Highlights from Ecosperity Conversations @ COP29

The 29th Conference of the Parties to the UNFCCC (COP29) held in Baku, Azerbaijan, marked yet another critical step in the global effort to combat climate change. With the theme on enhancing ambition and enabling stronger climate action, the conference brought together world leaders, policymakers and climate activists from almost 200 countries to address the most pressing environmental issues, with financing as a key focus.

The conference closed with consensus for the New Collective Quantified Goal on Climate Finance (NCQG) which aims to help nations leverage the benefits of clean energy, as well as protect their people and economies against climate disasters. 

Platforms, Partnerships and Practitioners

Meeting the NCQG will require leveraging limited public and philanthropic funds more effectively to mobilise private investment and to meet the scale and urgency required to address the climate crisis. At a panel on ‘How to Scale Blended Finance Globally to Accelerate Transition’ at the Business, Investment and Philanthropy Climate Platform convened by the COP29 presidency and UN Climate Change High Level Champion, senior representatives from the Monetary Authority of Singapore, Temasek, HSBC, Global Infrastructure Finance, Convergence and Three Cairns Group discussed the use of Blended Finance to mobilise private capital for climate action in developing countries. According to Connie Chan, Head, Financial Services at Temasek, US$1.5 trillion investment in infrastructure is needed annually but only 10% of these projects are fully bankable. Around 35% of projects are marginally bankable as they fall outside the remit of traditional lenders. 

The existing climate finance architecture is not designed for a wholesale approach. Current successes are dominated by individual projects, which makes it sub-scale, especially in emerging markets where fragmentation is more prevalent. Leong Sing Chiong, Deputy Managing Director, Markets & Development at the Monetary Authority of Singapore suggests approaching blended finance at a platform level, rather than ‘project by project, transaction by transaction’. To truly leverage concessional capital to have a catalytic effect, implementing entities need to be adaptable and develop a pipeline of investible projects which have a demonstration effect and can be scaled and replicated to transform entire sectors. The Singapore government announced at COP29, a commitment of up to US$500 million of concessional capital to support the Financing Asia’s Transition Partnership (FAST-P) blended-finance initiative which is designed to crowd in other sources of concessionary capital to mobilise commercial capital and to approach it from a platform perspective. 

Speakers also spoke about the need to ‘draw the eco system tighter together’. A critical barrier for climate financing is in ensuring alignment across different stakeholders’ mandates, processes and internal governance. More often than not, there is a lack of an ‘anchoring leader’ to corral more concessionary capital. In the case of FAST-P, the Singapore government is taking that leadership role to catalyse other concessional capital which will in turn catalyse more commercial capital needed for the transition. 

Stacy Swann, Board Member at Convergence and Founder of Resilient Earth Capital elaborated that the success of blended finance was not just about having a strategy or enough concessionary capital, but also about being ‘tactical’. At the heart of it, it is the people and practitioners who are trained in structuring deals and managing infrastructure projects, who will be most needed to address climate change.

Concessional capital is an important tool in derisking and improving bankability of many climate projects, and has been emerging as an asset class. However, financing climate projects will need more than just that. Connie Chan who also joined the COP29 Singapore Pavilion discussion on 14 Nov 2024, on ‘Maximising the Multiplier on Catalytic Capital’ called for the private sector to think of ‘creative ways to lean in’. She highlighted Temasek’s creative climate financing efforts through FAST-P’s Green Investments Partnership (GIP), and how the private sector can ringfence the contribution of non-commercial oriented capital towards climate projects such as Temasek’s Concessional Capital for Climate Action (CCCA) initiative. 

Discussants also spoke about the need for structural breakthroughs and the need to share data. If we want to establish blended finance as a new asset class, practitioners will need more to know how it performs and the kind of impact that it is making, in order to ensure repeatability and scalability.

At another panel discussion at the COP29 Singapore Pavilion on 15 Nov 2024, speakers from Temasek, LeapFrog Investments, Cosmos Innovation, Solar Impulse Foundation and HSBC explored ways to leverage existing green solutions to trigger the green leap for Asia’s emerging consumers and spur sustainable development.

Souleymane Ba, Partner & Co-Head of Climate Strategy at LeapFrog Investments shared that even though some green solutions are less expensive than incumbent technologies, they were still ‘not everywhere’. He opined that unlike existing technologies that typically have low CAPEX but high annual OPEX costs, new technologies such as solar require a much higher upfront cost. As such, its widespread deployment could be extremely challenging. In this case, beyond just scientific innovation, creative business models and innovative financing solutions are required to help make the transition more affordable in Asia.

Speakers also spoke about the need for governments to play a critical role in providing support and financing for scaling the manufacturing and deployment of new, green solutions. Sovereigns and sovereign wealth funds can consider taking on ‘early risk’ to support and fund scaling of these innovative solutions and thus, anchor supply chains of the future locally.

Dr Bertrand Piccard, Founder & Chairman at Solar Impulse Foundation highlighted the need for the focus to not only be on innovative renewable energy solutions, but to consider solutions that reduce and optimise energy consumption. 

The estimated capital required to deliver a green transition across mobility, energy, agriculture and the built environment in South Asia, Southeast Asia and Africa would amount to around US$330 billion a year, or US$3.3 trillion by 2030. To do so successfully would require the right infrastructure, innovative solutions and financing as well as collaboration across an integrated ecosystem of philanthropic, public and private sectors.

Watch the Ecosperity Conversations at COP29 session recordings here.