government to initiate the process of installing a Green Investment Bank in Sweden, just like was done 2010 in the United Kingdom. We argue that the Green Investment Bank shall issue Green Bonds for mobilizing private capital in Sweden for climate investment in the most needing countries. By following this approach, we believe that Sweden also can act as a role model for other countries.
Text by Svenne Junker
Published in March 2016.