Duma and Muñoz Cabré in Context: “Climate change talk is cheap without viable projects to finance”

Every year, in a well-choreographed succession of international summits, climate negotiators spend valuable political capital wrangling about the billions and trillions needed globally to finance the energy transition. The international community met again two weeks ago, this time in Paris, to seek the reform of the multilateral financial system to address climate change. But even if all these summits may result in statements about the “allocation” of billions of new climate finance commitments – which are always welcome – this discussion may distract from a more pressing need: project financing.

If we are to tackle climate change, understanding and addressing the factors that make project financing possible is critical, as we show in our recent report. It is time for the international community to pay serious attention and spend political capital on the mechanisms through which finance translates into actual projects, particularly in developing economies.

To accelerate private investment, even more effort needs to go into identifying and addressing the barriers that deter the viability of projects. Specifically, we need to increase many-fold the effort devoted to risk mitigation programs as a realistic way of harnessing the capabilities of the private sector.